The Bank of Japan kept its policy rate unchanged at 0.75%. Governor Ueda did not give clear guidance on whether there will be a rate rise at the June meeting.

Three dissenters initially raised expectations of a June move. The governor said the BoJ would make an “appropriate decision” in June, which reduced market expectations.

Bank Of Japan Signals And June Expectations

TD Securities still expects a June rate rise but with lower confidence. It said a closed Strait of Hormuz could lead the BoJ to pause for longer due to weaker demand risks for Japan’s economy.

The note said the yen has struggled to strengthen, while the BoJ’s stance remains cautious. It warned that renewed US dollar strength linked to risk events, such as strikes on Iran resuming, could lift USD/JPY towards 162, the high seen in July 2024.

Japan’s Golden Week holiday runs from 29 April to 6 May. TD Securities said intervention risk may be higher during this period because the Ministry of Finance has previously acted during thinner liquidity.

The Bank of Japan’s choice to hold rates at 0.75% and the lack of a clear signal for June has left the yen vulnerable. This opens the door for the USD/JPY to continue its upward trend. We believe the central bank may delay any rate hikes, adding further pressure on the currency.

Golden Week Liquidity And Intervention Risk

With the ongoing closure of the Strait of Hormuz threatening Japan’s economy, a test of the 162 level we last saw in July 2024 seems increasingly likely. Tensions flared again over the weekend with reports of another vessel being seized near the Strait, reinforcing this view. This keeps the fundamental pressure on the yen.

As of this morning, with USD/JPY hovering around 161.50, the market is on high alert for official action. One-month implied volatility has surged past 12%, signaling that traders are bracing for a significant price swing. This indicates that options premiums are rising in anticipation of a sharp move.

As we head into Japan’s Golden Week holiday, liquidity will be thin, creating a prime opportunity for intervention from the Ministry of Finance. This environment suggests that long volatility strategies, such as buying straddles or strangles, could be beneficial. These positions profit from a large move in either direction, whether from continued yen weakness or sudden intervention.

We saw this exact playbook back in October 2025 when officials stepped in during a quiet market, causing a rapid 5-yen drop in the pair. Therefore, holding outright short yen positions through options or futures is exceptionally risky. A sudden intervention could erase gains in an instant.

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USD/CAD traded near 1.3665 on Tuesday, up 0.27% on the day. It rebounded after falling briefly below 1.3600 on Monday.

Demand for the US Dollar rose amid uncertainty around US-Iran talks. Tensions near the Strait of Hormuz supported safe-haven buying, while the US Dollar Index traded near 98.75, up 0.25%.

Drivers Of The Latest Move

USD/CAD gains were limited by higher oil prices that supported the Canadian Dollar. West Texas Intermediate traded near $98.60 per barrel, with prices supported by supply disruption in the Middle East.

Markets are cautious ahead of central bank decisions. The Federal Reserve is expected to keep rates in the 3.5%-3.75% range, while the Bank of Canada is expected to hold rates near 2.25%.

Attention is on guidance from both banks and on Middle East developments. These factors may set the next move in USD/CAD.

We recall this period in 2025 when the USD/CAD was caught between opposing forces. The US Dollar saw safe-haven demand due to geopolitical tensions, while the Canadian Dollar was strongly supported by oil prices nearing $100 a barrel. This created a tight trading range as neither currency could establish dominance.

How The Setup Has Shifted

The situation has changed considerably as we look at the market today. West Texas Intermediate (WTI) crude has since pulled back from those highs, with recent futures data showing prices stabilizing around $83 per barrel, removing a key pillar of strength for the Canadian dollar. This cooling in the energy market followed a period of increased global production in late 2025.

Central bank expectations have also evolved since last year’s standoff. While the Bank of Canada has maintained a relatively steady policy, the US Federal Reserve has signaled a more dovish stance in response to moderating inflation figures seen in the first quarter of 2026. This has narrowed the interest rate differential that previously favored the US Dollar.

This new environment, with less support for both currencies, suggests an increase in volatility is likely. We believe derivative strategies that capitalize on price swings, rather than a specific direction, are now more appropriate. Traders should consider purchasing options straddles, which are positioned to profit from a significant move in either direction as these new economic themes play out.

