GBP rose by over 0.40% on Monday as comments about a final Tuesday deadline for Iran to reach a deal, plus talk of de-escalation, weighed on the US Dollar. GBP/USD traded around 1.3240, and was quoted at 1.3239 on the daily chart. Risk appetite improved after Axios reported talks on a 45-day ceasefire that could be extended. US equities rose by 0.15% to 0.52%.

Us Data And Dollar Pressure

US data showed weaker activity, with the ISM Services PMI for March falling to 54 from 56.1, below the 55 forecast. The Prices Paid index rose to 70.7, its highest since October 2022, alongside higher oil and fuel costs. Last week’s US labour figures showed Nonfarm Payrolls rising by 178K in March versus 60K expected. The Unemployment Rate fell to 4.3% from 4.4%. Prime Market Terminal data showed no expectations for Fed rate cuts, with the fed funds rate seen at 3.50%–3.75% in 2026. Markets are watching US inflation, jobless claims, and the Fed minutes. Technically, resistance is at 1.3320, then 1.3435 and near 1.35, with 1.3600 above. Support sits at 1.3187, then 1.3130 and 1.3035, with 1.3050 below. With the US deadline for Iran set for tomorrow, April 7th, a spike in market volatility is highly probable. The recent advance in the pound was built on rumors of de-escalation, a sentiment that could evaporate and cause a sharp reversal. Derivative traders should consider buying options to position for a large price swing in GBP/USD, as implied volatility in the pound has already risen to over 9.0 this week, up from an average of 7.5 in March.

Managing Volatility With Options

We have to weigh the conflicting economic signals from the United States that we saw last month. The robust job gains in March, which added 178,000 positions, stand in stark contrast to the slowing business activity shown in the ISM Services PMI. This confusion places enormous importance on the upcoming US inflation figures and the Federal Reserve’s meeting minutes to set a clearer direction. The inflation component of that services report is a significant warning, showing prices paid at their highest since the inflation surge of late 2022. After the last official Consumer Price Index (CPI) report for February 2026 showed inflation at 3.1%, the market is now pricing in a higher figure for March, challenging the idea that the Fed can remain on hold. A hot inflation number would likely strengthen the dollar and pressure the pound. The GBP/USD chart shows sellers are still in control as long as the price stays below the resistance cluster around 1.3500. A simple strategy would be to purchase put options with a strike price below the immediate 1.3187 support level. This provides a clear way to profit from a breakdown while strictly limiting risk if geopolitical news triggers a surprise rally. Alternatively, for those expecting the downward pressure to continue, selling call spreads above the 1.3320 resistance area could be an effective way to collect premium. This position benefits from the price either falling or moving sideways. The defined risk of a spread is well-suited for the current uncertain environment. Create your live VT Markets account and start trading now.

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Looking back to April 2025, we saw a clean MACD crossover on the daily Nasdaq chart around the 17,000 level that kicked off a massive 9,000-point rally. That exact signal, after a period of heavy selling, is appearing on our charts again today. This suggests a major bearish cycle may be ending, and we should prepare for a potential upward move. The recent pullback from the 24,000 highs was driven by market anxiety over the latest Consumer Price Index report, which showed core inflation remaining stubborn at 3.1%, and a cautious tone from the Fed in its March meeting. This widespread bearish sentiment has created a market structure nearly identical to the one we saw this time last year. Now, the MACD line has crossed above its signal line, telling us the directional bias has shifted.

