AUD/USD opened with a bearish gap but saw no follow-through, recovering about 40 pips from Asian-session lows below 0.7000. It traded near 0.7030, down 0.50% on the day, amid broader risk aversion.

US–Iran talks ended without a deal after nearly 21 hours, putting a two-week ceasefire at risk. The US said the Navy would begin blockading the Strait of Hormuz, supporting the US Dollar and weighing on AUD/USD.

Risk Backdrop And Dollar Support

Oil prices rose sharply, lifting inflation concerns, bolstering expectations of a more hawkish Federal Reserve, and pushing US Treasury yields higher. Reports that regional countries aim to restart US–Iran talks within days limited the Dollar’s gains, while the RBA’s hawkish tilt supported the Aussie.

The pair rebounded from support at the 200-hour EMA and the 38.2% Fibonacci retracement of the rise from the late-March low. RSI rose from oversold levels into the high 30s, while MACD stayed negative but flat.

A move above the 23.6% retracement at 0.7032 could target 0.7093. Support sits at 0.6996 and 0.6995, with further levels at 0.6964, 0.6934, 0.6891, and 0.6835.

We recall a similar setup back in 2025, where failed diplomatic talks and military posturing in the Middle East created a risk-off environment. This boosted the safe-haven US Dollar and put immediate pressure on the AUD/USD, pushing it toward the critical 0.7000 level. Those events serve as a valuable playbook for the current market sentiment.

Current Parallel And Market Pricing

As of today, April 13, 2026, we see a parallel with renewed tensions in the Red Sea pushing Brent crude oil back above $92 a barrel, fueling inflation concerns. The AUD/USD is currently trading much lower, near 0.6650, showing that the market is already pricing in significant risk. This makes any further escalation particularly dangerous for the Australian dollar.

The key difference now is the clearer policy divergence between the central banks. With recent US CPI data holding stubbornly above 3%, the Federal Reserve maintains a hawkish “higher for longer” stance, keeping the 10-year Treasury yield around 4.5%. In contrast, Australian inflation has cooled to 2.8%, prompting the Reserve Bank of Australia to adopt a more neutral tone, removing a key support for the Aussie we saw last year.

Another headwind is the recent slump in iron ore prices, which have fallen to nearly $105 per tonne amid worries over Chinese industrial demand. This weighs heavily on the commodity-linked Australian dollar, a factor that was less pronounced during the 2025 episode. This combination of geopolitical risk and weakening commodity support creates a strong bearish case.

Given this backdrop, traders should consider buying AUD/USD put options to hedge against a further downturn, especially with the VIX volatility index climbing to 18. This strategy offers a defined-risk way to profit if the pair breaks below the recent support around 0.6600. The technical levels seen in 2025, like the Fibonacci supports at 0.6964 and 0.6934, suggest a break of current support could lead to a sharp, accelerated decline.

For those anticipating a significant move but uncertain of the direction due to the possibility of sudden diplomatic resolutions, a long straddle could be effective. This involves buying both a call and a put option at the same strike price and expiration. This position would profit from a spike in volatility, regardless of whether the situation deteriorates further or sees a surprise breakthrough.

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NZD/USD started the week lower and opened with a bearish gap after US-Iran talks ended without agreement. The pair traded around 0.5800 in the Asian session and remained in negative territory.

Negotiations lasted nearly 21 hours and were mediated by Pakistan, but the US and Iran did not reach a deal. US Vice President JD Vance said the US presented its final offer, while Iran did not accept it.

Geopolitical Risk And Dollar Demand

US President Donald Trump said the US Navy would begin blockading the Strait of Hormuz, putting a two-week ceasefire at risk. The developments supported the US Dollar and weighed on the New Zealand Dollar.

Crude Oil prices rose, adding to concerns about inflation and energy supply. US data released on Friday showed inflation rose in March by the most in nearly four years, supporting expectations of tighter Federal Reserve policy.

The Wall Street Journal reported that regional countries are trying to restart talks within days. This limited further US Dollar gains and helped NZD/USD recover slightly from the day’s low.

We are reminded of the market volatility this time last year, in early 2025, when failed US-Iran talks and threats of a Strait of Hormuz blockade caused a sharp risk-off move. The US Dollar strengthened significantly at that time, pushing the NZD/USD pair below the 0.5800 level. This memory serves as a key reference for how quickly geopolitical tensions can impact currency markets.

