Vietnam’s GDP rose 7.8% year-on-year in Q1, above the Bloomberg consensus of 7.6% but below the government’s 10% target for 2026. This compares with 8.5% growth in Q4 2025.

Trade data showed faster growth in March, with exports up 20.1% year-on-year versus a 16.5% consensus and 5.7% in February. Imports also rose, linked to external demand and firms building inventories.

Inflation Signals Policy Pressure

Inflation increased, with March CPI up 4.7% year-on-year versus a 4.0% consensus and 3.4% in February. This was above the State Bank of Vietnam’s 4.5% target.

The exchange rate was steady, with USD/VND flat at about 26,337. The central bank kept a stable fixing to reduce volatility.

The article notes it was produced using an AI tool and reviewed by an editor.

We’re seeing robust economic activity with Q1 GDP at 7.8%, but the critical number for us is the 4.7% inflation print for March. This figure has pushed past the State Bank of Vietnam’s (SBV) 4.5% target, putting pressure on them to respond. This shifts the focus from growth to potential monetary tightening in the weeks ahead.

Trade Ideas And Positioning

The SBV’s primary tool to combat this inflation is raising its policy rate, a move we’ve seen them make before when price pressures mounted back in late 2024. A rate hike would likely end the recent period of stability in the USD/VND, which has been held steady around 26,337. This creates a clear opportunity for traders anticipating a policy shift.

Given this outlook, we should consider positioning through FX derivatives, specifically options on the USD/VND pair. Looking back, similar inflation surprises in other Southeast Asian markets in 2025 led to significant currency adjustments within a single quarter. Any signal of a rate hike could cause a sharp downward move in USD/VND, making put options particularly attractive.

Beyond currency, there’s a direct play on interest rates through the swaps market. We can look at entering interest rate swaps where we pay a fixed rate and receive a floating rate. This position would profit directly if the SBV follows through with a rate hike to cool the 4.7% inflation, a response similar to what we saw from the Bank of Thailand last year.

The strong export growth of over 20% suggests the economy can likely absorb a modest rate increase without derailing activity. Therefore, the probability of the SBV acting is higher than it has been in recent quarters. We must monitor their next policy meeting minutes for any change in tone.

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US consumer credit rose by $9.48bn in February. This was below expectations of $10bn.

The February consumer credit number came in below expectations, which indicates consumers are borrowing less. This is a potential early warning sign that consumer spending, a key engine of the economy, is beginning to slow down. We need to watch if this trend continues in the March and April data.

Consumer Credit Signals Softening Demand

This report reinforces the recent soft March retail sales figures, which fell by 0.4% according to the latest Commerce Department data. We saw a similar pattern in late 2025 when consumer fatigue began to set in after a period of restrictive interest rates. This combination of data points strengthens the case for a more cautious economic outlook for the second quarter.

In response, we should consider buying put options on consumer discretionary ETFs to protect against a slowdown in non-essential spending. For instance, the SPDR S&P Retail ETF (XRT) has shown sensitivity to these trends in the past. This provides a direct hedge against the consumer weakness we are beginning to observe.

The CBOE Volatility Index, or VIX, is currently sitting near multi-month lows around 14, suggesting complacency in the market. This weaker economic data could be the catalyst that reintroduces volatility into the market. We can position for this by purchasing call options on the VIX with expirations in May or June.

Looking back, we saw during the second quarter of 2025 how a decline in revolving credit often preceded a softening in the jobs market by a couple of months. While the latest jobs report showed a solid 215,000 jobs added in March, we must now anticipate that this strength may not last. Any weakness in the upcoming jobs report will confirm our cautious stance.

Implications For Fed Policy And Rates

This data also shifts the odds for future Federal Reserve action, making an interest rate cut before the end of the third quarter more likely. Traders can use options on Secured Overnight Financing Rate (SOFR) futures to position for a more dovish policy path. A shift in Fed expectations would likely lead to a steeper yield curve and support bond prices.

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The US Dollar Index (DXY) held near 99.80, close to last week’s 100 peak, as markets watched the Iran conflict and a US deadline set for 8:00pm EST linked to the Strait of Hormuz. Tehran rejected a temporary ceasefire, closed communication channels with the US, and set conditions for any lasting deal.

