WTI crude oil moved lower on Tuesday after earlier gains, as traders assessed the US-Iran war and supply disruption risks linked to the Strait of Hormuz. WTI was about $94.85 at the time of writing, down from a daily high of $97.63. Iran has continued to target energy infrastructure around the Persian Gulf, adding to pressure on global supply. The conflict has shown no clear move towards de-escalation.

Strait Of Hormuz Risks

Attention remains on shipping through the Strait of Hormuz, where limited flows have continued. China, India, Pakistan and Türkiye are securing or seeking passage for vessels through talks with Iran, while France and Italy are also in discussions. IEA Executive Director Fatih Birol said global energy trade will take time to recover and that the agency is ready to release more stockpiles if needed. Iran’s Foreign Minister Abbas Araghchi said the Strait would be closed only to “enemies and those supporting their aggression”, according to SNNnews. US President Donald Trump asked allied nations that rely on the route to help secure the Strait and send warships, but several key allies declined. IMO Secretary-General Arsenio Dominguez said escorts would not “100 per cent guarantee” ship safety and that military support is “not a long-term or sustainable solution”, according to the Financial Times. Given the market’s memory of the US-Iran conflict in 2025, we see that WTI prices remain sensitive to any geopolitical stress in the Persian Gulf. The rally to nearly $98 a barrel back then established a psychological ceiling, and the current price of around $88 reflects a lasting risk premium. Traders should therefore view any dips as potential buying opportunities, but with caution, as the market proved it has priced in significant disruption before. The Strait of Hormuz remains the world’s most critical oil chokepoint, with recent data showing over 21 million barrels per day still passing through the narrow waterway. This represents nearly a fifth of total global oil consumption, a fact that underpins the market’s anxiety. Even small naval drills or aggressive rhetoric from the region can now trigger a sharp increase in short-term volatility, a lesson we learned well in 2025.

Options And Volatility Strategies

In the coming weeks, we should focus on volatility as a tradable asset rather than just directional price moves. The CBOE Crude Oil Volatility Index (OVX) is trading in the low 30s, which is historically elevated and reflects the market’s nervousness since the 2025 conflict. Buying straddles or strangles on WTI futures could be a prudent way to capitalize on the sharp price swings that are likely to accompany any new developments. We should also consider using call option spreads to play any potential upside from renewed tensions. This strategy allows for profit if prices rise but defines the risk, which is critical given how quickly the situation de-escalated after peaking in 2025. The IEA’s confirmed readiness to release strategic reserves now acts as a powerful brake on runaway price spikes, making defined-risk strategies more appealing than buying outright calls. Recent reports from the EIA project global oil demand will grow by a steady 1.1 million barrels per day this year, driven by consumption in Asia. This solid demand backdrop means any perceived threat to supply will have an amplified effect on prices. We should therefore pay close attention to shipping insurance rates for tankers transiting Hormuz, as a sudden spike would be a leading indicator of trouble and a signal to adjust positions accordingly. Create your live VT Markets account and start trading now.

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Silver fell nearly 2% on Tuesday to $79.13 per troy ounce after a daily high of $82.56, despite a softer US dollar and lower US Treasury yields. It is down 1.81% on the week. Higher crude oil prices and ongoing Middle East tensions raised inflation concerns, which weighed on metals. Israel reported killing Iran’s security chief as hostilities moved into a third week.

