Key Points

• Crude remains the lead signal, Brent near $100 and WTI near $105 after a sharp surge.
• The Strait of Hormuz blockade drives risk-off and supports oil and USD.
• US–Iran talks end in a deadlock, keeping the risk of escalation elevated.
• Tuesday’s PPI is the key trigger for inflation and rate expectations.

The new week begins on high alert as the weekend failed to produce a lasting ceasefire. The key catalyst is the start of a naval blockade in the Strait of Hormuz, which has pushed crude oil sharply higher and triggered a defensive shift across global markets.

Brent is trading near $100, while WTI has climbed to around $105 after a volatile surge of nearly 11%. The bias remains firmly upward on any escalation, especially with the current strike pause set to expire Tuesday and no permanent framework in place.

At these levels, oil is no longer just reacting to headlines. Markets are beginning to price in second-order effects such as higher transport costs and persistent inflation, limiting central banks’ ability to ease. The risk is that elevated oil becomes structural rather than temporary.

US–Iran Deadlock, Hormuz Tensions Lift Oil and USD

Top-level talks between the US and Iran concluded without any progress, even after nearly 21 hours of intensive negotiations facilitated by Pakistan. US Vice President JD Vance stated that Washington had presented its final and most comprehensive offer, but Tehran rejected the proposal, resulting in a deadlock.

Adding to tensions, US President Donald Trump announced on Sunday that the US Navy would begin blockading the Strait of Hormuz, putting a fragile two-week ceasefire at risk. This escalation weighs on global risk sentiment and is seen supporting demand for the safe-haven US Dollar (USD).

USD near $99 on Iran deadlock and firm CPI

The US Dollar Index (DXY), which tracks the USD against six major currencies, is holding in positive territory after trimming earlier gains, trading near 99.00 during Asian hours on Monday.

The dollar strengthened on rising safe-haven demand after US–Iran peace talks collapsed. US Vice President JD Vance confirmed the negotiations in Islamabad ended without a deal after 21 hours of discussions.

San Francisco Fed President Mary Daly told Reuters that if inflation stays elevated, the Fed will keep rates unchanged until price stability is achieved. However, she noted that a rate cut could be considered if tensions with Iran ease quickly and oil prices fall.

PPI: The Supply Chain’s Inflation Reality Check

Tuesday’s Producer Price Index (PPI) release acts as a critical gauge for whether surging energy costs are officially hardening within the supply chain. With Brent Crude hovering above $100 due to the ongoing naval blockade, the market is hypersensitive to any signs that producers are passing these increased input costs down to the consumer level. A hot PPI print would likely cement a higher-for-longer interest rate path, fueling further US Dollar strength while squeezing profit margins for corporate equities already rattled by geopolitical tension.

Key Symbols to Watch

USDX | USOil | XAUUSD | SP500 | BTCUSD

Key Events of the Week

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Key Movements Of The Week

USDX

• The dollar has gapped up towards the $99 level as investors rotate towards safe havens.
• Tuesday’s PPI data could be a key driver for the Dollar as higher PPI data could keep the Dollar strong.

USOil

• Oil has gapped up above $100 level as Strait of Hormuz remain blocked.
• Ongoing tensions in the Strait of Hormuz could push oil prices higher.

XAUUSD

• Gold gapped down on Monday due to investors’ profit-taking to cover margin calls in other assets.
• Tuesday’s PPI could negatively affect gold prices if data surges higher than forecast.

BTCUSD

• BTCUSD traded lower during the weekends as negotiations between US and Iran failed.
• If Tuesday’s PPI data is higher than expected, it could push Bitcoin’s price lower.

SP500

• SP500 gapped lower on the Monday open as investors seek risk-off assets.
• If peace talks are not achieved in the near term, it could trigger equities sell off.

Bottom Line

Markets enter the week in a geopolitical risk-off regime, driven by the Strait of Hormuz blockade and failed US–Iran talks, pushing oil sharply higher and supporting the USD. Brent near $100 and WTI near $105 reflect not just headline risk, but growing pricing of persistent inflation pressure through energy and supply chains.

The key macro link now is inflation pass-through: if upcoming PPI confirms rising input costs, it strengthens the case for a higher-for-longer Fed stance, further supporting the dollar while pressuring risk assets.

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Gold prices in Malaysia fell on Monday, based on FXStreet data. Gold was MYR 602.24 per gram, down from MYR 606.73 on Friday.