US February core capital goods orders rose 0.6%, while headline durable goods orders fell 1.4%. Focus is also on upcoming FOMC minutes and PCE inflation data.

Key Moves Across Major FX Pairs

EUR/USD jumped towards 1.1580 as expectations grew that the ECB may tighten policy if higher oil prices feed into inflation. GBP/USD moved up to about 1.3270, with the pound near a more than four-month low against the dollar amid concern about imported energy and fiscal constraints.

USD/JPY was near 159.80 as Japan monitored oil-driven volatility, while the 10-year JGB yield rose to a 27-year high of 2.43%. AUD/USD traded around 0.6960, supported by recent RBA policy signals.

WTI rose to about $117 per barrel then fell to $113.40, with some physical grades near $150 and about 12 million barrels per day disrupted. Gold traded near $4,680, with China extending its gold-buying streak to 17 months.

The diary includes RBNZ, EU retail sales, an ECB meeting, and US FOMC minutes (8 April), then US PCE, GDP, and jobs data (9 April), followed by US CPI and other releases (10 April). WTI is a US crude benchmark traded via Cushing; prices are driven by supply and demand, geopolitics, OPEC quotas, US dollar moves, and inventory reports from API and EIA, which match within 1% about 75% of the time.

Looking back, the geopolitical panic surrounding the Strait of Hormuz in April 2025 was the key driver. We saw WTI crude oil spike above $117 per barrel, but that premium has since vanished as diplomatic channels reopened later that year. Now, with WTI trading around a more stable $82 per barrel, the extreme backwardation in the futures curve has normalized, making long-dated call options less expensive.

Macro Backdrop And Strategy Implications

That oil shock a year ago caused a significant inflation scare, which is why the ECB and Fed were signaling aggressive policy tightening. However, as energy prices cooled in the second half of 2025, inflation has followed, with the latest US CPI data for March 2026 coming in at a manageable 2.8%. This has completely altered the landscape, with fed funds futures now pricing in a 75% chance of a rate cut by the fourth quarter of this year.

The strong US Dollar Index, which pushed 100 during the 2025 crisis, has retreated significantly on the back of these changing rate expectations. We are now seeing the DXY hover near 95, a sharp reversal driven by the market’s belief that the Federal Reserve’s tightening cycle is firmly in the rearview mirror. This sustained dollar weakness should be a core assumption in our strategies for the coming weeks.

This environment favors being long EUR/USD, even though the ECB has also softened its stance. The pair has moved decisively from the 1.1580 area seen last year to challenge the 1.18 level, primarily on dollar weakness rather than euro strength. For GBP/USD, the pound’s recovery from its four-month lows in early 2025 has been pronounced, as its acute vulnerability to imported energy costs has turned into a tailwind.

We should also consider that the pressure on the Japanese Yen has eased considerably. Last year, USD/JPY was threatening 160, but with US yields having peaked and the rate differential set to narrow, the pair has fallen back toward 151. This suggests puts on USD/JPY or other bearish derivative structures could be profitable as the policy divergence between the Fed and the Bank of Japan shrinks.

Gold has been a major beneficiary of this regime change. While it struggled to rally past $4,680 last year due to the strong dollar, bullion recently broke to new highs near $5,100. Given the backdrop of a weaker dollar and impending rate cuts, buying call options on gold futures appears to be a sound strategy to capture further upside.

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US consumer credit rose by $9.48bn in February. This was below the expectation of $10bn.

The weaker than expected consumer credit figure for February is a signal that consumer spending, a key driver of the economy, is cooling. We should view this not as a one-off number but as a potential leading indicator of a broader economic slowdown. This suggests consumers are becoming more cautious, either by choice or due to tighter lending standards.

This data point makes it more difficult for the Federal Reserve to justify any further interest rate hikes in the near future. In fact, if we see continued weakness in upcoming data, the market will begin to price in a higher probability of a rate cut before the end of the year. Traders should therefore consider positions that would benefit from lower or stable interest rates, such as buying SOFR futures.

This report adds to other cautious economic signals we have seen in early 2026, including the March jobs report which showed hiring slowing to 165,000, below the 180,000 consensus. Furthermore, the most recent ISM Manufacturing PMI reading fell to 49.8, indicating a contraction in the factory sector. This combination of data strengthens the case for a defensive trading posture.