Looking ahead, we are watching for divergence in upcoming economic data, specifically employment reports from both nations. Historically, a surprise in non-farm payrolls, like the unexpected weakness we saw in the fall of 2025, can trigger sharp moves. A similar deviation in either country’s data could provide the catalyst that breaks the pair out of its current balance.

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Brent crude reached its highest level in three weeks as the Strait of Hormuz remains effectively closed and US–Iran talks have stalled. Brent stayed above $100/bbl, with markets pricing a more persistent oil-driven inflation shock.

An Axios report said Iran had offered the US a new proposal to reopen the Strait of Hormuz. This may have limited the rise in prices at the start of the week.

Brent Rally Extends On Supply Shock

With no immediate progress, Brent rose during the day and closed up 2.75% at $108.23/bbl. That was the highest closing level since a two-week ceasefire was announced in early April.

Overnight, Brent increased a further 1.00% to $109.31/bbl. The move was also seen across the futures curve, with 6-month Brent futures up 1.79% to $88.01/bbl.

Brent has been above $100/bbl for nearly a week. This has brought inflation worries back into focus.

With Brent crude holding firmly above $100 a barrel due to the ongoing closure of the Strait of Hormuz, we see a clear signal for bullish positioning. The stalled US-Iran talks reinforce this view, suggesting this supply shock is not a temporary issue. Current tanker tracking data shows a 90% reduction in traffic through the strait compared to last month, confirming the physical tightness in the market.

Strategies For Volatility And Spreads

The futures curve is in steep backwardation, with front-month contracts trading at a significant premium to those six months out, which currently sit near $88 a barrel. This structure strongly incentivizes owning near-term contracts or selling longer-dated ones. We have not seen this level of sustained backwardation since the supply panic that occurred in late 2025 following the OPEC+ production cuts.

Given the geopolitical uncertainty, implied volatility in the options market is extremely elevated, with the CBOE Crude Oil Volatility Index (OVX) pushing past 50 this week. This makes outright buying of options expensive, so traders should consider using bull call spreads to limit premium costs while capturing further upside. Selling puts is exceptionally risky until there is a clear diplomatic breakthrough.

The persistence of high oil prices is reigniting broader inflation concerns that we saw subside earlier in the year. The 5-year breakeven inflation rate, a key market gauge of price expectations, has now risen to 2.8%, its highest level this year. This environment suggests positioning for higher interest rates, as central banks may be forced to delay any planned easing.

This crisis disproportionately affects Brent crude, creating opportunities in spreads against other benchmarks. The premium of Brent over WTI has widened to over $10 a barrel, a level not seen in over a year, as WTI is more insulated from Middle Eastern disruptions. Traders should look to position for this spread to remain wide or even expand further in the coming weeks.

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Silver (XAG/USD) fell by almost 3% to below $73.00 during Tuesday’s European session, trading near $72.90. Selling pressure increased ahead of the Federal Reserve policy decision on Wednesday.

Markets expect the Fed to keep interest rates unchanged at 3.50%–3.75% for a third meeting. The CME FedWatch Tool puts the probability of no change at 76.7%, with the remainder pricing in a cut.

Fed Decision In Focus

Attention is on the policy statement and Chair Jerome Powell’s press conference for clues on the rate path. A modest rebound in the US Dollar also weighed on silver, after Monday’s sharp fall.

The US Dollar Index (DXY) was up 0.25% to about 98.75. A firmer dollar can reduce the appeal of dollar-priced metals.

Silver remains below the 20-day EMA near $76.22, keeping near-term price action biased lower. The RSI is around 42, pointing down and not yet in oversold territory.

Resistance sits at the 20-day EMA near $76.22, with a break potentially targeting $83.06 (April 17 high). Support levels include $68.28 (April 7 low) and a four-month low near $61.

Strategy And Key Levels

We are seeing a familiar pattern develop in the silver market, reminiscent of the setup from last year. In April of 2025, we saw silver prices drop sharply below $73 ahead of a Federal Reserve decision due to uncertainty and a strengthening dollar. Today, with another Fed meeting this week, traders should be preparing for a similar period of caution and potential volatility.