Inflation And Data Watch

US data showed the ADP Employment Change 4-week average eased from 14.75K to 9K, while Pending Home Sales for February rose 1.8% month on month after a 1% fall in January, beating expectations of -0.5%. The Dollar Index fell 0.15% to 99.68 and the US 10-year yield slipped by 2 basis points to 4.198%. Central bank policy remained in focus after the Reserve Bank of Australia raised rates by 25 bps. The Bank of Canada and the Federal Reserve are expected to keep rates unchanged, with more decisions due from the European Central Bank and the Bank of England. Technically, the price sits below the 50–200-day moving averages and the RSI is near 44, with resistance at $82.00–$83.00 and $86.50–$87.50. Support is seen at $78.00, then $73.50. Given the current market dynamics, we see silver’s weakness as a direct result of inflation fears fueled by higher oil prices, which have now climbed to over $95 per barrel. February’s CPI data, which came in hotter than expected at 3.4%, is forcing the market to price in a more hawkish Federal Reserve, overshadowing the normally positive influence of a weaker dollar. This suggests the market’s focus has shifted entirely to inflation and its impact on future monetary policy.

Options Positioning Ideas

The bearish momentum is clear, and with the price below key moving averages, further downside seems likely. We are looking at the $78.00 level as the first critical test, a support zone that was established during pullbacks in 2025. Traders should consider buying put options with strike prices around $75 to capitalize on a potential break of this immediate support. The conflicting signals between a weak dollar and inflation fears have pushed implied volatility on silver options to a 12-month high of 45%. This environment is ideal for strategies that profit from large price swings, regardless of direction. We believe purchasing a long straddle, buying both a call and a put option with the same strike price and expiration, could be an effective way to trade this uncertainty. However, we are also watching the Gold/Silver ratio, which has widened to over 100:1, a level historically suggesting that silver is undervalued relative to gold. For those looking for a contrarian play, this could be an opportunity to buy far out-of-the-money call options for a low premium. A shift in market sentiment back towards precious metals as a haven could cause this ratio to revert sharply. For traders already holding long silver positions, the current weakness is a serious threat. Despite the US Dollar Index slipping further to 99.45, it is not providing any support, making it a deceptive indicator at this time. We advise implementing protective collars by selling a covered call to finance the purchase of a put option, shielding the position from a potential slide towards the deeper $73.50 support zone. Create your live VT Markets account and start trading now.

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GBP/USD traded near 1.3350 on Tuesday and stayed on an upward path. The move came as market participants reduced exposure to the US Dollar ahead of the Federal Reserve policy decision on Wednesday. Attention is also on upcoming Bank of England decisions. Traders are watching how Fed and BoE policy signals may affect the pair. We recall that period in March 2025 when sentiment for the pound was bullish against the dollar, pushing the pair toward the 1.3350 level ahead of central bank meetings. The market was anticipating a favourable outcome for sterling from the Bank of England (BoE). However, the Federal Reserve’s subsequent hawkish stance proved stronger, causing the pair to retreat from those highs throughout the second quarter of 2025. Fast forward to today, March 17, 2026, the situation presents a different dynamic for traders. The UK’s latest CPI data came in stubbornly high at 3.4%, well above the BoE’s target, while recent US inflation has cooled to 2.9%. This divergence is putting pressure on the Bank of England to maintain its restrictive policy for longer than the Federal Reserve. This policy difference suggests potential upside for GBP/USD from its current level of around 1.2850. Derivative traders should consider positioning for pound strength, as the market is now pricing in a 65% chance of a Fed rate cut by September while expecting the BoE to hold rates steady. A viable strategy could be buying GBP/USD call options with strike prices around 1.3000 to capture potential gains if this policy divergence continues. Traders should also note the elevated implied volatility in the options market, which currently stands at 9.8% for 3-month contracts. This indicates that the market is expecting significant price swings around upcoming data releases and central bank announcements. Therefore, while buying calls offers defined risk, the higher premiums must be factored into any strategy’s potential profitability.