For equity index derivatives, this points towards potential weakness, as slowing consumer activity will eventually impact corporate earnings. We are positioning for increased market volatility, anticipating that the VIX index could rise from its current level of 18. Buying protective put options on the S&P 500 or Nasdaq 100 indices seems prudent in the coming weeks.

We are particularly wary of the consumer discretionary sector, which includes companies in retail and automotive industries. We remember seeing a similar pattern in the third quarter of 2025 when slowing credit growth preceded a significant underperformance in ETFs like XLY. This historical precedent suggests that short positions on this sector could be profitable.

The US Dollar Index held near 99.80, close to last week’s peak at 100, as markets tracked the Iran conflict and a US deadline set for 8:00pm EST linked to the Strait of Hormuz. Tehran rejected a temporary ceasefire and cut communication with the US, while oil markets priced disruption risk.

US February core capital goods orders rose 0.6%, while headline durable goods orders fell 1.4%. Attention now turns to the FOMC minutes and PCE inflation data.

EUR/USD rose towards 1.1580 as the euro stayed supported by expectations of possible ECB tightening if oil-driven inflation persists. GBP/USD moved up towards 1.3270, while the pound remained near a more than four-month low against the dollar.

USD/JPY traded around 159.80, near levels previously linked to Japanese intervention. Japan’s 10-year JGB yield reached a 27-year high of 2.43%.

AUD/USD traded near 0.6960 against a backdrop of recent RBA hawkishness. WTI crude reached about $117 per barrel before easing to $113.40, with some physical grades near $150 and about 12 million barrels per day effectively disrupted.

Gold traded near $4,680, supported by uncertainty and China’s central bank extending gold buying to 17 months. The week’s diary includes EU Retail Sales, an ECB non-monetary policy meeting, NZ and US releases, and US CPI on Friday.

We are looking back at this time last year, in April 2025, when the conflict in the Strait of Hormuz sent oil prices soaring. WTI crude was pushing past $117 per barrel then, creating extreme volatility that we must now contrast with today’s more stable price of around $78. That crisis provided a stress test for markets, and the aftershocks are still setting up today’s trading opportunities.

The US Dollar Index was near 100 back then, fueled by safe-haven demand and expectations of a hawkish Federal Reserve. Now, with the latest March 2026 core PCE inflation data cooling to 2.1%, the narrative has completely shifted toward potential rate cuts later this year. Traders should consider using options on SOFR futures to position for a dovish pivot from the Fed, a stark reversal from the hawkish stance it held during the 2025 energy shock.

In Europe, the ECB was signaling rate hikes in early 2025 to combat the oil-driven inflation spike, which kept EUR/USD surprisingly resilient. That hawkishness faded as the global economy slowed in late 2025, and now the focus is on policy divergence with the US. We see opportunities in long EUR/USD call spreads to capitalize on the potential for the Fed to cut interest rates before the ECB does.

A year ago, USD/JPY was threatening to break 160, a level that put Japanese officials on high alert for currency intervention. After authorities did step in during the summer of 2025, the pair has settled into a more controlled range around 148. This suggests that selling volatility through strategies like short strangles could be profitable, as officials seem determined to prevent the explosive moves we witnessed last year.

The Australian Dollar was surging around this time in 2025, supported by a hawkish RBA, but this strength was short-lived as the commodity shock hit global demand. Today, with China’s latest manufacturing PMI showing modest expansion at 50.4, the Aussie’s fate is again tied to global growth prospects rather than last year’s chaotic energy prices. We believe playing the AUD against currencies with more domestic troubles, like the pound, offers a clearer path.

Gold was trading near a lofty $4,680 last April, supported by geopolitics but capped by the strong dollar. With tensions eased and the dollar having softened, gold has settled near $3,950, reflecting a calmer market environment. However, since central banks are still hesitant to cut rates too quickly, using gold call options remains a cost-effective hedge against any unexpected return of inflation.

Higher oil and gas prices linked to conflict in the Middle East are expected to raise costs for European building materials such as cement, concrete and bricks. Manufacturers in this sector use large amounts of energy, so higher input costs may be passed on to construction firms, lifting building costs and putting pressure on margins and activity.

