Gold rose from an intraday low of $4,684 to about $4,730 as the US Dollar eased. The Dollar Index traded near 98.57 after reaching 98.80.

Inflation concerns persisted as tensions rose in the Strait of Hormuz, where shipping faces a dual blockade by the US Navy and Iran. Donald Trump said the US has “total control” of the strait and ordered the Navy to “shoot any boat putting mines in Hormuz”.

Strait Of Hormuz Risks

The Washington Post, citing a Pentagon assessment, reported it could take up to six months to fully clear mines. The IRGC reportedly seized two vessels on Wednesday, according to shipping companies and Tasnim.

Higher Oil prices have added to expectations that interest rates stay high for longer, which can limit demand for non-yielding Gold. Markets remain doubtful about near-term US-Iran talks despite a ceasefire extension that Iranian officials have not formally accepted.

US data showed Initial Jobless Claims at 214K versus 212K expected and 208K prior. S&P Global Manufacturing PMI rose to 54 from 52.3, a 47-month high, while Services PMI rose to 51.3 from 49.8.

On the 4-hour chart, XAU/USD is below the 20-period SMA near $4,756, with RSI (14) around 41 and ATR (14) near 38. Support is near $4,677 and resistance near $4,834.

Technical Levels And Macro Drivers

Given the persistent inflation, we see gold’s role as a hedge being overshadowed by the prospect of higher interest rates for longer. The March 2026 Consumer Price Index (CPI) report, which showed a year-over-year increase of 4.1%, confirms that price pressures are not easing as the Federal Reserve had hoped. This makes holding non-yielding gold costly when investors can get better returns from bonds.

The primary driver for this inflation remains the ongoing shipping disruptions in the Strait of Hormuz, which are keeping oil prices elevated. With WTI crude trading stubbornly above $115 a barrel, energy costs are feeding directly into the prices of goods and services globally. This situation shows no sign of a quick resolution, meaning we should expect inflation to remain a key concern for central banks.

Looking back from today, we can see how the aggressive rate hikes throughout 2025 were a direct response to this emerging energy crisis. Those actions set the stage for the current environment where the Fed has little room to consider rate cuts. Recent comments from Fed officials have reinforced this hawkish stance, signaling that fighting inflation remains their top priority.

For derivative traders, this outlook suggests that bearish positions on gold are warranted in the coming weeks. We believe buying put options on gold futures or related ETFs offers a defined-risk way to profit from a potential slide below the $4,677 support level. Selling call spreads with strike prices above the $4,834 resistance could also be an effective strategy to collect premium while betting on capped upside.

The sustained geopolitical tension means we should also expect gold volatility to remain elevated, even if the price trends downward. The Cboe Gold Volatility Index (GVZ) has been holding above 20, a level not seen consistently since the market turmoil of early 2025. This makes strategies that profit from high implied volatility, such as short strangles or straddles centered around a key price level, potentially attractive.

Finally, the strong US Dollar continues to be a major headwind for gold, as a stronger greenback makes the dollar-denominated metal more expensive for foreign buyers. As long as the Fed maintains its tight monetary policy, the dollar is likely to remain supported. A pair trade, going long US Dollar Index futures while simultaneously shorting gold futures, could be an effective way to leverage this macroeconomic trend.

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The United States held a 4-week Treasury bill auction with an unchanged yield of 3.595%.

The result indicates the auction cleared at the same rate as the previous comparable sale.

The unchanged 4-week bill auction at 3.595% confirms the market’s belief that the Federal Reserve is firmly on hold. For us, this signals that front-end interest rate volatility will likely remain low in the immediate term. There is little reason to position for a surprise rate move at the next FOMC meeting.

This stability aligns with recent economic data, such as the March CPI which came in at a manageable 2.8% and the latest jobs report showing a moderate gain of 175,000. These figures are not strong enough to warrant a rate hike, nor weak enough to force a cut. The market sees the Fed in a comfortable wait-and-see position for at least the next month or two.

Derivative traders should consider strategies that benefit from this expected calm. Selling premium on short-dated options, such as May or June SOFR futures, could be advantageous as low volatility will likely compress option prices. This environment is less favorable for buying options, as the lack of a clear catalyst will likely lead to time decay eating away at profits.

The real opportunity may lie further out on the yield curve, where uncertainty about the second half of the year remains. While the 4-week rate is anchored, we are seeing more activity in options on 2-year and 10-year note futures. The debate is not about the next few weeks, but whether slowing growth will force the Fed’s hand later this year.