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Statistics Canada’s National Balance Sheet Accounts for Q4 show Canadian household net worth rose 5.8% in 2025, reaching a record high. Total assets grew 5.6% year on year, while household credit increased 4.4%, similar to 2024. Real estate assets fell 0.2% in 2025, the second weakest result on record after 2022. Financial assets rose faster, driving the overall growth in household wealth. Financial assets increased 10.5% in 2025, after a 10.4% rise in 2024, the strongest growth in 15 years. The S&P/TSX returned 31.7% in total, with support from higher gold prices. The data cover a year marked by tariff uncertainty and policy changes. Bank of Canada interest rate cuts and federal tax reductions were in place during 2025, alongside strong financial market performance. The report states the article was produced with the help of an AI tool and reviewed by an editor. Looking back at 2025, we saw a massive 5.8% surge in Canadian household net worth, driven almost entirely by financial assets. The S&P/TSX delivered a stunning 31.7% total return, creating a significant wealth effect that is still being felt. This backdrop of high consumer confidence from last year sets the stage for our current market environment. That wealth effect appears to be translating into real spending, as January 2026 retail sales data showed a surprisingly strong 1.5% jump, far exceeding forecasts. This suggests continued strength in consumer discretionary sectors. We should therefore consider buying call options on ETFs tracking consumer-focused industries or specific retail giants that may continue to benefit from this elevated spending power. A key divergence last year was the disconnect between soaring financial assets and a weak housing market, which saw a 0.2% decline. However, recent data from the Canadian Real Estate Association for February 2026 showed national home sales ticked up for the first time in five months, hinting at a potential floor. This could signal a good time to look at call options on major Canadian banks, which would benefit from any renewed mortgage activity. After such a strong 2025, the S&P/TSX has been mostly flat through the first quarter of this year, suggesting the market is digesting last year’s gains. Coupled with the Bank of Canada’s recent statements in February signaling a pause on further rate cuts, we can expect volatility to increase. Now is an opportune moment to purchase options that profit from market chop, such as straddles on the S&P/TSX 60 index, to capitalize on any significant move. Gold was a major support for the TSX’s performance in 2025, and with the central bank now on hold and the equity rally stalled, its appeal as a hedge could grow. Historically, gold performs well during periods of market uncertainty and policy transition. We should analyze call options on gold mining stocks, which provide leveraged exposure to any further strength in bullion prices in the coming weeks.

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US President Donald Trump said the US had been told by most NATO allies that they do not want to take part in a US military operation in Iran. He wrote this in a post on Truth Social on Tuesday. He said the US no longer needs or wants assistance from NATO countries. He also said the US no longer needs support from Japan, Australia, or South Korea.

Expected Spike In Market Volatility

We should anticipate a significant spike in market volatility in the coming weeks. The CBOE Volatility Index (VIX), which is currently hovering around 18, could easily surge above 30 as uncertainty grows. We saw the VIX jump over 25% in a matter of days in early 2020 after similar tensions flared, so buying VIX call options is a direct way to position for this. This news is immediately bullish for crude oil prices due to the risk of supply disruptions. About one-fifth of the world’s oil supply passes through the Strait of Hormuz, making any conflict in the region a major threat to global energy markets. We should consider long-dated call options on Brent or WTI crude futures, recalling how Brent futures surged past $70 a barrel in January 2020 on fears of a wider conflict. Gold is the most obvious safe-haven asset in this scenario. With gold already trading above $2,500 an ounce this year, this new uncertainty provides a strong catalyst for a move towards new highs. Historically, gold has proven to be a reliable hedge during Middle East conflicts, and we should look at call options or futures to gain exposure.

Equity And Currency Risk Off Positioning

We must prepare for a sell-off in broad equity markets like the S&P 500. The index dropped nearly 7% in the two weeks following the start of the Ukraine conflict in February 2022, and this situation could provoke a similar risk-off reaction. Buying put options on the SPY or QQQ ETFs is a prudent defensive or speculative strategy. In currency markets, we expect capital to flow into traditional safe havens like the Japanese Yen and Swiss Franc. At the same time, the South Korean Won and Australian Dollar could come under pressure due to the explicit distancing from key Asian allies. A long position in the USD/KRW pair or buying puts on the AUD/USD pair could be effective ways to trade this divergence. Create your live VT Markets account and start trading now.