The current economic backdrop adds weight to this cautious outlook, with recent US inflation data for March coming in at a stubborn 2.9%, making the Fed’s path less clear. While the Fed held rates at 3.50%–3.75% during that period last year, they are now at 2.75%–3.00% and markets are split on whether the next move is a cut or another hold. The US Dollar Index is also stronger now than it was then, currently trading above 105, which typically acts as a headwind for silver prices.

Given this environment, traders should consider positioning for downside risk in the immediate short term. Buying put options with a strike price near the $70.00 level could offer protection against a repeat of last year’s price action, where silver tested support around $68.28. We are also seeing a rise in implied volatility in XAG options, which could make strategies like a bear put spread attractive to lower the entry cost.

The key technical levels from that 2025 period remain psychologically important for the market. A failure to hold above the current price of around $72.90 could open the door for a retest of those old support zones. We are therefore watching that four-month low from last year, near $61.00, as a major long-term floor should selling pressure intensify after the Fed announcement.

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Societe Generale analysts expect the National Bank of Hungary to keep its policy rate unchanged at 6.25% today. Hungary’s headline CPI rose to 1.8% year on year in March from 1.4% in February, which was less than estimated.

The analysts note that geopolitical risks and oil prices may limit near-term scope for policy moves. They also refer to a scenario involving the exit of Prime Minister Viktor Orbán and an absolute majority for the TISZA party.

Currency Technical Outlook

On the currency, they report EUR/HUF continued to fall after failing to hold above the 200-day moving average in March. They place an interim low near 360.

They describe the daily MACD as deep in negative territory, with no reversal signal yet. They say the February low near 374 could act as resistance if there is a rebound.

If 360 does not hold, they project further downside towards 357 and 353. Over the medium term, they project EUR/HUF at 340–350 and expect Hungarian government bond yields and rates to compress across the curve, especially at the long end.

The political shift we saw last year with the TISZA party’s majority is continuing to drive the forint’s strength. The forecast for a lower EUR/HUF exchange rate is supported by the gradual release of EU funds, with the European Commission having recently unlocked a further €2 billion in cohesion funds for Hungary in the first quarter of 2026. This confirms our view that the country’s risk premium is compressing.

Macroeconomic data reinforces this outlook for a stronger forint. With headline inflation now stable around 3.6% as of March 2026, the Hungarian National Bank has more policy flexibility than it did last year when geopolitical risks were a greater concern. We have also seen Hungarian 10-year government bond yields fall to around 5.9%, a significant compression from levels above 7% in early 2025.

Options Strategy Ideas

Given the strong downward momentum, traders should consider buying EUR/HUF put options to profit from further declines in the exchange rate. With the pair currently trading near 355, options with strike prices of 350 or 345 could offer good value in the coming weeks. This strategy allows for participation in the downside while strictly limiting risk to the premium paid.

For a more cost-conscious approach, a bear put spread is an attractive alternative. This involves buying a put option, for instance at the 352 strike, while simultaneously selling a lower strike put, such as one at 347. This trade structure lowers the initial cash outlay but caps the maximum potential profit, making it ideal for a moderate and steady decline.

We must remain aware of potential short-term rebounds, as the daily MACD indicates the downtrend may be stretched. Looking back, the low of around 374 from February 2025 should now serve as a major resistance level on any unexpected rally. A break above this historical point would signal a potential short-term reversal and a reason to reconsider bearish positions.

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Standard Chartered strategists Christopher Graham and John Davies expect the Bank of England to keep the base rate at 3.75% at the 30 April meeting. They forecast a pause in rate moves through this year.

They describe current policy as restrictive and point to a weaker macroeconomic backdrop, a softer labour market and limited fiscal support. They say these conditions differ from 2022 and support a wait-and-see approach.

Policy Signals And Near Term Risks

They expect most Monetary Policy Committee members to remain on hold while monitoring the Middle East situation and energy prices. They add that one or two members could shift towards voting for a rate rise.

They expect Governor Bailey to stress uncertainty and the risks to inflation and growth. They also note that a longer conflict could raise the risk of further tightening.

They compare the outlook to 2011, when oil prices rose beyond USD 120/bbl and consumer price inflation exceeded 5%, while the BoE kept rates steady. The article states it was produced with an AI tool and reviewed by an editor.

