About 3 weeks ago, the article described a bullish outlook on Google using an Elliott Wave approach. It noted three waves down from the February highs, then a breakout above a downward channel after a reaction from a yellow-box support zone.

It then reports a strong rise, with the price now trading at new highs. It adds that some traders may take profits or move stop levels higher due to uncertainty about how far the rise may run.

On the updated chart, it says there is still scope for a retest of the upper line of the impulsive channel, around 380, if the Elliott Wave structure holds. It also says there could be a near-term pullback towards 330 as first support, particularly ahead of earnings.

It references a recorded live webinar streamed on 27 April for further detail.

We are looking at a very similar setup to the one we saw this time last year, when our Elliott Wave view correctly anticipated a strong rally in the spring of 2025. That breakout from the channel did indeed propel the stock higher, eventually testing the $380 target zone we had outlined in the following months. The near-term pullback to $330 that we thought was possible ahead of the 2025 earnings report was very shallow, as a strong report ignited another leg up.

Fast forward to today, the stock is up over 18% year-to-date and trading near $415, putting us in a familiar position of strength right before an earnings release. Implied volatility is currently elevated at 55%, placing it in the 78th percentile for the last twelve months and making options premium expensive. This high cost suggests a significant “volatility crush” is likely after the numbers are out, which could hurt traders who simply buy puts or calls.

For traders who remain bullish and expect another positive surprise, selling an out-of-the-money put credit spread for the upcoming May expiration could be a sound strategy. This allows you to capitalize on the rich premium and gives you a cushion if the stock pulls back modestly. A defined-risk trade like this is often more prudent than buying expensive call options right before a major news event.

Given the strong rally, some caution is certainly justified, and trailing stops on any long positions is a sensible defensive move. Recent options data shows a notable increase in open interest for puts expiring next month, indicating that some traders are actively buying protection. Therefore, a neutral strategy like an iron condor could be effective, designed to profit from the expected drop in volatility as long as the stock stays within a specific price range post-earnings.

TD Securities said incoming Fed Chair Kevin Warsh supports new inflation tools, such as trimmed mean measures and a possible big-data price project. The firm said these additions are unlikely to change the near-term policy path.

It said Fed officials already track a wide range of inflation and economic indicators. It added that rate cuts would still need clear proof that underlying inflation is returning to normal.

Policy Easing Bar Remains High

TD Securities said the hurdle for easing policy soon remains high. It also said some forces keeping inflation elevated may be temporary.

It said the most likely Fed stance for now is to keep rates on hold. It expects enough evidence by the September FOMC meeting for the Fed to start cutting rates and move gradually towards a neutral setting.

Even with new inflation tools on the horizon, the Federal Reserve’s path of least resistance is to wait. For traders, this signals that betting on rate cuts in the next couple of months is a risky proposition. We believe the Fed will stay in a holding pattern until there is undeniable proof that inflation is normalizing.

This cautious stance is supported by recent data, as the latest Consumer Price Index report for March 2026 showed headline inflation still elevated at 3.1%, driven by persistent services and shelter costs. This makes it difficult for the Fed to justify easing policy soon. The market is now pricing in less than a 20% chance of a rate cut before the September meeting.

Market Implications For Traders

Looking back to late 2025, many of us were expecting cuts to begin by the summer of 2026, but that timeline has shifted. The strong March 2026 jobs report, which added a solid 240,000 jobs, further solidified the case for patience. Therefore, the focus for the coming weeks should be on a Fed that is on hold.

Given this expected stability, volatility may remain low in the near term, with the VIX index hovering around 14. This environment could favor strategies like selling short-dated options to collect premium, as a sudden policy shift appears unlikely before late summer. However, any unexpected inflation or employment data could quickly disrupt this calm.

For interest rate derivatives, the play is to look further out on the calendar. Traders might consider positions that reflect a cut around the September meeting, rather than in June or July. This could involve using options on SOFR futures to target the fourth quarter for a potential policy pivot.

In the equity markets, a “higher for longer” stance from the Fed acts as a headwind for growth. A prudent approach would be to use derivatives for defensive positioning. This might include buying protective puts on broad market indices to hedge long portfolios against any downside if the market grows impatient with the Fed’s delay.

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US consumer sentiment edged up in April, as the Conference Board’s Consumer Confidence Index rose to 92.8 from 92.2 in March.

The Present Situation Index fell by 0.3 points to 123.8, based on views of current business and labour market conditions.