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The United States sold 52-week Treasury bills at an auction rate of 3.485%. This was up from the previous auction rate of 3.345%. The change means the government borrowed for one year at a higher yield than before. The rise from 3.345% to 3.485% is an increase of 0.140 percentage points.

Higher For Longer Rates

The recent rise in the 52-week bill yield to 3.485% suggests the market is pricing in higher interest rates for longer. This move follows last week’s February 2026 Consumer Price Index report, which showed core inflation at 3.1%, failing to cool as quickly as anticipated. We believe this signals that Federal Reserve rate cut expectations for the summer may now be premature. For those trading interest rate futures, this shift is critical. The probability of a May 2026 rate hike, according to the CME FedWatch tool, has now jumped to over 40%, a significant repricing from the 15% chance we saw just last month. This environment may favor strategies that profit from rising yields, such as buying puts on Treasury bond ETFs like TLT. In equity markets, higher rates pressure valuations, especially for growth and technology stocks. The NASDAQ 100 has already seen a 2% pullback since the auction results, as higher borrowing costs impact future earnings projections. We are seeing increased buying of short-term put options on major indices as a hedging strategy. This situation is reminiscent of what we observed throughout 2022, when persistent inflation forced the Fed’s hand and led to a rapid repricing of risk assets. Looking back from our 2025 vantage point, that period showed how quickly sentiment can turn against equities when the “risk-free” rate becomes more attractive. This time, the CBOE Volatility Index (VIX) has already climbed to 19, up from 15 just two weeks ago, indicating growing market anxiety.

Dollar Strength Continues

The strengthening U.S. interest rate outlook is also boosting the dollar. The U.S. Dollar Index (DXY) has broken through the 105.50 resistance level as capital flows into higher-yielding American assets. Currency traders should watch for continued dollar strength, particularly against currencies whose central banks are expected to ease policy sooner. Create your live VT Markets account and start trading now.

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New Zealand’s Global Dairy Trade (GDT) Price Index fell to 0.1%, down from 5.7% previously. The update shows a sharp slowdown in price growth compared with the prior reading. No further figures or breakdowns were provided in the release snippet. We are viewing this sharp deceleration in the GDT Price Index as a clear signal that the recent upward momentum in dairy prices has stalled. This abrupt halt from strong growth to a flat reading suggests a potential peak, warranting a shift to more defensive or bearish strategies. The coming weeks will be crucial to see if this is a temporary pause or the beginning of a downward trend. Given this data, we are adjusting our positions on New Zealand Dollar futures and options. The NZD is highly sensitive to dairy prices, and this report removes a key pillar of support for the currency. We anticipate the NZD/USD cross to face downward pressure, especially since February 2026 import data from China showed a 4% decline in whole milk powder purchases, signaling softening demand from the largest buyer. This prompts us to consider buying put options on dairy-related equities like the Fonterra Shareholders’ Fund (FSF.NZ). The dramatic slowdown in price growth will almost certainly lead analysts to revise earnings forecasts downward. We remember the volatility in late 2025 when a similar, though less severe, slowdown prompted a sharp 5% correction in the NZD over the subsequent month. The market for whole milk powder (WMP) futures on the NZX will likely see increased selling pressure. Traders who were previously long will now be looking to take profits or hedge their physical holdings against a potential price drop. We are looking for entry points to establish short positions, anticipating that the index could turn negative in the next auction. This flat reading also changes our outlook on the Reserve Bank of New Zealand’s next move. Any pressure to hike rates due to commodity-driven inflation has now significantly eased. Swap markets are already reflecting this, pricing in a near-zero chance of a rate hike in the second quarter of 2026.