Back in April 2025, the view was that the Bank of England would hold its base rate steady at 3.75%. This perspective was based on a weakening economy and a softer job market, suggesting that policy was already tight enough. The expectation of a prolonged pause meant we saw opportunities in selling interest rate volatility.

Trading Implications For The Current Cycle

A good strategy at that time would have been to sell options on SONIA futures that would profit from the Bank Rate remaining stable. This trade was based on the belief that the market was over-pricing the risk of a rate hike due to temporary energy price fears. That wait-and-see approach proved correct as the Monetary Policy Committee did hold rates through the summer of 2025.

Looking back, we can see the data supported this stance, as UK inflation eventually cooled to 2.4% by the end of 2025 while unemployment ticked up to 4.5%. The comparison to 2011 was particularly useful for our thinking. In that year, Brent crude surpassed $120 a barrel, yet the Bank of England held rates steady at 0.50% because it viewed the inflation spike as temporary.

Now, in late April 2026, the situation is different, but the lesson remains valuable. The market is currently pricing in an aggressive series of rate cuts for the second half of this year. We believe this pace may be overly optimistic, creating a new opportunity for traders.

Given the still-persistent wage growth figures we saw last month, we see value in positions that would benefit if the Bank of England cuts rates more slowly than the market expects. This could involve using options on SONIA futures to bet against the sharp drop in short-term rates currently priced in. This mirrors the 2025 strategy of betting against the market’s most extreme pricing, but in the opposite direction.

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GBP/USD extended a pullback from the 1.3575 area and fell further on Tuesday. It moved down to around the 1.3500 level in early European trading, supported by firmer US Dollar demand.

Further moves were limited as markets awaited this week’s central bank decisions. The US Federal Reserve is due to announce its decision on Wednesday, followed by the Bank of England on Thursday.

Pound Under Pressure Ahead Of Boe

The pound was trading about 0.2% lower near 1.3500 against the dollar during the European session. Selling pressure was linked to uncertainty ahead of the BoE announcement.

The BoE is widely expected to keep rates at 3.75%, with an 8-1 vote split. The expectation follows cooler UK core CPI growth in March, while elevated energy prices and the prolonged closure of the Strait of Hormuz were cited as ongoing inflation risks.

As we approach the end of April 2026, the GBP/USD pair is hovering near 1.2450, facing pressure as the US dollar finds strength. All eyes are now on the upcoming policy meetings for the US Federal Reserve this Wednesday and the Bank of England on Thursday. These events are creating caution in the market, limiting any significant moves until we get more clarity from both central banks.

The focus for the Fed meeting is sticky inflation, as the latest US Consumer Price Index for March 2026 came in hotter than expected at 3.1%. This figure has traders believing the Fed will push back any plans for interest rate cuts, likely signaling a “higher for longer” stance. A hawkish tone from the Fed would almost certainly add more strength to the US dollar.

Options Ideas For Event Risk

Meanwhile, the situation in the UK is different, with its own March inflation data showing a more encouraging drop to 2.5%. With UK economic growth remaining sluggish, the Bank of England is facing more pressure to consider cutting rates sooner than its US counterpart. This growing policy divergence between the two central banks is putting downward pressure on the pound.

For derivative traders, the rising uncertainty means implied volatility is increasing ahead of these announcements. This environment suggests that buying options, such as straddles, could be a viable strategy to capitalize on a significant price swing in either direction. The cost of these options will be higher, but a sharp move post-announcement could make it worthwhile.

Given the stronger US data, we see a clearer path for those with a bearish outlook on the pound. We remember last fall, in 2025, when similar hawkish signals from the Fed sent the pound tumbling below 1.2200. Traders may consider buying GBP/USD put options to profit from a potential drop, or use put spreads to define risk and lower the upfront cost.

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US Energy Secretary Chris Wright said on Tuesday, during the European trading session, that President Donald Trump is focused on getting the right deal with Iran.

Wright said Iran does not have a huge amount of storage capacity. He also said the US is not considering an export ban on US energy products.

Market Impact Of A Potential Us Iran Deal

He added that the US will announce historic agreements in Europe on Tuesday. The remarks were reported by Sagar Dua.