Shifting Expectations And Market Implications

The Expectations Index increased by 1.2 points to 72.2, reflecting the short-term outlook for income, business, and labour market conditions.

Markets showed little reaction to the release. At the time of press, the US Dollar Index was up 0.25% on the day at 98.74.

Looking back at this time last year, in April 2025, we saw a small rise in consumer confidence. The important signal, however, was the growing gap between how people felt about the present and their worries about the future. This split foreshadowed the economic slowdown we experienced in the later half of 2025.

Today, that cautious outlook from last year seems justified, with recent data showing GDP growth slowing to 1.6% in the first quarter of 2026. At the same time, we’re still battling a stubborn core CPI that has hovered around 3.1%, putting the Federal Reserve in a difficult position. This situation creates significant uncertainty for the market’s direction over the next few months.

Positioning For Volatility And Downside Risk

This uncertainty is reflected in the CBOE Volatility Index (VIX), which has been trading in a higher range, recently averaging near 19. For the coming weeks, we see opportunities in strategies that benefit from price swings, such as purchasing straddles or strangles on major indices like the S&P 500. These positions can be profitable whether the market moves sharply up or down on the next inflation report or Fed announcement.

Given the continued weakness in consumer expectations, hedging against a downturn in consumer spending remains a prudent move. We are considering buying put options on consumer discretionary ETFs, which could provide downside protection if retail sales data comes in weaker than expected. This acts as a relatively low-cost insurance policy against a further softening in the economy.

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The Richmond Fed Manufacturing Index for the United States came in above expectations in April. Forecasts had pointed to -4.

The index recorded an actual reading of 3. This is higher than the previous expectation by 7 points.

Implications For Fed Policy Expectations

The April Richmond Fed manufacturing number coming in at 3 against an expected -4 is a significant surprise. This positive reading suggests regional economic activity is more resilient than we had anticipated. This unexpected strength will likely force a re-evaluation of the timing for any potential Federal Reserve rate cuts this year.

This kind of surprise data increases uncertainty, which is fuel for market volatility. We should anticipate a rise in the VIX from its recent lows around 15 as the market reprices economic expectations. Traders may consider buying short-term call options on the VIX or establishing straddles on major indices to profit from bigger price swings in the coming weeks.

We are already seeing the impact in the bond market, with the 10-year Treasury yield jumping 10 basis points to 4.65% this morning. This move suggests that futures traders are pushing back bets on a summer rate cut. This reinforces the “higher for longer” interest rate narrative that has been building.

Looking back, we saw a similar situation in the third quarter of 2025 when a string of strong regional surveys delayed an expected Fed pivot. Those events led to a sharp, short-term correction in rate-sensitive equities. This historical precedent suggests we should be cautious about being overly exposed to sectors like utilities and real estate right now.

The CME FedWatch Tool reflects this shift in sentiment almost immediately. The probability of a rate cut by the July 2026 meeting has now plummeted from over 60% last week to just around 35%. Derivative positions built on the assumption of a near-term cut must be hedged or reconsidered quickly.

Trade Positioning And Risk Management

Given this data points to manufacturing strength, we should look at call options on industrial and materials sector ETFs. Conversely, if we believe the market is overreacting to a single regional report, this could be an opportunity to sell premium. Selling out-of-the-money puts on bond funds like TLT could be a viable strategy if we expect yields to stabilize.

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The Bank of Japan kept its policy rate at 0.75% after a 6–3 vote. It raised its core inflation forecast to 2.8% and cut its growth outlook to 0.5%.

The split decision increased market expectations of a possible rate rise in June. Japanese yields and USD/JPY moved in response to the announcement.

BoJ Focus On Geopolitics And Oil

The BoJ said it is watching Middle East developments and oil prices amid geopolitical tensions. The 6–3 vote was the largest division under Governor Ueda’s term.

Japanese life insurers are targeting 10-year yields of 3% for fresh purchases of domestic debt. The article was produced using an AI tool and checked by an editor.

Given the Bank of Japan’s hawkish hold, we believe a June rate hike is now highly probable, a view supported by the latest national core CPI print of 2.9%. This split vote signals a growing urgency to combat inflation even at the cost of growth. Derivative traders should therefore position for a stronger yen, with short-term USD/JPY put options looking attractive to capture a potential move lower.

The USD/JPY pair, which recently pushed toward 170, has already reacted by pulling back near 165.50, and we see further downside from here. Any rallies should be viewed as opportunities to initiate short positions, as the Ministry of Finance now has a clearer policy backing from the BoJ for potential intervention. The 6-3 vote, the most divided of Governor Ueda’s tenure, underscores a decisive shift in the bank’s tolerance for yen weakness.