Looking back, this period of calm is a sharp contrast to the aggressive rate adjustments we navigated through 2023 and the careful easing cycle we saw through much of 2025. Historical data from that period shows that such stability can be a precursor to a significant move once a clear economic trend emerges. We should therefore use this time to position for potential shifts in the longer-term rate outlook.

EUR/USD rose on Thursday after early losses, as the US Dollar weakened despite stronger US data and cautious risk mood linked to US–Iran tensions. The pair traded near 1.1714 after touching 1.1679, while the US Dollar Index sat around 98.57 after an intraday high of 98.80.

US activity data improved in April. The S&P Global Manufacturing PMI rose to 54 from 52.3, a 47-month high, and the Services PMI increased to 51.3 from 49.8, a two-month high, both above forecasts.

Us Data And Dollar Reaction

US Initial Jobless Claims climbed to 214K for the week ending April 18, versus 212K expected and 208K prior. The Dollar did not extend gains after the PMI releases, with price action described as technical.

Tensions centred on the Strait of Hormuz continued to affect markets. Donald Trump posted that the US has “total control” over the strait and said he ordered the Navy to “shoot any boat putting mines in Hormuz”, adding it is “sealed up tight” until Iran makes a deal.

Iran maintained demands for the naval blockade to be removed, calling it a ceasefire violation. Mohammad Bagher Ghalibaf said reopening Hormuz would be “impossible” while alleged ceasefire breaches continued.

With a dual blockade and supply disruption, oil prices stayed high and inflation risks remained in focus. Markets priced in possible ECB rate rises and expected the Fed to hold rates.

Then Versus Now In Markets

Looking back to this time in 2025, we saw EUR/USD trying to hold the 1.1700 level amid significant geopolitical tension. Today, the situation is quite different, with the pair trading much lower around 1.0750. The US Dollar Index reflects this strength, sitting near 105.80 compared to the 98.50s we were watching last year.

The intense US-Iran standoff in the Strait of Hormuz that worried us in 2025 has fortunately eased, following a diplomatic resolution late last year. This de-escalation has helped bring down some of the risk premium in energy markets. WTI crude oil prices have stabilized around $82 a barrel, a notable change from the supply disruption fears that kept prices elevated.

Last year we saw US manufacturing PMI hit a remarkable 47-month high of 54, signaling powerful expansion. While the latest S&P Global Manufacturing PMI reading for April 2026 has moderated slightly to 51.9, it still shows the factory sector is expanding comfortably. This indicates a durable, though less super-charged, economic backdrop.

The market’s view on central banks has completely flipped since we were analyzing this in 2025. Back then, we were pricing in potential ECB hikes while the Fed was expected to hold. Now, with Eurozone inflation cooling faster than in the US, traders are betting the ECB will cut rates by June, well before the Federal Reserve even considers a move.

This policy divergence suggests traders should consider strategies that benefit from a stronger dollar and weaker euro in the coming weeks. Buying EUR/USD put options could offer a way to profit from further downside while clearly defining risk. Selling out-of-the-money call options is another approach to collect premium if the pair remains capped.

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Commerzbank reports that the Turkish central bank kept policy unchanged and relied on foreign exchange intervention and ad hoc liquidity tightening rather than raising interest rates. It says this decision followed a meeting where the bank argued that fundamentals were improving and that recent geopolitical events were external disturbances to be monitored.

The bank says disinflation has stalled, inflation expectations are rising, reserves are falling, and market scepticism is increasing. It adds that core inflation momentum remains high and that the earlier improvement in the current account has started to reverse after policy was eased.

Commerzbank expects renewed pressure on the lira and a faster pace of depreciation. It notes that the annualised rate of depreciation since the beginning of April is 47%.

It forecasts USD/TRY at 55.0 by year-end. This compares with market expectations of around 52.0.

Looking back at the analysis from 2025, we can see that the forecast for significant lira weakness was correct. The central bank’s decision at that time to avoid rate hikes in favor of intervention set the stage for a predictable slide in the currency. By the end of 2025, USD/TRY had indeed surpassed the 54.0 level as foreign reserves dwindled and inflation expectations became unanchored.

This history is important because the underlying dynamics have not fundamentally changed. Official data from March 2026 shows annual inflation is still running at a concerning 45%, well above the central bank’s target, despite recent policy tweaks. This persistence shows that the market remains skeptical of the authorities’ commitment to truly tight monetary policy, a sentiment we also observed back in 2025.

