Strait Of Hormuz Developments
Trump called on allies to help secure the Strait of Hormuz, and the Wall Street Journal reported the White House was preparing to announce a coalition to escort ships. EU foreign ministers are debating a naval response, and the UK plans to send minesweeping drones. Japan’s Prime Minister Sanae Takaichi said options to protect Japanese vessels are being explored, with no current plan to dispatch the navy. US Energy Secretary Chris Wright said he expects the conflict to end within the next few weeks, with a rebound in oil supplies and then lower prices. WTI tested $100 and retreated towards $98. The USD Index traded near 100.30 after topping 100.50 on Friday, its highest since May. Gold fell nearly 3% last week, dipped below $4,970, then moved back above $5,000. EUR/USD recovered towards 1.1450, GBP/USD held near 1.3250, and AUD/USD rose more than 0.5% above 0.7000, with a 25 bp RBA rise to 4.1% expected.Key Market Levels And Moves
USD/JPY rose more than 1% last week, then slipped below 159.50; Japan’s finance minister said officials were ready to take decisive FX steps. Looking back to this time in 2025, we saw oil prices surge towards $100 a barrel on fears of the Strait of Hormuz closing. That conflict did escalate through the spring of 2025, briefly pushing WTI above $115 before a coalition-led naval presence restored supply confidence. With WTI now trading around $85 a barrel and global inventories stable, traders should consider that the peak geopolitical risk has passed, making strategies that profit from range-bound price action, like selling strangles, more attractive. A year ago, we were bracing for a week of coordinated interest rate hikes from nearly every major central bank. Today in March 2026, the story has completely flipped, with the market now pricing in a 60% chance of a Federal Reserve rate cut by the end of the year, according to CME FedWatch data. This policy divergence from the ECB, which is signaling rates will stay higher for longer, suggests that long EUR/USD positions could continue to perform well. The anxiety in 2025 pushed gold to test the $5,000 level, a base which has since proven to be remarkably firm. Even with Middle East tensions lower than last year, persistent global inflation, which saw US CPI for February 2026 come in at 2.8%, continues to support gold. Traders could view any dips towards the $5,000 mark as opportunities to buy call options, anticipating continued demand from both central banks and investors. We remember Japanese officials threatening intervention as USD/JPY pushed towards 160.00 in March 2025, which they later acted upon. That intervention provided only temporary relief, as the massive interest rate differential has driven the pair back towards 158.50. This pattern suggests that while another intervention is possible, selling USD/JPY put options could be a way to collect premium while betting that the fundamental carry trade will limit any significant downside. The Reserve Bank of Australia was still hiking rates a year ago, but is now firmly on hold with Australian inflation falling to 3.4% last quarter. The RBA’s neutral stance contrasts with the ongoing tightening cycle in some emerging markets. This makes the AUD a potential funding currency for carry trades, for instance, by shorting AUD against the Mexican Peso to capture the favorable interest rate spread. Create your live VT Markets account and start trading now.
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