Daily Chart Direction Filter

For traders, the daily chart acts as a filter; as long as the MACD stays above its signal line, our focus is exclusively on buying opportunities. We will disregard short-term bearish noise and use any pullbacks to look for entry points. This discipline is crucial, as it prevents us from fighting what could be the start of the next major impulse wave up. Drilling down to the 4-hour chart, we can see what appears to be a corrective Wave 2 nearing its completion. The recent fear in the market, which saw the VIX jump to over 21, is now subsiding as it falls back toward the 17 level, supporting the view that this pullback is losing steam. This multi-timeframe confirmation strengthens our confidence in the bullish setup. The precise entry zone we are watching is around the 23,600 level on the Nasdaq. On the 30-minute chart, we are waiting for the MACD to cross above its signal line once price enters this zone. This crossover is our trigger to execute a long trade, such as buying call options or trading futures. This setup offers a well-defined risk-reward scenario for derivative traders. A call spread or a simple long call option could be used to capitalize on the potential upward thrust, with a stop placed just below the low of the corrective wave. The reward is substantial if a powerful Wave 3 develops as the structure suggests.

Clear Invalidation Rule

The entire trade idea is invalidated if the daily MACD line crosses back below the signal line. If that happens, the bullish setup is off, and we will step aside without hesitation. This clear invalidation point is key to managing risk on the trade. Create your live VT Markets account and start trading now.

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GBP/USD rose by over 0.40% on Monday and traded near 1.3240, as talk of a possible Iran de-escalation weighed on the US Dollar. US President Donald Trump said the Tuesday deadline for Iran to make a deal is final. Axios reported talks involving US and Israeli officials and regional mediators about a 45-day ceasefire, with an option to extend it. US equities rose by 0.15% to 0.52% during the session.

Us Data And Rate Expectations

US data showed weaker service-sector momentum, with the ISM Services PMI for March falling to 54 from 56.1, below the 55 forecast. The Prices Paid index rose to 70.7, its highest since October 2022. Last week’s US Nonfarm Payrolls rose by 178K in March versus 60K expected, and the Unemployment Rate fell to 4.3% from 4.4%. Prime Market Terminal data showed the Fed funds rate seen staying in the 3.50%–3.75% range through 2026, with no rate cuts priced. Traders are watching US inflation data, jobless claims and the latest Fed meeting minutes. Technically, GBP/USD was at 1.3239, with resistance at 1.3320, 1.3435 and near 1.35, and support at 1.3187, 1.3130 and 1.3035, then 1.3050. Looking back at the analysis from over a year ago, we can see how the market sentiment has shifted significantly. In early 2025, the GBP/USD was trading above 1.3200 on hopes of a ceasefire that would weaken the US dollar. As of today, April 6, 2026, the pair is trading much lower around 1.2650 as those geopolitical hopes proved short-lived and economic realities set in. The forecast for the Federal Reserve to hold rates steady through 2026 was overly optimistic about inflation’s decline. While the Fed did initiate some cuts in late 2025, persistent core inflation, which registered at 3.5% last month, has forced them to pause with the federal funds rate currently in the 4.75%-5.00% range. This is a much more hawkish stance than what was being priced in back then and has provided underlying support for the dollar.

Sterling And Macro Crosscurrents

On the sterling side, the Bank of England is facing a similar challenge, creating a tug-of-war in the currency pair. UK inflation remains sticky at 3.2%, well above the central bank’s target, which has prevented them from signaling any significant policy easing. This economic stagnation in the UK has capped any potential rallies for the pound, even during periods of dollar weakness. The geopolitical factors mentioned in 2025 have also evolved from a source of dollar weakness to one of dollar strength. The temporary ceasefire talks failed, and ongoing Middle East instability has pushed WTI crude oil prices back above $85 per barrel. This has renewed safe-haven demand for the dollar and exacerbated global inflation concerns, complicating the outlook for central banks. For derivative traders, this environment suggests playing the range rather than betting on a strong directional breakout. With both the Fed and the BoE in a holding pattern, implied volatility for GBP/USD options has remained contained, making strategies like selling strangles outside the 1.2500-1.2800 range potentially profitable. However, we must remain prepared for upcoming inflation data, as any surprises could cause a spike in volatility and challenge these established boundaries. Create your live VT Markets account and start trading now.

