EUR\/JPY stayed under pressure near 186.60 in Asian trading on Monday, after earlier losses left it near 186.50. The Euro weakened as US\u2013Iran talks in Islamabad ended without a deal after 21 hours of negotiations, confirmed by US Vice President JD Vance.<\/p>\n
US President Donald Trump said Washington would begin blockading all ships entering or leaving the Strait of Hormuz. US Central Command confirmed operations targeting maritime traffic to and from Iranian ports from 10 AM ET (14:00 GMT) on Monday.<\/p>\n
Nordea projected four 25-basis-point European Central Bank rate rises starting in June in its pre-ceasefire outlook. It later noted downside risks to that view, while still pointing to ongoing price pressures.<\/p>\n
Losses in EUR\/JPY may be limited as the Yen stays weak on stagflation concerns linked to rising oil prices. Higher energy costs also lifted expectations of a near-term Bank of Japan rate rise, ahead of its April 28 decision.<\/p>\n
The Sakura Report said board members weighed higher inflation risks against weaker growth risks after the April 6 branch managers\u2019 meeting. All nine regions said their economies were \u201crecovering moderately\u201d, \u201cpicking up\u201d, or \u201cpicking up moderately\u201d.<\/p>\n
Given the failure of US-Iran talks, we should anticipate a surge in market volatility across all asset classes in the coming weeks. The US blockade of the Strait of Hormuz is a significant escalation that mirrors the market shocks we saw back in early 2022 following the invasion of Ukraine. Consequently, buying derivatives that profit from rising volatility, such as call options on the VIX index, should be a primary consideration.<\/p>\n
The immediate impact will be on energy prices, creating a clear opportunity in oil derivatives. Since roughly a fifth of the world’s oil supply passes through the Strait of Hormuz, this blockade will create severe supply-side fears. We should therefore consider buying call options on Brent crude futures, positioning for a sharp price spike above the $100 per barrel mark.<\/p>\n
For the EUR\/JPY pair itself, the situation is complex as both currencies face headwinds, suggesting that directional bets are risky. The Euro is weakened by general risk aversion, while the Yen is under pressure from Japan’s position as a major energy importer. This conflicting pressure makes the pair unpredictable, so using options to trade a wide price range rather than a specific direction may be the most prudent strategy.<\/p>\n
We must also watch for a potential divergence in central bank policy, which presents a longer-term trade. While the ECB may be forced to slow its rate hikes to protect the economy from an energy shock, the Bank of Japan could be pressured to tighten policy to fight import-driven inflation. This is a reversal of the dynamic we saw a few years ago in 2023 and could weigh on EUR\/JPY over the medium term.<\/p>\n
Finally, the risk to European growth is now substantially higher due to the region’s energy dependency. We should therefore look to hedge our portfolios against a downturn in the European economy. Buying put options on major European stock indices like the Euro Stoxx 50 would provide a direct hedge against the expected economic fallout.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/JPY hovered near 186.60 as Euro slid on Hormuz blockade fears, while weak Yen capped losses.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-44730","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44730","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=44730"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44730\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=44730"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=44730"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=44730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}