Given this environment, traders should anticipate continued pressure on the lira in the coming weeks. The pattern of policy inaction followed by currency depreciation is a well-established one. This suggests that any periods of lira stability are likely to be temporary and driven by short-term interventions rather than a sustainable shift in fundamentals.

For derivative traders, this outlook supports strategies that profit from a rising USD/TRY. Buying USD/TRY call options is a direct way to position for further lira weakness while clearly defining your maximum risk. These options become more valuable as the exchange rate increases, providing upside exposure to the ongoing trend.

It is also wise to be cautious of the high costs of holding these positions, known as negative carry, due to the interest rate difference between the two currencies. Therefore, carefully timing entries and using option structures that mitigate time decay could be advantageous. Monitoring the central bank’s foreign reserve levels will be a key indicator for the timing and intensity of the next major move.

US Kansas Fed manufacturing activity eased in April, with the index slipping to 10 from 11 in the previous month.

The latest reading still indicates expansion, but at a slightly slower pace than before.

Historical Signal And Market Lesson

We remember seeing the Kansas Fed manufacturing index slip to 10 back in April 2025. That small dip was an early signal that preceded a broader economic cooling over the next two quarters, a period where the Federal Reserve paused its rate adjustments. This history provides a valuable lesson for our current market positioning.

The present environment is showing similar signs of a slowdown, making that past event highly relevant. Recent data shows initial jobless claims have crept up to 219,000, and the latest Chicago PMI reading for March 2026 came in at a contractionary 48.2. This pattern of weakening data suggests caution is warranted.

Given this setup, we believe market volatility is likely to increase in the coming weeks. We are looking at buying call options on the VIX index expiring in May and June. This provides a relatively inexpensive hedge against a potential equity market pullback.

We also anticipate a shift in interest rate expectations. A weakening manufacturing base makes it very difficult for the Federal Reserve to justify a hawkish stance. We are considering positions in SOFR futures that would profit from a drop in short-term interest rate expectations.

Sector Rotation And Defensive Positioning

This outlook calls for a specific sector rotation strategy using options. We see an opportunity in buying puts on the Industrials ETF (XLI), as these companies are directly impacted by a slowdown in manufacturing activity. This offers a direct way to position for further weakness in the sector.

Conversely, we are looking to establish long positions in defensive areas of the market. We are exploring call options on the Consumer Staples ETF (XLP). These companies tend to show more resilient earnings during periods of economic uncertainty.

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Nomura expects the European Central Bank to keep the deposit rate at 2.00% at the 30 April meeting. It also forecasts the rate will stay at 2.00% through Q4 2027.

Policy is expected to remain data-dependent after the Iran war shock. Key inputs include Brent crude oil prices, inflation expectations and wage dynamics.

The forecast assumes the Middle East conflict leads to an energy price shock with limited medium-term effect on the euro area economy. The ECB is expected to wait for evidence in incoming data rather than respond immediately.

Nomura sets a condition for rate rises linked to oil prices. If Brent stays above $95 per barrel by the ECB’s June meeting, it expects 25 basis point increases in June and again in September.

A rate rise would require signs of persistently higher inflation, as in 2022, or a rise in inflation expectations. June is seen as the earliest meeting when the ECB could raise rates in response to the Iran war.

We expect the European Central Bank to hold its deposit rate steady at 2.00% during its upcoming meeting on April 30th. The decision itself is widely anticipated, so we are focused on any change in tone regarding future policy. The central bank will likely want to wait and see how the recent shock from the Iran war affects the economy before acting.

The key risk for a more aggressive, or hawkish, policy shift is tied directly to energy prices. Brent crude has been volatile, recently trading around $98 per barrel after the latest geopolitical flare-up, which is above the critical $95 threshold. This is compounded by recent data showing Eurozone flash inflation for April ticked up to 2.8% and first-quarter negotiated wage growth remains firm at 4.5%.

For derivative traders, this creates an opportunity in the volatility market for interest rates. With the April meeting likely to be a non-event, options on June and September Euribor futures could be mispriced if they do not reflect the significant chance of a rate hike. We believe positioning for higher volatility is prudent as the market digests incoming energy and inflation data over the next month.

We are also looking at curve-steepening trades, where traders might position for short-term rates to rise faster than long-term ones. We remember the energy shock of 2022, and the Governing Council will be very sensitive to any signs that current inflation is becoming embedded in expectations. This historical precedent from the last major inflation wave suggests the ECB may act more decisively than the market currently expects if oil prices do not fall.