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The Canadian Dollar rose against the US Dollar on Monday amid developments in the US-Iran war. USD/CAD traded around 1.3921, near four-month highs. Risk appetite improved in the Asian session after reports of a possible 45-day ceasefire, putting modest pressure on the US Dollar. The US Dollar later recovered part of its losses as mixed reports kept uncertainty high. The US Dollar Index (DXY) traded near 99.98 after rebounding from an intraday low around 99.76. DXY tracks the Greenback against a basket of six major currencies. Iran called for a permanent end to the war in response to the US proposal, according to IRNA, and rejected a ceasefire framework conveyed via Pakistan. A US official cited by Axios said Iran sent a 10-point response described as “maximalist”. A deadline set by US President Donald Trump was referenced, with a warning of potential strikes on power plants and other civilian infrastructure if the Strait of Hormuz is not reopened by Tuesday at 8:00 p.m. Eastern Time. Oil price rises were linked to inflation pressure and global growth worries, affecting the outlook for the Federal Reserve and the Bank of Canada. In data, the ISM Services PMI for March was 54, down from 56.1 and below 55 expected. Forthcoming releases include US March CPI, February PCE, and Canada’s March employment data. A correction dated April 6 at 17:15 GMT stated USD/CAD was 1.3921, not 1.1315. Given the high uncertainty around the US-Iran ceasefire talks, we are preparing for a sharp increase in market volatility. The Tuesday deadline for reopening the Strait of Hormuz is a major flashpoint that could cause erratic price swings in either direction. This environment makes buying volatility through options, such as straddles on the USD/CAD pair, a sensible strategy to consider in the coming days. We are closely watching crude oil prices, as the war has pushed WTI futures above $115 a barrel, a significant jump from the sub-$90 levels we saw for most of late 2025. As a major oil exporter, Canada’s economy benefits from higher prices, which could lend further strength to the Loonie against the Greenback. This suggests positioning for potential CAD upside if the conflict continues to disrupt global energy supplies. However, we must also respect the US Dollar’s role as a primary safe-haven asset during times of global stress. The CBOE Volatility Index (VIX), a key measure of market fear, has been elevated, consistently trading above the 30-point mark for the last two weeks. A significant military escalation could easily trigger a flight to safety that would overwhelm the oil price factor and push the USD/CAD pair higher. The upcoming economic data adds another layer of complexity to our decisions. Last month’s US headline CPI already surprised to the upside at 4.1% year-over-year, and another hot inflation report this week could force the Fed into a more aggressive stance. Meanwhile, the Canadian employment figures will be weighed against the backdrop of the strong 2.5% annualized GDP growth reported for the fourth quarter of 2025.

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USD/CAD edged lower on Monday as the Canadian Dollar strengthened amid changing headlines on the US-Iran war. The pair traded around 1.3921, staying near four-month highs. Market sentiment improved in Asia after reports of a possible 45-day ceasefire, which put mild pressure on the US Dollar. The US Dollar later recovered part of its move as mixed reports kept uncertainty high.

Dollar Index And Iran Response

The US Dollar Index traded near 99.98 after rising from an intraday low around 99.76. Iran called for a permanent end to the war, according to IRNA, while rejecting a ceasefire framework sent via Pakistan. A US official cited by Axios said Iran delivered a 10-point reply to the US proposal and labelled it “maximalist”. The official said it was unclear whether the response could support a diplomatic outcome. President Donald Trump set a deadline for reopening the Strait of Hormuz by Tuesday at 8:00 p.m. Eastern Time. He warned of possible strikes on power plants and other civilian infrastructure if it is not reopened. Oil price rises added to inflation pressure and growth concerns, affecting the policy outlook for the Fed and BoC. US ISM Services PMI for March was 54, down from 56.1, and below 55.