Volatility Strategies Ahead Of June Meeting

This heightened uncertainty has pushed 1-month implied volatility for USD/JPY options above 12%, a significant jump from the relative calm we saw in late 2025. This environment makes volatility plays, such as buying straddles ahead of the June meeting, a viable strategy to profit from a large price swing in either direction. The risk of a sharp, sudden policy adjustment is now the highest it has been in years.

Looking at the bond market, Japanese 10-year government bond yields have risen to 1.25% in response, but this is far from the 3% level that major life insurers are targeting for investment. This suggests a significant, long-term flow of capital back into Japan is on the horizon, which will create sustained downward pressure on USD/JPY. We should anticipate Japanese yields to continue their grind higher in the coming months.

The fundamental driver of yen weakness, the wide interest rate differential with the US where the Fed funds rate remains at 4.5%, is now being challenged. The BoJ’s hawkish pivot threatens to unwind the profitable yen carry trade that has dominated markets since last year. A rush to close these positions could trigger a much faster and more severe decline in USD/JPY than many currently expect.

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Brent crude rose above $110 per barrel and traded around $111. Talks on Iran were described as aiming to restore the status quo and reopen the Strait of Hormuz without restrictions or tolls.

Brent’s return above $108 was followed by a move over $110. The higher oil price was linked to a firmer US dollar and higher bond yields.

Market Drivers And Geopolitical Risk

A separate note said President Trump was unlikely to accept Iran’s proposal to end the conflict after meeting national security officials. The report also referred to earlier trading where the US dollar fell against G10 currencies despite Brent moving back above $108.

The piece said further oil rises could lead to profit-taking in risk assets if prices push to new highs and weaken stock momentum. It also included an assumption that oil prices fall to $70–$80 per barrel by the end of the projection period.

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

We’re seeing a familiar pattern as Brent crude pushes towards $94 a barrel, reminding us of the spike to over $110 back in 2025. This rise is again supporting the US dollar, which has climbed to a multi-month high of 105.5 on the DXY. For traders, this signals a time for caution in risk assets, as a further move in oil could easily trigger a sell-off.

Hedging And Positioning Ideas

The move in oil is directly lifting bond yields, with the 10-year Treasury now hovering around 4.5%, up 30 basis points this month alone. Just as we saw in 2025, sustained high energy prices act like a tax on the economy and can stall equity momentum. The S&P 500 has already shown signs of weakness, pulling back 2% from its recent peak.

Given this dynamic, a sensible strategy involves buying protection on equity positions. Purchasing VIX call options or out-of-the-money puts on major indices like the SPY could be a cost-effective hedge against further profit-taking. This is a direct play on the idea that if oil threatens new highs, stock market volatility will increase.

We should also consider strategies that benefit from a stronger dollar, which tends to rise with oil-driven uncertainty. Long positions in USD call options against commodity-linked currencies, like the Australian or Canadian dollar, offer a way to capitalize on this relationship. We saw this correlation play out clearly during the Iran tensions of 2025 when the dollar strengthened significantly.

It’s important to remember how quickly the situation reversed in the past, with oil eventually falling back to the $75 range later in 2025. This suggests that while near-term bullishness on oil is warranted, setting up longer-dated bearish positions, such as buying puts on crude oil futures for the fourth quarter, could be prudent. This prepares for a potential resolution of current supply issues, mirroring the previous cycle.

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GBP/USD fell on Tuesday and traded near 1.3490 at the time of writing. It was down 0.33% on the day as traders reduced positions ahead of Federal Reserve and Bank of England decisions this week.

Sterling faced selling pressure as uncertainty remained over the Bank of England outlook. The Bank is widely expected to keep its key rate at 3.75%, with recent UK core inflation showing signs of easing.

Bank Of England Outlook

Policy makers are still expected to point to upside inflation risks linked to ongoing tension in global energy markets. Bank of England Governor Andrew Bailey said at an IMF event there was no urgency to change policy, citing uncertainty over the outlook and how energy shocks pass into the UK economy.

The US Dollar was supported, with the Dollar Index (DXY) edging higher ahead of the Fed decision. The Fed is expected to keep rates unchanged in the 3.5%–3.75% range for a fourth straight meeting.

Markets also tracked Middle East tensions and energy supply disruption, which supported the Dollar. Volatility may rise before the announcements as traders watch guidance on the future path of rates.