Ultimately, the price of oil will be the most important factor for the ECB’s decision in June. The spot price of Brent crude has effectively become the primary signal for near-term monetary policy. Therefore, any positions in interest rate derivatives should be managed alongside a close watch on energy markets.

GBP was slightly weaker against the USD, but performed better than most G10 currencies after UK PMI data beat forecasts. The preliminary manufacturing and services PMIs were above expectations and around the 50 level, pointing to modest expansion.

Other UK releases were mixed, with public borrowing a little higher than expected and CBI sentiment weaker. Even so, market pricing for Bank of England tightening increased.

Market Pricing For Boe Tightening

Markets are pricing 20 basis points of tightening for June and a total of 50 basis points by September. No rate rise is priced for next Thursday’s BoE meeting.

On the charts, momentum is mildly positive, with the RSI in the mid-50s after easing from recent lows in the 60s. GBP/USD is still trading in a range, with near-term levels seen between 1.3450 and 1.3550, and 1.35 acting as a congestion point.

We recall how last year, around this time in 2025, a surprise in UK purchasing managers’ data led us to price in Bank of England rate hikes. This optimism supported the pound, holding it firm within a tight range near the 1.3500 level against the dollar. The current environment today presents a starkly different challenge.

The economic picture is now more complicated, as the latest Office for National Statistics data shows UK inflation remains persistent at 3.1%, well above the 2% target. While the recent S&P Global services PMI still shows expansion at 54.2, the focus has completely shifted from rate hikes to how long the bank must hold rates at current levels. This has capped any significant strength in the pound.

Policy Divergence And Options Positioning

Meanwhile, the US economy appears more robust, with the last Non-Farm Payrolls report for March 2026 showing a healthy addition of over 240,000 jobs. This strength gives the Federal Reserve little reason to consider cutting interest rates, creating a policy divergence that weighs on the GBP/USD pair. As a result, the pound has fallen far from the 1.35 handle and now trades closer to 1.2550.

For derivatives traders, this means the tight, range-bound strategies of early 2025 are no longer appropriate. Implied volatility in GBP/USD options has increased as markets are uncertain about the timing of future rate cuts from both central banks. The key is now to position for bigger, data-driven moves rather than expecting the pair to remain in a narrow channel.

Considering the persistent downward pressure from a strong dollar, traders could look at buying GBP/USD put options to position for further weakness. A put spread, which involves buying one put and selling another at a lower strike price, offers a cost-effective way to speculate on a gradual decline towards the 1.2400 level. This strategy provides downside exposure while clearly defining risk.

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NZD/USD fell to about 0.5875 on Thursday, down 0.47% on the day. Trading stayed in a tight recent range as risk aversion and geopolitical uncertainty kept positioning cautious.

Rising tensions between the US and Iran supported demand for safe-haven assets, aiding the US Dollar. The Greenback also drew support from higher US Treasury yields and fewer expectations of near-term rate cuts, as the US Dollar Index moved higher.

Us Data Mixed

US data were mixed. Initial Jobless Claims rose to 214K, while the S&P Global Composite PMI increased to 52 in April from 50.3, pointing to moderate expansion.

In New Zealand, the CPI rose 3.1% year on year in the first quarter. This kept inflation above the Reserve Bank of New Zealand’s target and backed expectations of a restrictive policy stance, which helped limit NZD/USD falls.

Markets have priced in major rate increases over a one-year horizon. Financial conditions have already tightened, which could reduce the need for further aggressive action.

Near-term risks for NZD/USD remained tilted lower if Middle East tensions worsen and demand for the US Dollar increases. Later in the year, NZD/USD could recover if the Federal Reserve delivers additional rate cuts.

Trading Implications

Given the current risk-off mood, traders should be cautious about taking long positions in NZD/USD. Rising tensions in the Middle East are pushing capital into the safe-haven US Dollar, with the US 10-year Treasury yield now firm above 4.75%, further strengthening the greenback. This environment suggests that any rallies in the pair are likely to be sold into, at least in the immediate term.

The Federal Reserve’s stance is a key factor supporting the dollar and weighing on this pair. We have seen market expectations shift dramatically, with futures markets now pricing in just one 25-basis-point rate cut by the end of 2026, down from three expected earlier in the quarter. This repricing makes holding US Dollars more attractive and puts downward pressure on pairs like NZD/USD.

However, the downside for the kiwi dollar is being cushioned by New Zealand’s own domestic inflation, which is holding stubbornly above 3%. The Reserve Bank of New Zealand has kept its official cash rate at 5.50% for over a year now, and this persistence signals that it will not be quick to cut rates. This creates a solid floor of support for the currency, preventing a more significant collapse.