Key Data And Market Focus

This week includes US CPI for March, US PCE Price Index for February, and Canada’s March employment data. The article was corrected on April 6 at 17:15 GMT to confirm 1.3921, not 1.1315. We recall this time in 2025 when tensions between the US and Iran created sharp, unpredictable moves in the currency markets. The USD/CAD pair was pushed to multi-month highs near 1.39 as conflicting headlines about ceasefires and escalations kept traders on edge. That period of uncertainty showed us how geopolitical risk can quickly overshadow economic fundamentals. Today, we see a similar pattern emerging, with renewed friction in the Strait of Hormuz pushing Brent crude oil prices back above $95 per barrel for the first time this year. The Cboe Volatility Index (VIX), a key measure of market fear, has also climbed to 21, reflecting a nervousness we haven’t seen in months. This has helped lift USD/CAD back toward the 1.38 level, as traders again seek the relative safety of the US Dollar. Given the whiplash we saw in 2025 from diplomatic rumors, buying volatility seems like a prudent strategy for the coming weeks. Options strategies like straddles on USD/CAD could be effective, as they profit from a large price swing in either direction without needing to predict the outcome of negotiations. One-month implied volatility for the pair has already risen from 7% to over 9% in the last two weeks, suggesting the market is bracing for a move. We are also watching for this week’s US Consumer Price Index (CPI) and Canadian employment data, just as we were in 2025. A hot inflation number in the US, especially after last month’s came in at a sticky 3.3%, could amplify US Dollar strength by putting pressure on the Federal Reserve. A weak Canadian jobs report would only add fuel to a potential breakout above the 1.39 resistance level. The relationship between oil prices and the Canadian Dollar is critical but can be misleading during these times. Historically, like in the initial months of the 2022 Ukraine conflict, a flight to safety can cause the US Dollar to strengthen even as rising oil prices should theoretically support the CAD. Derivative traders should be cautious about assuming the petro-currency link will hold, as risk aversion is currently the dominant market force. Create your live VT Markets account and start trading now.

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EUR/USD traded near 1.1570 on Monday, up slightly as the US Dollar lost safe-haven demand. Markets steadied as fears around the Iran war eased. Ceasefire hopes reduced earlier risk-off flows into the Dollar. Reports referred to diplomatic efforts involving regional intermediaries.

Ceasefire And Strait Of Hormuz Developments

Donald Trump warned Iran that not reopening the Strait of Hormuz would bring severe consequences. He set a Tuesday deadline and said the US would destroy Iran’s power plants and bridges if the Strait stayed closed. Ceasefire reports softened the market impact of the ultimatum and helped limit further Dollar gains. This kept EUR/USD from moving sharply lower. US data added pressure on the Dollar, as the ISM Services PMI eased to 54 in March from 56.1 in February. The result was below expectations of 55. On the 4-hour chart, EUR/USD was at 1.1555, with a mildly bullish bias above the 20-period SMA and near the 100-period SMA. The RSI was near 54.

Technical Levels And Market Positioning

Support levels were 1.1538, then 1.1518 and 1.1506, while resistance stood at 1.1571. A move above 1.1571 could lift the pair, while a drop below 1.1538 could weaken the bias. We remember from last year’s tensions surrounding the Strait of Hormuz that the US Dollar’s safe-haven status can quickly fade when ceasefire hopes emerge. This taught us that the dollar weakens when the market perceives a de-escalation, a pattern we should watch closely with current events. Today, the EUR/USD is trading near 1.0850, and while geopolitical risks persist, the market seems less inclined to rush into the dollar without a direct and immediate threat. Similar to the weaker ISM Services PMI we saw in March of 2025, the latest reading for March 2026 also came in slightly below forecast at 51.5, signaling a continued moderation in the US economy. This makes it difficult for the Federal Reserve to justify a hawkish stance, especially with recent inflation data holding steady at 2.8%. This contrasts with the European Central Bank, which seems equally hesitant to cut rates amid its own persistent inflation, creating a policy balance that supports the Euro. With the pair holding a support base above the key 1.0800 level, a similar technical floor to the 1.1538 zone noted last year, derivative positioning should account for a potential move higher. One-month implied volatility for EUR/USD is currently subdued, hovering around 6.5%, making options strategies relatively inexpensive to implement. This suggests that buying call options or call spreads with strike prices above 1.0900 could be a cost-effective way to position for a gradual upward move. However, we must also consider the risk of a sudden spike in geopolitical tensions or a surprisingly strong US economic report. Historically, unexpected escalations, like the threats we saw in 2025, can cause volatility to surge and send the dollar sharply higher. Traders could hedge this risk by purchasing cheap, out-of-the-money put options to protect against a downside surprise. Create your live VT Markets account and start trading now.