From 2010 to 2020, the use of oil for heating in the sector fell sharply, but there was no further drop in the past five years. Between 2020 and 2025, companies mainly phased out coal, while gas use has stayed roughly unchanged for 15 years.

Energy Exposure And Cost Transmission

The sector’s exposure to oil and gas is described as similar to 2022, which suggests sensitivity to renewed energy price rises. An increase in building permits points to potential demand support, but ongoing recovery is linked to more stable energy markets and continued changes in production methods.

If production costs keep rising, sales prices may increase, which could weaken demand. The original article states it was produced with the help of an artificial intelligence tool and reviewed by an editor.

Given the recent surge in energy prices, we see a direct parallel to the cost pressures experienced in 2022. With Brent crude futures now trading above $95 a barrel, up 8% in the last month due to renewed conflict, European building material producers face significant margin compression. We should anticipate that these increased energy costs will be passed on, impacting the entire construction value chain.

This presents an opportunity to position for weakness in the European construction and materials sector over the coming weeks. The latest S&P Global Eurozone Construction PMI for March 2026 already fell to 48.2, signaling a contraction even before this energy price shock. We should consider buying put options on a sector index ETF or on specific, energy-intensive producers like Heidelberg Materials and Holcim.

Trade Structure And Historical Signal

The industry’s fundamental vulnerability has not changed much since last year. An analysis of the 2020-2025 period showed that while coal usage declined, the sector’s dependency on natural gas and oil has remained high. This structural exposure makes these companies particularly sensitive to the current energy market volatility.

A pair trade could effectively isolate this theme by going long an energy sector ETF while simultaneously shorting a construction materials ETF. Looking back at the 2022 energy crisis, we saw the STOXX Europe 600 Construction & Materials index underperform the broader market by nearly 15% in the six months following the initial price spike. This historical precedent suggests a similar divergence could occur now.

We will be watching the upcoming Q1 earnings reports for any downward revisions in profit guidance from these companies. The next release of building permit data will also be a key indicator of whether rising costs are beginning to stifle demand. Any further geopolitical escalation would likely act as an accelerant, making options with May and June 2026 expiries increasingly attractive.

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The Australian Dollar rose against the US Dollar on Tuesday as the US Dollar weakened ahead of a deadline set by US President Donald Trump for Iran to reach a deal or reopen the Strait of Hormuz by 8:00 p.m. Eastern Time (00:00 GMT on Wednesday). AUD/USD was near 0.6955, up about 0.54% on the day.

The US Dollar Index (DXY) traded around 99.80 after failing to hold above 100. The Australian Dollar also gained support from a firmer Chinese Yuan after the People’s Bank of China set the daily reference rate at 6.8854, its strongest level in nearly three years.

Technical Levels In Focus

On the daily chart, AUD/USD rebounded after holding above the 100-day Simple Moving Average at 0.6842. The pair is testing 0.6950, a prior support level that is now acting as resistance.

A move above 0.6950 could bring 0.7000 into view, close to the 50-day SMA at 0.7024. If the pair closes below the 100-day SMA, the next area in focus is 0.6700, described as a previous breakout zone.

The RSI has moved back towards 50. MACD remains slightly below its signal line but is rising towards zero, while the histogram is narrowing.

Looking back at the analysis from 2025, we see a market that was far more optimistic on the Aussie. Today, the US dollar is significantly stronger, with the US Dollar Index holding firm around 105.50, a stark contrast to the sub-100 levels seen back then. This has been a primary driver keeping AUD/USD suppressed below the 0.6600 handle in recent weeks.

Options Strategies And Macro Catalysts

The Australian dollar is also feeling pressure from its role as a proxy for China’s economy. Unlike the strong Yuan fixing we saw in 2025, recent data has been more mixed and has failed to provide a significant tailwind. The latest Caixin Manufacturing PMI for March 2026, for example, came in at 50.9, a slight cooling which has tempered enthusiasm about the recovery’s momentum.

From a technical standpoint, the pair is now contained within a much lower range, with key support found near the 0.6510 level and stiff resistance at the 50-day SMA around 0.6640. For derivative traders, this suggests that buying puts with a strike price below 0.6500 could serve as effective portfolio insurance against a potential break lower. Selling out-of-the-money call options above 0.6700 could be a strategy to generate income, banking on that ceiling holding firm.