We saw a similar dynamic play out in the second half of 2025, when a brief spike in global uncertainty pushed the pair below 0.5800 before it found its footing on the RBNZ’s hawkish policy outlook. This pattern suggests that while the immediate path may be lower, strong support exists not far from current levels. For derivative traders, this points toward strategies that benefit from a defined range, such as selling volatility through short strangles or iron condors.

The primary tension is the strong, geopolitically-driven US Dollar versus the floor provided by RBNZ policy. Traders could consider buying put options to protect against a sudden drop if tensions escalate further. Conversely, selling out-of-the-money call options could be a way to generate income, based on the belief that the strong USD will cap any significant upward moves in the coming weeks.

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US EIA data shows a natural gas storage build of 103 billion cubic feet for the week ending 17 April. The forecast was 96 billion cubic feet.

The actual increase was 7 billion cubic feet higher than expected. This indicates a larger weekly stock build than the market estimate.

Near Term Market Impact

The natural gas injection of 103 billion cubic feet (Bcf) was significantly higher than the 96 Bcf forecast, signaling a well-supplied market. This bearish data point will likely put immediate downward pressure on front-month futures contracts. We should prepare for a test of lower price supports in the coming trading sessions.

This injection is substantially larger than the 5-year average for this week in April, which is closer to 60 Bcf. As of today, this puts total working gas in storage at over 2,410 Bcf, representing a surplus of nearly 35% against the historical average. This massive cushion limits the upside potential for prices heading into the summer.

Even with strong demand from LNG export facilities, robust domestic production continues to flood the market with supply. Looking back from our perspective in 2025, the market then was far more concerned with supply adequacy. This year, the persistent glut is the dominant theme we must trade against.

For derivatives traders, this reinforces a bearish outlook, making it attractive to sell call option spreads on the June and July contracts to capitalize on range-bound price action. We could also consider buying puts or initiating put spreads to profit from a further slide in prices. The data suggests that any price rallies are likely to be short-lived and met with selling pressure.

Trading And Volatility Considerations

This report will likely suppress near-term price volatility, which makes selling premium an attractive strategy for us. We need to monitor upcoming weather forecasts for any signs of early summer heat that could boost demand. However, until this supply surplus begins to shrink meaningfully, the path of least resistance for prices remains lower.

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Societe Generale analysts report that USD/BRL did not move above its downward-sloping 200-day moving average during a recent consolidation phase. This is described as consistent with a broader bearish trend.

USD/BRL has moved below the lower edge of its prior trading range. The next levels referenced are the lower band of a multi-month channel near 4.90, followed by projections at 4.86 and 4.84.

The level at 5.20, which was reached earlier in April, is cited as short-term resistance. The article notes it was produced with the help of an AI tool and reviewed by an editor.

Given the failure of USD/BRL to break its 200-day moving average, we see the broader downtrend reasserting itself. The recent break below its consolidation range confirms this move is underway. We are now focused on targets located at the lower band of its multi-month channel.

Our primary objectives are now near the 4.90 level, with further projections pointing towards 4.86/4.84. Any unexpected strength in the pair should meet significant resistance at the 5.20 mark. This level represents the peak from earlier in April and now acts as a ceiling for the current bearish structure.

This technical view is supported by Brazil’s solid fundamentals as of April 2026. The Central Bank of Brazil is holding the Selic interest rate firm at 10.5%, making the Real highly attractive for carry trades. This contrasts sharply with the US Federal Reserve, which has signaled a pause in its own tightening cycle amid moderating inflation.

Furthermore, Brazil’s economic data provides a strong tailwind for the Real. The country posted a robust trade surplus of $9.1 billion in March 2026, driven by strong commodity exports. This continued strength in the external accounts reinforces the fundamental case for BRL appreciation against the USD.

For derivative traders, this outlook suggests buying put options with strike prices around 4.95 or 4.90 to profit from the expected decline. Alternatively, selling call spreads with the short leg above the 5.20 resistance level could be an effective strategy to collect premium. These positions are a direct play on our view that the pair’s upside is now severely limited.

We recall that the pair found significant buying interest near these lower levels in the third quarter of 2025 before staging a recovery. Therefore, traders should consider taking profits on bearish positions as we approach the 4.86/4.84 projection zone. This historical price action suggests that while the trend is down, a bounce from those long-term lows is possible.