The US Dollar Index (DXY) hovered near 98.00 as demand for safe assets eased after reopening news. Geopolitical risk linked to the Strait of Hormuz continued to limit further falls.
Reports said the Strait of Hormuz was “fully open and ready for full passage”, reducing near-term supply disruption fears. Later reports said Iran may consider closing it again if the United States keeps a naval blockade, and that Iran would treat this as a ceasefire breach.
Currency Moves And Risk Sentiment
EUR/USD rose towards 1.1790 and GBP/USD moved up near 1.3550 as the US dollar softened. USD/JPY slipped to around 158.20, while AUD/USD reached about 0.7200 before easing towards 0.7180.
WTI oil dropped to about $83.00 per barrel after the reopening reduced risk pricing. Gold climbed towards $4,865 despite weaker safe-asset demand.
Scheduled events include central bank speeches from April 21 to April 24, including ECB speakers and Fed’s Waller, plus SNB Chairman Schlegel. Data due includes China’s PBoC rate decision, Germany PPI, Canada CPI, UK jobs and inflation, Eurozone confidence, global PMI surveys, US retail sales and jobless claims, Japan trade and inflation, and the US Michigan readings and inflation expectations.
We are currently in a state of cautious relief where the reopening of the Strait of Hormuz has eased immediate supply fears, pushing WTI crude oil down toward $83 per barrel. However, the situation remains fragile, mirroring the volatility we saw during the Red Sea shipping disruptions back in 2024, which kept energy markets on edge for months. Given that maritime data showed tanker transits through the strait had already fallen by 30% in late 2025, any renewed threat of closure will cause an immediate and severe price shock.
This environment suggests that derivative traders should focus on volatility rather than outright direction in the oil market. The CBOE Crude Oil Volatility Index (OVX), which recently spiked above 55, has eased but remains well above its historical average, indicating that options markets are still pricing in significant price swings. This makes strategies like buying long straddles or strangles on WTI futures viable, as they profit from a large price move in either direction without needing to predict the outcome of the standoff.
Key Risks And Trading Focus
The U.S. dollar’s softness is creating opportunities in currency markets, but this trend could reverse quickly. The Australian dollar is a key currency to watch, as its rally to the 0.7200 area showed its sensitivity to both improved risk appetite and commodity prices. We believe using options on AUD/USD offers a good way to play this dynamic, allowing for upside participation while hedging against a sudden flight to safety that would strengthen the U.S. dollar.
Gold’s strength, pushing it toward $4,865 an ounce, is a critical signal that traders are looking past the temporary calm. This isn’t just short-term hedging; it’s supported by a multi-year trend of central bank buying, which saw a record 1,100 tonnes added to reserves in 2025, according to the World Gold Council. Therefore, we see holding long positions in gold call options as a core strategy to protect portfolios against a broader escalation of geopolitical conflict.
Next week is dense with central bank speeches and critical inflation data, which will compound the uncertainty. The inflation reports from Canada on Monday, the UK on Wednesday, and Japan on Thursday will be scrutinized for the impact of the recent energy price volatility. Any surprisingly high readings could force central bankers like Fed’s Waller and ECB’s Lagarde to adopt a more hawkish tone, putting an end to the dollar’s recent slide.
Given this backdrop, we advise traders to be prepared for sharp reversals driven by headlines from either the Middle East or central bank speakers. It would be prudent to use short-dated options to hedge existing positions through the end of next week’s major data releases. This allows for navigating the potential for high volatility while managing the significant event risk on the calendar.