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Sentiment in Asia-Pacific remains fragile as geopolitical risks and higher crude oil prices raise FX and equity volatility. Persistent foreign capital outflows are adding pressure to regional currencies and worsening equity market swings. March saw record foreign net selling in South Korea, Taiwan, and India. Several regional currencies have weakened as intervention activity rises. The Reserve Bank of India has tightened FX rules to limit Indian Rupee (INR) falls. Measures include caps on banks’ FX Net Open Positions and limits on onshore dealers offering INR non-deliverable forward (NDF) contracts. Indonesian Rupiah (IDR), Philippine Peso (PHP) and South Korean Won (KRW) are described as the most exposed, with currencies trading near all-time lows versus the US dollar. Ongoing outflows are linked to continued volatility. Positioning data show rising hedging demand. iFlow holdings indicate IDR and INR have moved from overheld to underheld, while Taiwan Dollar (TWD) remains deeply underheld. Underheld positions and outflows point to uneven performance, with currencies potentially lagging during risk-on periods. Terms-of-trade pressures remain a drag on parts of the region. Given the fragile sentiment in Asian markets, we should prepare for continued pressure on regional currencies. Brent crude holding stubbornly above $90 a barrel is tightening financial conditions and hurting the terms of trade for major oil importers. This external stress, combined with geopolitical uncertainty, makes defensive positioning a priority. Central bank intervention is becoming a major factor, creating unpredictable price swings. The Reserve Bank of India, for instance, has been actively selling dollars, with its foreign exchange reserves recently falling by over $5 billion in a single week to defend the rupee. These actions increase short-term volatility, making it costly to hold unhedged short positions but rewarding for those positioned for sharp, sudden movements. The Indonesian Rupiah, South Korean Won, and Philippine Peso are especially at risk, with the USD/IDR pair recently breaking above 16,200 for the first time in four years. The South Korean Won has also weakened past 1,370 per dollar, a level that has previously prompted verbal warnings from its finance ministry. This weakness confirms these currencies are on the front line of current market pressures. For derivative traders, this environment suggests that implied volatility in these currency pairs will likely remain elevated. Buying options can be more prudent than holding outright spot positions, as they provide defined risk against sudden policy-driven reversals. We should consider purchasing US dollar calls against a basket of the IDR, PHP, and KRW to position for further depreciation. Positioning data confirms these currencies have moved from overheld to significantly underheld, suggesting that foreign investors are still exiting. This lack of ownership means these currencies may fail to rally strongly even if broader market sentiment improves. Therefore, selling into any strength could be a viable strategy over the coming weeks. We saw this pattern last year, when March 2025 saw record foreign net selling in key markets like South Korea and India. The fact that capital outflows are persisting a year later indicates a deep-seated structural vulnerability. This historical precedent reinforces our view that further weakness is more likely than a sustained recovery.

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EUR/USD traded near 1.1570 on Monday as the US Dollar lost support from safer-market demand. Ceasefire hopes around the Iran conflict reduced the need for defensive positioning. Diplomatic efforts, said to involve regional intermediaries, helped calm markets and eased concerns about the Strait of Hormuz. This offset earlier demand for the Dollar and limited further USD gains.