With GBP/USD trading near 1.2450, we see traders reducing risk ahead of major central bank meetings. This situation feels very familiar, reminding us of the uncertainty we navigated back in 2025 before similar announcements. The current caution is creating downward pressure on the pair.

Trading Strategy Considerations

We expect the Bank of England to hold its rate at 3.0%, even as the UK economy shows little growth. March 2026 inflation data came in at a stubborn 2.8%, well above the 2% target, which prevents the bank from offering any relief. This mirrors the policy paralysis we observed last year when officials were worried about energy shocks.

On the other side of the Atlantic, the Federal Reserve is facing a different problem, as US inflation has ticked back up to 3.1%. While the Fed is expected to hold its rate at 3.25%, the market is now pricing in a higher chance of a rate hike by summer. Any firm language from the Fed chair will likely strengthen the US dollar significantly.

Ongoing geopolitical tensions continue to disrupt energy supply chains, which weighs on global risk sentiment. This environment boosts the US dollar’s appeal as a safe-haven asset, adding further pressure on currencies like the pound. We have seen this pattern play out repeatedly over the last 18 months.

In the coming weeks, we should consider strategies that benefit from a stronger dollar and a weaker pound. Buying put options on GBP/USD could offer a good way to position for a potential drop while capping our risk ahead of the central bank news. Selling GBP/USD futures is another direct way to express this bearish view, but it requires careful management given the expected volatility.

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The Pound fell against the Yen on Tuesday after the Bank of Japan (BoJ) policy decision. GBP/JPY traded near 215.18, down about 0.27%, and stayed within a two-week range.

The BoJ kept its benchmark rate at 0.75% with a 6-3 vote, as three members supported a move to 1.0%. It raised its inflation outlook and cut growth forecasts, citing risks from the US-Iran war and higher Oil prices.

BoJ Guidance And Near Term Growth Risks

Governor Kazuo Ueda said the BoJ plans to keep raising rates and adjusting policy support based on activity, prices, and financial conditions. He also said growth may slow in fiscal year 2026 due to geopolitical tensions.

The Yen strengthened after the decision, but the move was limited as high energy costs weigh on Japan, which imports Oil. The Bank of England (BoE) and BoJ rate gap remains a key factor, with the BoE decision due Thursday.

GBP/JPY remains above the 100-day SMA and 200-day SMA, keeping the near-term trend higher. RSI is near 60 and drifting lower, while MACD shows a fading green histogram.

Support sits at 214.50 and 213.00, then the 100-day SMA at 211.71 and the 200-day SMA at 206.50. Resistance is at 216.00, with targets at 217.00 and 218.00 if it closes above 216.00.

Options Positioning Into Key Event Risk

We see GBP/JPY consolidating near its highs, creating a cautious environment for the coming weeks. The Bank of Japan’s recent hawkish hold at 0.75% is putting a temporary cap on the pair’s ascent. This contrasts with the market’s expectation of at least two more hikes from the Bank of England this year to combat persistent inflation.

The ongoing US-Iran conflict has pushed WTI crude prices above $110 a barrel, a key factor fueling inflation globally. In the UK, the latest CPI data showed inflation stubbornly holding at 4.1%, pressuring the Bank of England to remain aggressive. This environment makes holding long GBP positions attractive due to the positive carry trade.

However, we are also seeing signs of exhaustion in the uptrend, with momentum indicators like the RSI showing a bearish divergence. This suggests the BoJ’s commitment to normalizing policy is gaining credibility, reminding us of the sharp yen rallies seen in late 2025 after similar verbal warnings. Therefore, buying short-term put options with strike prices below the 214.50 support level could be a prudent hedge against a sudden reversal.

Given the technical resistance at 216.00 and the fading upside momentum, we view this as an opportunity for income generation. Selling call options with a strike price at or above 217.00 could capitalize on time decay if the pair remains range-bound ahead of the BoE decision. This strategy allows traders to collect premium while waiting for a decisive breakout.

The upcoming Bank of England meeting this Thursday is the next major catalyst that could break the current deadlock. A surprisingly hawkish statement could easily push the pair through the 216.00 resistance level. Traders anticipating this outcome might consider buying call options with a short expiry to play a potential sharp move towards 218.00.

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The ECB Consumer Expectation Surveys reported higher-than-forecast inflation expectations. The 1-year figure was 4.0% versus a market forecast of 2.8%, and the 3-year figure was 3.0% versus 2.6%.