The Reserve Bank of Australia’s decision to hold interest rates steady at its April 2026 meeting, citing persistent services inflation, has further contributed to this range-bound action. With Australian annual inflation last reported at 3.4%, the RBA is in a holding pattern, which tends to cap significant upside for the currency. This environment suggests implied volatility may stay relatively low, making long-dated options strategies less appealing for now.

We must watch for catalysts that could break the current stalemate, particularly the next US Non-Farm Payrolls report. A stronger-than-expected jobs number could reinforce the “higher for longer” Federal Reserve narrative, potentially sending AUD/USD to test the 0.6450 support zone we saw late last year. Any unexpected weakness in US data, however, could spark a short-covering rally back toward that 50-day moving average.

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Conflict in the Middle East has pushed up oil and gas prices. Higher energy costs are forecast to raise costs for European building materials such as cement, concrete and bricks.

Producers’ exposure to oil and gas is described as similar to 2022 levels. If energy prices stay high, manufacturers are likely to pass on higher costs to construction firms.

Energy Price Pass Through Risks

This cost pass-through could reduce profit margins in construction. It could also raise overall building costs and dampen construction activity.

From 2010 to 2020, the sector reduced the use of oil for heating by a large amount. There has been no further fall in oil use in the past five years.

Between 2020 and 2025, companies mainly reduced coal use. Gas use has stayed about the same for the last 15 years.

Building permits have risen recently. A longer recovery is linked to more stable energy markets and lower-energy production methods.

Market Positioning And Hedging

The article states it was created with help from an AI tool and reviewed by an editor.

With recent tensions in the Middle East pushing Brent crude back towards $95 a barrel, we are seeing a direct impact on energy-dependent sectors. This situation mirrors the pressures we observed back in 2022, where elevated energy prices were quickly passed on by producers. The European building materials sector, with its significant reliance on natural gas and oil, is particularly exposed to this renewed price shock.

Looking back, we can see that building material companies made little progress in reducing their oil and gas dependency between 2020 and 2025. While coal use was phased out, the reliance on gas has remained steady for over 15 years, leaving these firms vulnerable. The recent performance of the STOXX Europe 600 Construction & Materials index, which has underperformed the broader market by nearly 5% in the last quarter, confirms this vulnerability is now being priced in.

For the coming weeks, we should consider positioning for further downside in this sector as profit margins come under pressure. Buying put options on key players like HeidelbergCement or Saint-Gobain could be a direct strategy to capitalize on expected earnings weakness. This view is supported by Eurostat’s latest data from February 2026, which showed industrial producer prices for construction materials ticking up 1.2%, signaling that cost inflation is already taking hold.

Simultaneously, this provides an opportunity for a pair trade by going long on the energy sector. Elevated oil and gas prices that squeeze manufacturers will likely boost revenues for energy producers. We could look at call options on major European energy companies or futures contracts tied to European natural gas to hedge against, or profit from, the sustained high energy costs.

The glimmer of hope from a slight uptick in building permits we noted in late 2025 now seems fragile. The latest reports show a stall in new permits across Germany and France, suggesting that higher prospective building costs are already dampening construction demand. This rising uncertainty across the sector suggests an increase in implied volatility, making options strategies that benefit from price swings, such as straddles, potentially attractive.

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The Australian Dollar rose against the US Dollar on Tuesday as the US Dollar weakened ahead of a deadline set by US President Donald Trump for Iran to reach a deal or reopen the Strait of Hormuz by 8:00 p.m. Eastern Time (00:00 GMT on Wednesday). AUD/USD traded near 0.6955, up about 0.54%, while the US Dollar Index (DXY) was around 99.80 after failing to hold above 100.

The AUD also gained support from a firmer Chinese Yuan after the People’s Bank of China set its daily reference rate at 6.8854, the strongest in nearly three years. The AUD often moves in line with China-related developments due to Australia’s trade links with China.

Audusd Tests Key Resistance

On the daily chart, AUD/USD rebounded after holding above the 100-day Simple Moving Average at 0.6842. The pair is testing 0.6950, which has shifted from support to near-term resistance.