Gold also dropped to MYR 7,024.34 per tola from MYR 7,076.77 on Friday. Other listed prices were MYR 6,022.34 for 10 grams and MYR 18,731.64 per troy ounce.

How FXStreet Calculates Local Gold Prices

FXStreet converts international prices into MYR using the USD/MYR rate and local units. The figures are updated daily at the time of publication and are for reference, as local rates may differ slightly.

Central banks are the largest holders of gold and use it as part of their reserves. World Gold Council data shows central banks added 1,136 tonnes of gold worth about $70 billion in 2022, the highest annual total on record.

Gold often moves opposite to the US Dollar and US Treasuries, and can also move against risk assets such as shares. Its price can change with geopolitics, recession fears, interest rates, and shifts in the US Dollar because gold is priced in dollars (XAU/USD).

While gold prices saw a minor dip to 602.24 MYR per gram, we view this as short-term noise rather than a trend reversal. This slight pullback could present a buying opportunity for those looking to enter or add to long positions. The key drivers remain favorable, particularly shifting central bank policies and persistent global uncertainty.

Market Outlook For Gold

The US Dollar Index has softened, falling over the last month as we see the Federal Reserve signal a more dovish stance for the second half of the year. Looking back, the aggressive rate hikes that ended in 2025 successfully tempered inflation, but now the focus is on avoiding a sharp economic slowdown. As a non-yielding asset, gold becomes more attractive when interest rates are expected to fall.

We cannot ignore the relentless demand from central banks, a powerful trend that accelerated back in 2022 and has not slowed. Data from the first quarter of 2026 shows emerging market central banks, particularly those in Asia, added another 200 tonnes to their reserves. This consistent buying creates a strong floor for prices and absorbs any significant dips in the market.

Ongoing geopolitical tensions are reinforcing gold’s role as a primary safe-haven asset, much as we saw during the turbulent periods of 2024 and 2025. We’ve observed that open interest in gold futures and options contracts tends to spike during periods of heightened global uncertainty. This behavior suggests traders are actively hedging against potential disruptions in riskier markets like equities.

For derivative traders, this environment suggests that buying call options or establishing bull call spreads on gold futures could be a prudent strategy over the next few weeks. These positions offer leveraged upside potential while limiting downside risk if the recent price dip extends further. Selling out-of-the-money put options is another way to collect premium, capitalizing on our view that strong underlying demand will provide price support.

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Gold (XAU/USD) rebounded from the $4,633–$4,632 area, a four-day low in Asia on Monday, and closed much of the weekly bearish gap amid mixed signals. A Wall Street Journal report said regional countries are trying to bring the US and Iran back to talks within days after weekend discussions ended without agreement, which limited US dollar gains.

US Vice President JD Vance said a final offer was made but Iran did not accept it, leaving talks stalled. Iranian state media said excessive demands reduced the chance of a deal.

Geopolitical Risks And Dollar Dynamics

US President Donald Trump said the US Navy would begin blockading the Strait of Hormuz, putting a two-week ceasefire at risk. Continued Israeli strikes in Lebanon added to tension, which could support the US dollar and restrict gold gains.

WTI crude rose back to about $105 a barrel after the latest developments. US inflation data for March showed the biggest monthly rise in nearly four years, with CPI up 0.9% month-on-month and 3.3% year-on-year, leading to higher Treasury yields and a firmer dollar.

Technically, gold remained below the 100-hour SMA, with MACD negative and RSI near 44. Resistance was cited at the 100-hour SMA near $4,732.63, while traders monitored recent lows as potential support.

Looking back at the situation in 2025, we saw gold caught between geopolitical fears and a hawkish pivot from central banks. That core conflict remains the primary driver of the market today, April 13, 2026, creating significant uncertainty. This environment suggests derivative traders should focus on volatility and defined-risk strategies.

The Federal Reserve did follow through on the hawkish signals we saw last year, raising the Fed Funds rate to 4.5% to combat the inflation that was running at 3.3% in March 2025. The latest US CPI report for March 2026 showed inflation has cooled to 2.8%, which is an improvement but still stubbornly above the 2% target. This leaves the Fed’s next move in question, creating a tricky environment for gold.

This interest rate of 4.5% puts a ceiling on gold, as holding the non-yielding metal has a high opportunity cost. However, the unresolved tensions in the Strait of Hormuz, which never fully dissipated after the failed talks last year, are providing a solid floor of support under the price. We believe these opposing forces will keep gold trading in a volatile range for the coming weeks.