The data suggests inflation may stay above previous assumptions beyond the first-year energy shock. This may lead the ECB to use firmer language at its 30 April meeting.

Inflation Expectations Shift Higher

The article notes that the labour market is less tight than in 2022. This could reduce the risk of wage-driven, second-round inflation effects.

Ongoing uncertainty means the ECB is likely to keep a strong focus on incoming data. The piece also states it was produced with the help of an AI tool and reviewed by an editor.

Consumer expectations for inflation have come in much higher than we anticipated. The latest survey shows people expect 4.0% inflation in one year and 3.0% in three years, well above forecasts. This suggests a worry that price pressures are becoming entrenched beyond just temporary shocks.

With the European Central Bank meeting on April 30th, we should prepare for more hawkish communication. This has already caused markets to reprice interest rate futures, pushing the timeline for any potential rate cuts further into 2027. This shift indicates that policy will likely remain tighter for longer than previously thought.

Positioning For Higher Volatility

This uncertainty is a clear signal to brace for higher volatility in euro-denominated assets. We are already seeing a rise in implied volatility on EUR/USD options, suggesting traders should consider strategies that profit from larger price swings. Options like straddles or strangles could become more attractive in this environment.

However, we must also consider that the labor market is not as tight as it was, looking back to the post-pandemic recovery period of 2022. The Eurozone unemployment rate recently ticked up to 6.7%, which may reduce the risk of a wage-price spiral. This conflicting data is exactly why the ECB will remain highly dependent on incoming figures.

The recent flash estimate for April inflation, which came in at 3.1%, supports this view of persistent price pressures. For the coming weeks, derivative positions should be managed with a close eye on wage growth data and the next preliminary inflation prints. Any signs of accelerating wages could trigger an even more aggressive hawkish shift from the central bank.

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The United Arab Emirates said it will leave OPEC and OPEC+ on 1 May, Reuters reported. The move follows a review of its energy strategy.

The decision comes during rising tensions linked to conflict with Iran. Threats to the Strait of Hormuz are putting Gulf exports under pressure.

Strait Of Hormuz Risks

The Strait is a chokepoint for a large share of global Oil and Liquefied Natural Gas (LNG) flows. Disruption has affected wider energy supply routes.

The UAE’s exit reduces the size of a group long led by Saudi Arabia. It may add to fractures over production quotas and policy direction.

Reuters reported that officials want an energy plan that fits wider national priorities beyond Oil. The report also linked the timing to concerns over regional support after multiple attacks during the conflict.

In markets, WTI briefly fell to about $96 after the news. It later rose to around $97.60, up 2.8% on the day.

Trading Implications And Volatility

With the UAE set to leave OPEC+ on May 1st, we are facing a period of intense uncertainty in the oil markets. The immediate conflict is between a potentially bearish supply increase from the UAE and a very bullish geopolitical risk premium tied to Iran. This tension makes directional bets risky, suggesting that volatility itself will be the most important factor for traders in the coming weeks.

We anticipate the UAE could add over 1 million barrels per day to the market relatively quickly, as it is no longer bound by quotas. This would challenge the 5 million barrel per day spare capacity cushion that the EIA reported the rest of OPEC holds. This potential flood of oil could cap any price rallies if tensions in the Strait of Hormuz do not escalate further.

However, the threat to the Strait of Hormuz, through which nearly a fifth of the world’s daily oil supply travels, cannot be understated. Any disruption there would immediately overshadow the UAE’s extra production, creating a scenario for a massive price spike. We saw a similar risk premium added in 2025 after initial clashes, which sent prices above $110 for a brief period.

Looking back, we remember the OPEC+ fallout in 2020, where a price war briefly sent WTI futures into negative territory. While the current demand situation is much stronger, it shows how quickly coordinated supply policy can unravel into a battle for market share. This history suggests traders should be prepared for moves that seem extreme by recent standards.

Given this uncertainty, the most prudent derivative strategies may involve buying volatility rather than picking a direction. We are seeing implied volatility in options contracts for June and July delivery surge, with the CBOE Crude Oil Volatility Index (OVX) pushing toward 50, a level not consistently seen since the market turmoil of 2022. Buying options, such as straddles or strangles, could allow traders to profit from a large price swing in either direction.

The spread between Brent and WTI crude should also be watched closely as an indicator of market stress. Historically, this spread widens during periods of Middle East conflict, as Brent is more directly exposed to disruptions in the region. A widening spread would signal that the market is pricing in a higher probability of a supply shock emanating from the Gulf.

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