A move above 0.6950 could target the 0.7000 level and the 50-day SMA at 0.7024. Support remains near the 100-day SMA, and a daily close below it could point to 0.6700.

The RSI has moved back towards 50. The MACD remains below its signal line but is rising towards zero, and the histogram is narrowing.

We recall a similar dynamic back in 2025 when fragile sentiment over a US-Iran deadline weakened the dollar. That situation provided a clear playbook for how geopolitical stress can create opportunities in the AUD/USD pair. This pattern of a softening greenback during times of uncertainty appears to be re-emerging.

Trade Talks Add Market Fragility

Currently, renewed discussions around US-EU trade tariffs are creating similar fragility in the market. The US Dollar Index has consequently dipped 1.2% over the last two weeks, struggling to hold its ground around the 101.50 mark. This is putting broad-based upward pressure on other major currencies, including the Aussie dollar.

The Australian dollar’s strength is further supported by positive economic data from China. China’s latest report showed first-quarter GDP growth of 5.1%, beating expectations and reinforcing demand for Australian commodities. We’ve seen iron ore prices climb over 8% in the past month alone, directly benefiting Australian export values.

Given this backdrop, traders should consider positioning for further upside in AUD/USD. Buying call options with a strike price around 0.7150 could be a viable strategy to capture potential gains in the coming weeks. This allows for participation in the rally while limiting downside risk to the premium paid.

To manage risk, we should look at key support levels for placing protective put options. The 100-day simple moving average, now sitting near 0.6920, serves as a solid technical floor. A break below this level would signal a significant shift in momentum and a reason to exit bullish positions.

Current technical indicators support this positive outlook, unlike the mixed signals we saw in 2025. The Relative Strength Index is pushing above 60, indicating strong buying momentum is building. Furthermore, the MACD shows a clear bullish crossover, suggesting the uptrend has room to run.

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Brown Brothers Harriman expects four central banks to keep policy rates unchanged at meetings this week. These are the Reserve Bank of India (RBI), the National Bank of Poland (NBP), Peru’s central bank (BCRP), and the Bank of Korea (BOK).

The RBI is expected to hold at 5.25% for a second meeting on Wednesday. It may move its stance from neutral to restrictive due to a weaker inflation outlook.

Central Banks Expected To Hold

The NBP is expected to hold at 3.75% on Thursday after a 25bps cut on 4 March. Market pricing in swaps implies 60bps of hikes over the next 12 months.

Peru’s BCRP is expected to hold at 4.25% for a seventh meeting on Thursday. Headline and core CPI inflation rose in March above the bank’s 1 to 3% target range.

The BOK is expected to hold at 2.50% for a seventh meeting on Friday. Its six-month rate projection may shift to show hikes rather than a steady-rate path.

The Reserve Bank of India is expected to hold its repo rate at 6.0% this week, but the risk is not symmetrical. After March CPI data showed inflation re-accelerating to 4.9%, we see a risk of a more hawkish tone from the governor. This is a similar setup to what we saw back in 2025, when the board weighed a shift to a restrictive stance due to a worsening inflation outlook.

Forward Guidance In Focus

Poland’s central bank will likely keep its policy rate at 4.50%, but the focus is on the forward guidance from Governor Glapinski. The swaps market is currently pricing in over 50 basis points of hikes in the next year as wage growth remains stubbornly high. This echoes the dynamic from March 2025, when the swaps curve also priced in significant hikes that traders had to watch closely.

We anticipate Peru’s central bank will pause its easing cycle and hold rates at 5.00% for a second straight meeting. Upside inflation risks are re-emerging, with the latest March reading hitting 3.2%, putting it just above the bank’s 1-3% target band. We saw this same kind of inflation threat back in 2025, which ultimately kept the BCRP on hold for seven consecutive meetings.

The Bank of Korea is set to keep its policy rate unchanged at 3.50%, a level it has now maintained for over two years. The key risk for traders is a hawkish surprise in their forward projections, especially with the Korean won recently weakening past the 1400 per dollar psychological level. This reflects the same potential for a hawkish pivot we monitored in 2025, where the board considered signaling future hikes instead of a steady outlook.

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