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EUR/GBP traded near 0.8640 on Tuesday and was almost flat on the day, as markets waited for European Central Bank (ECB) and Bank of England (BoE) policy decisions due on Thursday. The ECB is expected to keep its deposit rate at 2%. Money markets still price in the chance of a rate rise by mid-year, with attention on inflation risks linked to geopolitical tensions. The BoE is also expected to hold its key rate at 3.75% amid economic uncertainty. Markets are watching for any signal that policymakers remain focused on inflation, including risks from higher energy prices. UK labour market figures are also due on Thursday. The ILO unemployment rate is forecast to edge up to 5.3%, and the result could affect expectations for future policy moves. The euro has been helped by lower oil prices, which can reduce import costs for the Eurozone. Reports of tankers crossing the Strait of Hormuz and talk of possible strategic reserve releases have reduced near-term supply concerns. EUR/GBP has stayed range-bound while traders wait for clearer central bank guidance. A correction noted that the UK unemployment forecast is 5.3%, not 5.2%. With EUR/GBP trading in a tight range around 0.8640, we see this as a period of building pressure ahead of Thursday’s central bank meetings. Derivative traders should view this sideways market not as a lack of opportunity, but as a chance to position for the volatility that is likely to follow. The low daily movement suggests implied volatility on short-term options may be relatively cheap before the announcements. The risk for the Euro is skewed to the upside, despite the European Central Bank being expected to hold rates. The February 2026 inflation print for the Eurozone came in at 2.6%, still stubbornly above the ECB’s 2% target, giving hawks like Peter Kazimir a reason to push for future tightening. Traders could consider buying near-term EUR/GBP call options to position for a surprisingly hawkish tone from the ECB. For the Bank of England, the challenge is balancing persistent inflation with a fragile economy. With UK wage growth still elevated at 6.1% in the latest data from early 2026, the Bank of England has little room to sound dovish, even if they keep rates at 3.75%. A firm, anti-inflationary message could strengthen the pound, making EUR/GBP put options an effective way to prepare for a downside move. The UK unemployment data, due before the central bank decisions, is an important initial catalyst. A reading below the forecasted 5.3% would likely boost the pound and could trigger an early move downwards in the currency pair. This data release provides a specific event to trade around, potentially using short-duration options that expire shortly after the release. Given the uncertainty in direction but the high probability of a sharp move, a long straddle or strangle strategy on EUR/GBP is a logical approach. By purchasing both a call and a put option with the same expiry date, traders can profit whether the pair breaks significantly higher or lower following the central bank announcements. This strategy directly plays the expected increase in volatility. We only need to look back to the second half of 2025 to see how divergent central bank commentary created sharp, multi-week trends in the pair. On several occasions, one bank holding firm while the other hinted at a pivot caused moves of over 150 pips in a single week. History suggests that when these two central banks meet on the same day, complacency can be a costly mistake. As implied volatility will likely rise heading into Thursday, the cost of buying options will increase. To manage this, traders could use debit spreads, such as a bull call spread or a bear put spread, instead of buying options outright. This approach caps potential profit but significantly lowers the upfront cost and risk, offering a more controlled way to express a directional view.

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An earlier outlook on the S&P 500 was set when the index traded near 6,746 and pointed to a bearish wave structure. The index then fell from about 6,746 towards the 6,600 area, matching the projected Elliott Wave path. From a broader high near 7,011, the index is described as forming a complex corrective pattern. The structure is labelled W/A – X/B – Y/C, with the final C wave still possible.

Key Levels And Downside Map

If the index holds below 6,575, further downside is mapped towards 6,494 as a key reference level. This view depends on the corrective pattern continuing. Two routes are tracked next. One is a direct, impulsive fall towards the downside targets; the other is a sideways phase, such as a flat or triangle, before another drop. The approach focuses on following pre-set scenarios and adjusting to price action as it develops. Further chart detail is provided in the related video. We have been tracking the S&P 500’s decline from the 6746 level, and the recent move toward 6600 has followed our expected path. This reinforces the bearish bias we identified earlier, suggesting more weakness is ahead. The market is reacting to last week’s inflation data, which came in at a stubborn 3.5% year-over-year for February, dashing hopes for any near-term rate cuts from the Federal Reserve.