Options Strategies For Volatile Gold Markets

Given this outlook, traders could consider options strategies that profit from sharp price swings rather than a specific direction. With the Gold Volatility Index (GVZ) currently elevated near 19, purchasing long straddles or strangles could be an effective way to position for a breakout. This involves buying both a call and a put option, profiting if gold makes a significant move either up or down.

For those with a directional bias, buying call options offers a way to bet on an escalation in the Middle East with a capped downside risk. Conversely, if we believe the Fed will signal more hikes to crush the last bit of inflation, put options provide a hedge or a direct bet on lower prices. Using options allows for precise positioning while managing the substantial risks present in the current market.

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Hungary held a parliamentary election on Sunday. Péter Magyar, leader of the centre-right opposition Tisza party, defeated Prime Minister Viktor Orbán by a landslide.

With almost all votes counted, officials said Tisza is set to win a two-thirds majority in parliament. The party was currently on 138 seats.

The result ended Orbán’s 16-year period in office. European leaders said it would also change Hungary’s stance inside the European Union.

After the vote, the Hungarian forint rose by over 1.50% against the US dollar on the day. USD/HUF traded near a four-year low of 314.58.

With the Hungarian Forint surging, we see this as the start of a longer-term trend. We should look to gain exposure through derivative markets, such as by buying HUF call options or selling out-of-the-money USD/HUF calls to capitalize on further currency strength. The initial move is sharp, but the fundamental re-rating of the country has just begun.

We have a clear historical precedent for this from looking back at Poland’s election in October 2023. After the pro-EU coalition won, the Polish Zloty rallied nearly 10% against the dollar and the Warsaw WIG20 stock index jumped over 25% in the following four months. We expect Hungarian assets to follow a similar positive trajectory in the coming weeks.

This outlook makes long positions in BUX index futures attractive. The change in government is expected to unlock a significant amount of previously frozen EU funds, specifically the €10.4 billion from the Recovery and Resilience Facility. This capital injection will boost the domestic economy and corporate earnings, making Hungarian equities look cheap at their current levels.

The new political climate significantly reduces Hungary’s country risk premium, which will positively impact government bonds. As yields fall, we should position for this using interest rate futures. This also gives the Hungarian National Bank, which cut its key rate to 7.75% as of its last meeting in March 2026, more room to continue its easing cycle without spooking currency markets.

Finally, implied volatility, which was high leading into this election, is now collapsing. Selling USD/HUF straddles or strangles could be an effective strategy to profit from the return to political stability. The period of uncertainty is over, and we should expect calmer price action moving forward.

Key Points

• USDX trades near 99.06, holding close to its strongest level since April 7.
• US-Iran talks in Islamabad ended without a breakthrough, eroding confidence in the fragile ceasefire and prompting a return to defensive positioning.
• Renewed concern over disruption in the Strait of Hormuz has lifted oil prices and revived inflation concerns.

The US dollar started the week on firmer footing as failed US-Iran peace talks pushed markets back into a more defensive stance.

The rebound marks a reversal from the more optimistic tone seen after last week’s ceasefire announcement, when traders briefly reduced defensive exposure and returned to equities and other risk assets.

The US Dollar Index is holding near 99.06, close to its highest level since April 7, suggesting that some of the geopolitical premium that had faded is now being rebuilt.

Failed Diplomacy Pushes the Market Back Into Caution

Markets had hoped the discussions between Washington and Tehran could stabilise the situation and reduce the risk of wider regional escalation. Instead, the lack of progress has brought uncertainty back into focus.

The earlier ceasefire had supported a measured recovery in risk appetite. Equities had regained some lost ground, oil had pulled back from recent highs, and the dollar had surrendered part of its defensive premium. The latest developments have disrupted that narrative and prompted investors to unwind some of those positions.

Price action across the currency market reinforces that shift. The euro moved lower, while more risk-sensitive currencies such as the Australian dollar and sterling came under greater pressure.

Together, these moves suggest that investors are pulling back from earlier optimism and returning to a more defensive stance.

Hormuz Risk Returns to the Centre of the Market

A second force behind the stronger dollar is the renewed focus on energy supply risk. The Strait of Hormuz remains one of the world’s most important oil transit routes, so any threat to shipping there quickly becomes a broader macro issue.