Geopolitical Risks And Market Sentiment

President Donald Trump warned that if the Strait of Hormuz is not reopened by his Tuesday deadline, there would be severe consequences. He also threatened to destroy Iran’s power plants and bridges. US data also weighed on the Dollar. The ISM Services PMI eased to 54 in March from 56.1 in February, below forecasts of 55. On the 4-hour chart, EUR/USD was around 1.1555, holding above the 20-period SMA and testing the 100-period SMA area. The 20-period SMA turned up above 1.1540, while the RSI near 54 stayed above 50. Support levels are 1.1538, then 1.1518 and 1.1506. Resistance is at 1.1571, with a move above it pointing to further gains.

Looking Back To Early 2025

We saw a similar dynamic play out in early 2025, where hopes of a ceasefire temporarily weakened the US dollar and pushed EUR/USD toward 1.1570. That situation was a classic example of how a shift from risk-off to risk-on sentiment can directly impact major currency pairs. The market’s reaction then provides a useful playbook for the environment we see today. However, the fundamental picture is quite different now in April 2026, with EUR/USD currently trading much lower, around 1.0865. While we are seeing some diplomatic easing of tensions in the Red Sea, strong U.S. economic data is providing a solid floor for the dollar. For instance, the latest U.S. Services PMI for March 2026 came in at a robust 53.4, far outpacing the Eurozone’s reading of 51.5 and contrasting with the weak data seen in 2025. This economic divergence makes it difficult for the euro to gain traction in the same way it did in the past. The significant interest rate differential, with the Federal Reserve’s key rate at 4.75% versus the European Central Bank’s 3.50%, also makes holding long euro positions costly. This underlying yield advantage for the dollar will likely cap any rallies driven by sentiment alone. For derivative traders, this suggests that selling volatility could be an attractive strategy. With the MOVE Index, a measure of bond market volatility, having recently fallen to its lowest level since February, the market is not pricing in major shocks. Selling out-of-the-money call options on EUR/USD could allow traders to collect premium while betting that the fundamental headwinds will prevent a significant breakout above the 1.0980 resistance level. Alternatively, traders expecting a return to dollar strength could look at buying cheap put options. Any failure of the EUR/USD to break higher on positive geopolitical news could be a signal that the underlying bearish trend is reasserting itself. A break below the key 1.0800 support level could trigger a faster move down, making put options a low-cost way to position for that scenario. Create your live VT Markets account and start trading now.

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Rising geopolitical risks and higher crude oil prices are driving greater FX and equity volatility across APAC. Foreign capital outflows are weakening regional currencies and adding to equity market swings, with sentiment described as fragile. March recorded foreign net selling in South Korea, Taiwan, and India. Several regional currencies are near all-time lows versus the US dollar, including the Indonesian rupiah (IDR), Philippine peso (PHP), and South Korean won (KRW).

Central Banks Tighten Market Access

The Reserve Bank of India (RBI) tightened FX rules to limit depreciation of the Indian rupee (INR). Measures include caps on banks’ FX Net Open Positions and limits on onshore dealers offering INR NDF contracts. Positioning data show rising hedging demand. iFlow holdings indicate IDR and INR moved from overheld to underheld, while the Taiwan dollar (TWD) remains deeply underheld. The article links underheld positions and ongoing outflows to continued volatility. It also notes that some currencies may underperform during risk-on phases due to weaker terms of trade. The report states it was produced using an AI tool and reviewed by an editor.