Trading Paths And Strategy

The broader structure points to a complex correction from the high near 7011, and we believe the final C-wave down is still developing. This view is supported by slowing economic growth, with final Q4 2025 GDP figures showing a revision down to 1.2% and major corporations guiding earnings lower for the first half of this year. We are now watching for a sustained break below the 6575 support level to confirm the next leg down. For traders anticipating this drop, buying put options on the SPY or SPX provides a direct way to position for a move toward our 6494 target. A decisive break of 6575 would be the signal to consider adding to these bearish positions. Looking back at similar setups in 2022, a failure to hold a key technical level often preceded a rapid decline. We also see rising market fear, with the VIX climbing from its 2025 lows to trade consistently above 20 in recent weeks. This suggests traders are increasingly buying protection against a significant downturn. Derivative traders can use VIX call options or strategies like put debit spreads on the S&P 500 to capitalize on both the downward direction and the expected increase in volatility. If strong bearish momentum takes hold, we could see a sharp, impulsive decline directly toward the 6494 area. This scenario is becoming more likely as weekly jobless claims have ticked up for the third consecutive week, suggesting the strong labor market of 2025 is finally beginning to soften. In this case, shorter-dated puts could offer significant returns if the move accelerates. Alternatively, the market might enter a sideways consolidation period above 6575 before the next major drop. This chop would likely frustrate purely directional bets but could be an opportunity to sell call credit spreads with strike prices well above recent highs, like 6800. This strategy allows for collecting premium as the market either drifts sideways or slowly bleeds lower. Create your live VT Markets account and start trading now.

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EUR/USD rose modestly on Tuesday and stayed supported after a bullish reversal on Monday. The move continued in the North American session as the pair extended a sentiment-led recovery. Germany’s ZEW investor sentiment survey came in well below expectations. The survey is described as a leading indicator for industrial production by about 12–18 months.

Market Sentiment Drives Price Action

Despite the weak ZEW result, EUR/USD showed little reaction, with sentiment remaining the main driver. Market attention instead shifted to rates, with the US 2-year yield remaining quiet and leaning towards a further bearish turn. In Germany, the bund reacted to the ZEW release after Friday’s hanging man doji pattern, which is a bearish reversal candle formation. Yield spreads were described as elevated, providing support for the euro. Options pricing also pointed to caution, as risk reversals showed a premium for protection against euro weakness. Near-term direction was linked to whether broader market tone continues to improve, allowing EUR/USD to retrace its recent geopolitically driven fall. The Euro is gaining against the dollar, building on Monday’s strong reversal in a move that appears well supported. This bullishness is being driven by market sentiment rather than fundamentals, as traders are largely ignoring weak economic signals. For example, Germany’s ZEW investor sentiment survey for March came in at 15.2, falling significantly short of the 20.5 that was expected, yet the currency held its ground.

Bond Yields And Options Signal Caution

We are watching the bond markets closely, as they seem to be the key driver of this move. While the US 2-year Treasury yield is currently much higher at around 4.6% compared to the German 2-year bund at 2.9%, the market is anticipating this gap will shrink. The prevailing view is that US yields are poised for a bearish turn, which would reduce the dollar’s yield advantage and support the EUR/USD pair. Looking back, this recovery appears to be retracing the sharp decline we saw late last year. That drop was largely fueled by the flare-up in geopolitical tensions during the fourth quarter of 2025. As those specific fears have subsided, market sentiment has improved, allowing the Euro to claw back some of its losses. For derivative traders, this environment could favor strategies that benefit from a rising or stable EUR/USD, such as selling out-of-the-money put options to collect premium. However, caution is warranted, as risk reversals still show a meaningful premium being paid for options that protect against Euro weakness. This indicates that while the immediate mood is positive, larger players remain hedged against a potential reversal. Create your live VT Markets account and start trading now.

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