Markets are also reassessing the potential consequences for oil flows, inflation, and the broader policy outlook. With the US moving toward a blockade tied to Iranian ports, traders are again pricing the possibility of deeper disruption across the region.

That shift has contributed to a sharp rise in oil prices, reinforcing concern that inflation could remain elevated for longer. In a geopolitically unstable environment, higher energy costs make it more difficult for markets to assume a smooth moderation in inflation or a near-term turn toward easier monetary policy.

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The Dollar’s Strength Reflects a Broader Repricing

The dollar is drawing support from more than renewed safe-haven demand. Markets are also reassessing whether elevated energy prices could keep inflation pressures firmer and delay a shift toward easier policy.

If crude remains elevated, the global disinflation narrative becomes harder to sustain, limiting scope for markets to price a near-term turn toward easier monetary policy. That leaves the dollar on firmer footing as investors reassess the risk of more persistent inflation.

Viewed in that context, the latest rebound appears more grounded than a standard risk-off move. The greenback is being supported both by demand for safety and by the risk that policy settings may remain restrictive for longer.

While the move remains sensitive to headlines, it increasingly reflects a wider repricing of geopolitical and inflation risk.

USDX Technical Outlook

The US Dollar Index (DXY), which tracks the USD against a basket of six major currencies, is held in positive territory around 99.00 during Asian trading hours on Monday after trimming earlier gains. The Dollar is currently trading in a short term downtrend as investors still believe there are chances for a rate cut in the future which could weaken the Dollar.

The moving averages currently are still aligned for a downtrend and signals for possible shorts. However, MACD histogram currently is showing a possible chance for a retracement towards the upside as there is a bullish histogram above the 0 level. It is best to wait for further updates from the US-Iran negotiations before taking any positions as current directions are still unclear and prices could start to consolidate.

Key Levels To Watch:

• Support: 98.42 -> 98.2 -> 97.9
• Resistance: 99.17 -> 99.47 -> 99.6

What Comes Next

The dollar appears supported as long as the ceasefire remains fragile and the threat to energy flows stays active. The next phase will depend on whether tensions stabilise or move into a more disruptive stage.

If the situation around Hormuz worsens and oil extends its rise, the dollar may continue to hold firm or push higher. If diplomatic efforts restart and crude begins to ease, part of this latest safe-haven premium may unwind again.

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WTI futures on NYMEX rose 7.6% to near $98.00 in Asian trading on Monday. The move followed a Truth.Social post from US President Donald Trump saying he instructed the navy to blockade “any or all ships trying to enter or leave” the Strait of Hormuz, a route linked to almost 20% of global energy supply.

The warning followed talks between Iran and US Vice President JD Vance that failed after Iran refused to drop its nuclear ambitions. Trump also ordered the navy to “seek and interdict every vessel in International Waters that has paid a toll to Iran”, adding that “no one who pays an illegal toll will have safe passage on the high seas”.

Hormuz Blockade Threat Drives Oil Spike

US Central Command said forces will start a blockade of all maritime traffic entering and exiting Iranian ports on Monday, 10 AM ET (14:00 GMT). Separately, Saudi Arabia said it restored full pumping capacity of its East-West pipeline to seven million barrels a day.

On the daily chart, WTI traded around $98 and stayed above the 20-day EMA at $93.41. The RSI (14) was 56.23, with support near $93.41 and a higher level near $106.70.

The move towards $98 a barrel signals a significant shift in market dynamics, and we must position for further price increases. A full blockade of the Strait of Hormuz would represent the most severe supply disruption since the 1970s. This is a time to prepare for extreme volatility and substantial upward price pressure in the coming weeks.

We are observing a massive influx into out-of-the-money call options for WTI, specifically for the June and July contracts with strike prices above $110. Implied volatility on near-term options has surged past 65%, reflecting the market’s anticipation of sharp, unpredictable price movements. This indicates that the cost of insuring against price spikes is rising rapidly, a trend we expect to continue.

This supply shock is occurring at a time when the market is already tight, which will magnify its impact. The most recent Energy Information Administration (EIA) report showed a drawdown in U.S. crude inventories of 3.8 million barrels, surprising analysts who had predicted a small build. This pre-existing supply tightness provides very little cushion for the loss of Iranian barrels.