Volatility Strategies For Apac Markets

Sentiment in Asia-Pacific markets remains fragile, driven by elevated oil prices and persistent geopolitical risk. With Brent crude recently trading above $95 per barrel, we see continued pressure on energy-importing nations and their currencies. This environment favors strategies that profit from rising market volatility, such as buying straddles or strangles on the most exposed currency pairs. We are seeing significant capital flight from the region, underscored by the record foreign net selling in South Korean equities during March 2026, which exceeded $7 billion. This mass exit supports using derivatives to hedge or establish short positions in regional equity indices. For traders, buying put options on benchmarks like the KOSPI 200 offers a direct way to position for further outflows. The Reserve Bank of India’s recent macroprudential tightening, including its crackdown on certain derivative contracts, shows that central banks are becoming less tolerant of speculation. This intervention risk can cause sharp, unpredictable reversals, making longer-dated options a more prudent tool than short-term futures. Traders should be cautious, as policy announcements can trigger sudden squeezes. The Indonesian Rupiah, now trading near 16,550 against the dollar, and the Korean Won, above 1,410, remain the most vulnerable currencies, touching levels not seen since the turbulence of 2022. This is a sharp reversal from the relative stability we saw for much of 2025. We believe buying US dollar call options against these currencies is a sound strategy to gain exposure to further weakness while defining risk. Positioning data confirms that investors have already sold down their holdings in the Indian Rupee and Indonesian Rupiah, leaving them in underheld territory. This suggests these currencies will lag even if global risk appetite improves, as there are few forced buyers left. We advise traders to use any strength in these currencies as an opportunity to initiate fresh short positions. Create your live VT Markets account and start trading now.

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Gold prices held on to mild gains on Monday as the US Dollar softened on improved risk mood. XAU/USD traded near $4,684 after hitting an intraday low around $4,600. Axios reported talks on a possible 45-day ceasefire involving the US, Iran and regional mediators, citing four US, Israeli and regional sources. Reuters said a two-step plan has been sent to Washington and Tehran, could start as early as Monday, and may reopen the Strait of Hormuz.

Ceasefire Talks And Market Reaction

Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said Tehran has prepared its diplomatic response and will announce it later. Donald Trump said the US could strike power plants and other civilian infrastructure if the Strait is not reopened and no deal is reached by Tuesday at 8:00 p.m. Eastern Time. Oil prices eased from recent highs but stayed above pre-war levels, keeping inflation and growth concerns in view. Markets increasingly expect central banks, led by the Fed, to keep rates higher for longer or raise them, which limits gold’s upside. The ISM Services PMI for March was 54, down from 56.1 and below 55 expected. This week includes CPI and PCE data, after last week’s stronger-than-expected NFP report. Technically, gold is trying to hold above the 100-day SMA at 4,654, with 4,800 then the 50-day SMA near 4,944. A drop below 4,654 may open 4,350 and then 4,100, while RSI sits just under 50 and MACD is turning up.

Key Battleground Levels For Gold

The current situation presents a classic dilemma for us. Ceasefire talks are dampening the safe-haven appeal of gold, but the resulting weakness in the US Dollar is providing support. Gold holding above the 100-day moving average at $4,654 is the critical battleground for now. Uncertainty over a final deal suggests volatility will be a key theme in the coming weeks. While the VIX has fallen from its war-time highs above 30, it remains near 22, signaling that options markets are still pricing in sharp potential moves. This makes strategies like straddles or strangles attractive to play either a breakout or a period of calm if a deal is signed. Beyond the headlines from Iran, we must focus on the persistent inflation risk, which is being fueled by elevated oil prices. Fed funds futures now show a 40% chance of a rate hike by June, a stark increase from last month. This week’s CPI and PCE data will be pivotal in determining whether the Fed’s hawkish stance will cap gold’s upside. For those anticipating a successful ceasefire and a weaker dollar, call options with a strike price above the $4,800 resistance level could offer significant leverage. Conversely, if we believe hot inflation data will dominate, buying puts with a strike below the $4,654 support could prove profitable. The key is to position for the market’s next major catalyst. We should recall the market’s behavior during similar geopolitical de-escalations in 2025. An initial sell-off in safe-haven assets was often short-lived as the market’s focus quickly shifted back to underlying economic data like inflation. This historical pattern suggests any peace-driven dip in gold could be a buying opportunity if inflation remains a primary concern. Create your live VT Markets account and start trading now.

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