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    Investors reassess US trade policy and Iran tensions, leaving the dollar weaker as 15% import surcharge concerns grow

    by VT Markets
    /
    Feb 23, 2026
    We remember the uncertainty in early 2025, when U.S. trade policy shifted to a flat 15% import surcharge. At the time, many feared a broad sell-off across Treasuries, equities, and the dollar. Geopolitical tensions with Iran also added to the instability. At the same time, those risks helped keep some demand under the dollar. That period of trade friction still affects the economy today. New Commerce Department data shows the U.S. trade deficit has widened to more than $65 billion per month, pointing to ongoing imbalances. This suggests dollar volatility will likely remain sensitive to any new trade announcements from Washington.

    Dollar Range Shift And Options Positioning

    Earlier, many expected the DXY to stay stuck in a 97.00–98.00 range. That view did not last, and the dollar strengthened. With the DXY now trading consistently above 103, traders may want to use options that fit this higher range, instead of betting on a return to 2025 levels. Selling out-of-the-money puts on the dollar can be one way to collect premium while aligning with this new setup. The Federal Reserve’s dovish tilt in January 2025 also proved temporary, as inflation pressures returned later that year. With the Fed Funds rate now holding firm in the 5.25%–5.50% range, the market is pricing a “higher for longer” path. Traders may want to prepare for ongoing rate volatility by using options on Treasury futures to hedge against sudden shifts in central bank guidance. Risk tied to Iran has also been joined by other global hotspots, which continues to support demand for safe-haven assets. In this kind of market, holding long volatility positions can make sense as a hedge against sudden shocks—possibly through VIX call options. These tools can offer a relatively cost-effective way to protect portfolios from geopolitical flare-ups that have become more frequent.

    Geopolitics Volatility And Portfolio Hedges

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