Positioning And Risk Management

Technically, the price holding firmly above the 20-day moving average near $93.41 confirms the bullish trend. We should view any pullbacks to this level as opportunities to add to long positions. The next logical price target is the recent high around $106.70, a level that could be tested very soon.

We must recall the market reaction to the start of the Ukraine war back in 2022, when WTI soared from around $90 to over $120 in just a few weeks. The current threat to the Strait of Hormuz has the potential to trigger a similar, if not more aggressive, price rally given the volume of oil that passes through it daily.

While the primary strategy is to be long, we should not ignore the risks of a sudden de-escalation. The news that Saudi Arabia has restored its East-West pipeline capacity offers a minor offset but cannot replace the nearly 20 million barrels per day that transit Hormuz. Therefore, using put spreads to hedge long futures positions could be a prudent way to protect against a sudden diplomatic breakthrough.

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EUR/USD rose after opening with a gap down and traded near 1.1690 in Asian hours on Monday. The daily chart shows the pair moving higher within an ascending channel.

The pair remains above the nine-day and 50-day Exponential Moving Averages (EMAs), which points to an upward tilt. The 14-day Relative Strength Index is near 56, indicating upward momentum that is not overstretched.

Resistance is seen near the top of the channel around 1.1750, then at the eight-week high of 1.1834 set on 23 February. If price moves above that area, the next level is around 1.2082, the highest since June 2021, reached on 27 January.

Support sits at the 50-day EMA of 1.1640 and the nine-day EMA of 1.1636. Below those, attention turns to the lower channel boundary near 1.1500 and the eight-month low of 1.1411 from 13 March.

The technical analysis was produced with the help of an AI tool.

Looking back at the analysis from around this time in 2025, we recall a bullish technical setup for EUR/USD, with the pair holding within an ascending channel. The expectation was for a potential test of the 1.1750 resistance zone. That particular price structure pointed towards buying on dips as a primary strategy.

That upside momentum never fully materialized last year, as the pair instead saw significant pressure from a more cautious European Central Bank. We remember that industrial production figures out of Germany were particularly weak in the second half of 2025, which capped the euro’s strength. The pair spent much of late 2025 consolidating well below the 1.12 mark.

Now, in April 2026, the fundamental picture has shifted significantly. Eurostat’s latest flash estimate for March inflation came in at 2.4%, perfectly in line with the ECB’s target. This stable inflation reading gives the central bank room to hold its policy steady, providing a firm base for the currency.

On the other side of the pair, futures markets are now pricing in a greater than 70% probability of a Federal Reserve rate cut by this summer. This view has been reinforced by the latest U.S. jobless claims data, which ticked up to 225,000, its highest level in four months. This policy divergence is creating a clear tailwind for EUR/USD that was absent in 2025.

For the coming weeks, derivative traders should consider strategies that benefit from a gradual grind higher, rather than explosive momentum. Buying call options with strike prices around 1.1200 and expirations in June 2026 allows for participation in the upside while defining risk. The implied volatility is currently low, making long-option strategies relatively inexpensive.

We must use the current 50-day EMA near 1.0950 as a key level for risk management. A sustained break below this area would challenge the bullish outlook. Therefore, purchasing protective puts with a strike near 1.0900 could be a prudent hedge against any unexpected reversal in sentiment.

USD/JPY extended gains from the past two days and opened the week with a bullish gap, rising to around 159.85 in the Asian session. Further upside was limited by concern about possible market intervention.

Risk-off trading followed failed US-Iran peace talks, supporting the US dollar’s role as a reserve currency. Higher crude oil prices added to inflation concerns and supported expectations of a hawkish Federal Reserve stance.

Yen Weakness And Intervention Watch

The yen faced pressure from worries about imported energy costs linked to the Middle East conflict. At the same time, talk of official action to limit yen weakness reduced the scope for further USD/JPY gains.

The pair kept a bullish bias after holding above the 158.25–158.20 support area last week. It also remained above the 200-period simple moving average, with the RSI near 63 and the MACD strengthening.

Traders may look for a sustained move above 160.00 before expecting more gains. Support levels include the 200-period SMA at 158.56, then 158.25–158.20 and 158.00, with a break below these levels increasing downside risk.

We recall a similar environment back in 2025, when failed US-Iran talks and rising oil prices created a strong bid for the US Dollar. At that time, the market was nervously watching the pair approach the 160.00 level, with the constant threat of intervention capping the rally. That period taught us that fundamentals can push a currency pair to a breaking point, but political risk ultimately sets the ceiling.