The possibility of a new US-Iran deal introduces significant uncertainty, creating a binary event for oil prices. A successful agreement could quickly bring over 1.5 million barrels per day of official Iranian supply back to a market that is already finely balanced. Traders should therefore anticipate a period of high volatility in the coming weeks.

If a deal is reached, we should expect a sharp drop in crude prices. Iran’s limited storage capacity means it would be forced to sell its oil quickly, creating a supply glut that could push Brent crude back towards the lows we saw in 2025. Derivative traders might consider buying put options or establishing short positions to hedge against this significant downward risk.

On the other hand, if negotiations stall or fail, the market’s focus will snap back to the current tight supply situation. The latest data from the Energy Information Administration (EIA) shows global inventories remain below their five-year average, which would support a rally if the prospect of new supply evaporates. This scenario justifies holding call options as a hedge against diplomatic failure.

How Traders May Approach The Volatility

The market is already pricing in these swings, with the CBOE Crude Oil Volatility Index (OVX) having climbed over 15% this month alone. This environment is ideal for volatility-based strategies like long straddles, which profit from a large price move in either direction. The key is to position for a decisive break from the current trading range.

We must also factor in that the US will not ban its own energy exports, which effectively puts a cap on how high prices can go. With US production remaining robust near the record levels of 13.3 million barrels per day set last year, this supply can help moderate any potential price spikes. This suggests that while a rally is possible, its upside may be limited compared to the potential downside of a deal being announced.

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India’s industrial output rose by 4.1% in March. This was below the expected 4.2%.

The data points to slightly weaker growth than forecast. The difference between actual and expected was 0.1 percentage points.

Industrial Output Miss Signals Softer Momentum

The industrial output number for March coming in at 4.1% is a slight disappointment against the 4.2% we were looking for. This suggests a minor loss of momentum in the economy heading into the new financial year. We should now position for a brief period of caution and potential downside.

This data could put pressure on the Nifty 50 index in the near term, making protective put options an attractive strategy. Looking back at similar slowdown fears in 2025, we saw that markets often overreact initially before finding a floor. Foreign investors have already shown signs of caution, similar to when they pulled a net $3 billion from equities in January 2024 amid global concerns.

A slowing economy could also weaken the Indian Rupee, so we see an opportunity in long USD/INR futures. The Reserve Bank of India may be forced to signal a more growth-supportive stance, which typically works against the currency. This makes betting on a weaker rupee a logical hedge against domestic-focused equity positions.

Implied volatility, as measured by the India VIX, has been hovering near a relatively low 12, but this news could cause it to rise. We will be closely watching the upcoming manufacturing PMI data for April to confirm if this weakness is a blip or a trend. A lower PMI reading would validate a more defensive trading posture for May.

Key Signals To Watch Next

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India’s manufacturing output grew by 4.3% in March. This was down from 6% in the previous period.

The change shows slower growth in March compared with the earlier figure. No further details were provided.

Market Implications For Equities

With the slowdown in March manufacturing output to 4.3%, we see an increased chance of near-term weakness in the stock market. We should anticipate that industrial and banking stocks, which are sensitive to economic cycles, may underperform. This suggests a cautious approach is needed for equity derivatives.

We are considering buying Nifty 50 put options with May or June expiries to hedge our portfolios against a potential downturn. The recent S&P Global India Manufacturing PMI for April confirms this cooling trend, as it eased to 57.5 from 59.1 in March. This data pairing strengthens the case for a market correction.

This economic data also impacts our view on the Indian Rupee. Slower growth could lead to reduced foreign investment flows, putting downward pressure on the currency. We are therefore looking at buying USD/INR call options as a way to profit from a potential depreciation of the Rupee against the dollar.

The slowdown also changes the outlook for interest rates, increasing the possibility of a future rate cut by the Reserve Bank of India. Looking back at 2025, the RBI remained hawkish due to inflation, but this growth concern may shift their focus. We see value in interest rate swaps that bet on rates falling in the second half of the year.

This perspective is bolstered by the latest retail inflation figures for March, which came in at 4.7%, comfortably within the RBI’s tolerance band.

Rates Strategy And Policy Outlook

With inflation under control and growth now becoming a concern, the central bank has more flexibility to adopt an accommodative policy. This makes positioning for lower rates through bond futures or swaps a logical strategy.

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