April 2026 Market Setup

Now in April 2026, we see a familiar pattern, with the pair pushing new highs near 162.50. Recent US inflation data, showing a core CPI of 3.4%, has once again postponed expectations for Federal Reserve rate cuts. This policy difference with the Bank of Japan, which has only moved cautiously away from its ultra-loose policy, provides a powerful tailwind for USD/JPY.

Given this backdrop, buying call options is a prudent way to stay long with a defined risk. This allows traders to benefit from further upside if the trend continues but limits the maximum loss to the premium paid should Japanese authorities intervene suddenly. We saw how the Ministry of Finance acted decisively in 2024, causing a multi-yen drop in minutes, a lesson we must not forget.

For those more wary of a pullback, buying out-of-the-money put options can serve as a cheap form of insurance. This strategy is especially useful for hedging existing long positions against a sharp reversal caused by intervention. The implied volatility in options will rise as the pair grinds higher, reflecting the market’s increasing anxiety.

Ultimately, the technical picture we saw in 2025, with the RSI below overbought territory and a positive MACD, is similar to today’s setup, suggesting the underlying momentum remains. However, the key is using derivative structures, like bull call spreads, to lower entry costs and manage risk around this critical zone. The fundamental case for a higher USD/JPY is strong, but the risk of a sudden, policy-driven reversal is equally significant.

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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–Iran talks in Islamabad ended without a deal after 21 hours of negotiations, confirmed by US Vice President JD Vance.

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.

Central Bank Outlook And Rate Path

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.

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.

The Sakura Report said board members weighed higher inflation risks against weaker growth risks after the April 6 branch managers’ meeting. All nine regions said their economies were “recovering moderately”, “picking up”, or “picking up moderately”.

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.

Energy Shock Trading And Hedging

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.

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.

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.

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.

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USD/CHF started the week higher, rebounding from a nearly three-week low near 0.7855 reached on Friday. It ended a five-day fall and traded around 0.7925, up 0.50%, supported by a firmer US dollar.

Risk appetite weakened after US-Iran talks failed over the weekend. After nearly 21 hours of discussions, there was no breakthrough, and Donald Trump said the US Navy would blockade ships entering or leaving the Strait of Hormuz.

Market Reaction And Central Bank Fallout

These events pushed crude oil prices higher and raised inflation concerns. This added to the view that major central banks, including the Federal Reserve, could take a more hawkish policy approach.

Hot US inflation data on Friday reduced expectations for Federal Reserve rate cuts this year and shifted attention to possible rate rises. Higher US Treasury yields also supported the US dollar.

The Wall Street Journal reported that regional countries aim to resume US-Iran talks within days. This limited further US dollar gains, while USD/CHF held above the 100-day simple moving average and kept an upward bias.

We recall how last year, around this time in 2025, a spike in geopolitical risk from failed US-Iran talks fueled a rush into the US Dollar. This safe-haven demand, combined with fears of Fed rate hikes due to hot inflation, saw the USD/CHF pair rebound sharply from its lows. That environment rewarded bullish dollar positions and those long volatility.

Trading Implications For Usdchf Options

The situation today, in April 2026, presents a very different picture as the geopolitical risk premium from the Strait of Hormuz has largely faded. Recent data shows US inflation is moderating, with the March CPI figure coming in at 2.8%, weakening the case for a hawkish Federal Reserve. This contrasts sharply with the inflation scare we saw last year that pushed US Treasury yields and the dollar higher.

Furthermore, a significant policy divergence has emerged between the central banks, favoring the Swiss franc. While we now see the Fed pausing, the Swiss National Bank surprised markets with a rate hike to 1.75% last month to combat persistent domestic price pressures. This growing interest rate differential in favor of the franc suggests the path of least resistance for USD/CHF has shifted downwards.

For derivative traders, this means implied volatility in the pair is considerably lower than during the military tensions of 2025, making options strategies more affordable. The fundamental shift suggests that buying USD/CHF put options to position for further downside is a logical approach. We see this as a way to capitalize on the contrasting central bank policies.

Specifically, looking at June and July expirations allows time for this policy divergence theme to play out further. The 100-day moving average, which acted as strong support during the 2025 rebound, now appears to be a point of resistance. Therefore, establishing bearish positions via put spreads below that key technical level could offer a favorable risk-to-reward setup in the coming weeks.

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