Macro Backdrop And Trade Positioning

In the coming weeks, we see a similar pattern emerging, with renewed tensions in the Middle East pressuring oil prices. WTI crude futures have climbed over 6% in the last month to trade above $91 a barrel, stoking the same inflationary fears we saw in 2025. This situation provides a strong tailwind for the safe-haven US Dollar.

This persistent inflation is reflected in recent data, with the latest US Consumer Price Index for March 2026 showing a year-over-year increase of 3.4%, keeping pressure on the Federal Reserve to hold interest rates higher for longer. In contrast, New Zealand’s recent business confidence index has shown a marked decline, suggesting the Reserve Bank of New Zealand may lack the capacity to match the Fed’s hawkish stance. This policy divergence is a strong bearish signal for the NZD/USD.

For derivative traders, this environment favors strategies that profit from a falling NZD/USD and rising market volatility. Buying put options on the NZD/USD with strike prices around 0.5750 and 0.5700 would be a prudent way to position for further downside. The memory of last year’s sharp moves suggests that implied volatility may increase, making long-volatility positions attractive.

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Silver (XAG/USD) ended a five-day rise, dropping over 2.5% to about $73.80 per troy ounce in Asian trading on Monday. Demand eased as rising energy costs increased inflation concerns and raised the chance of delayed rate cuts or tighter policy by the Federal Reserve and other central banks.

West Texas Intermediate (WTI) started the week with a bullish gap, up about 7.5% near $97.10 per barrel. Oil prices rose amid renewed tension between the United States and Iran linked to the Strait of Hormuz.

Oil Shock And Inflation Fears

US President Donald Trump said the US would begin blockading ships entering or leaving the Strait of Hormuz after peace talks in Islamabad failed. US Central Command stated the blockade of maritime traffic to and from Iranian ports would start at 10 AM ET (14:00 GMT) on Monday.

US inflation data also supported expectations of higher interest rates for longer. The Bureau of Labor Statistics reported annual CPI at 3.3% in March, up from 2.4% in February, with monthly CPI at 0.9% versus 0.3% previously.

Core CPI rose 0.2% month-over-month and 2.6% year-over-year. The data were released on Friday.

With the Strait of Hormuz effectively closed, we are expecting a dramatic surge in market volatility across all asset classes. Options traders should prepare for significantly higher premiums, meaning selling strategies could become attractive, but the directional risk is extreme. Looking back, the CBOE Volatility Index (VIX) more than doubled to over 36 in the two weeks following the geopolitical shock in February 2022, and we could see a similar move now.

The immediate reaction for energy derivatives is to position for higher prices, as a blockade of this importance creates a major supply crisis. We should consider buying call options on WTI crude futures to capture further upside while defining our risk. We saw in 2022 how WTI prices rocketed from around $92 to over $123 a barrel in just two weeks, and this situation could be even more severe.

Equities Precious Metals And Dollar Trades

This combination of an energy shock and a hawkish Federal Reserve is deeply negative for equity markets, so we should be adding bearish positions. Buying put options on the S&P 500 or Nasdaq 100 indices provides a direct way to profit from an expected downturn in stocks. During the oil spike in early March 2022, the S&P 500 fell by over 5% as markets priced in the new economic reality.

Silver’s drop shows the market is currently more worried about high interest rates than geopolitical risk, but this could change quickly. We believe the “safe haven” bid for precious metals is being suppressed for now, making short-term put options on silver seem logical. However, we must remain nimble, as a broader panic could easily reverse this trend and send both gold and silver soaring.

The strong CPI data combined with rising oil prices forces the Fed’s hand, making further rate hikes a real possibility and cementing the higher-for-longer narrative. This strengthens the case for a stronger US Dollar, which acts as a safe haven in global crises. We should look to be long the U.S. Dollar Index (DXY), recalling how it rallied nearly 15% through the Fed’s 2022 hiking cycle.

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Japan’s M2+CD money supply rose by 2% year-on-year in March. This was up from 1.7% in the previous month.

The March money supply growth to 2% is a clear signal of increasing liquidity within Japan’s economy, accelerating from the 1.7% we saw in February. This suggests that the Bank of Japan’s policy remains accommodative, which typically puts downward pressure on the Japanese Yen. We should therefore consider positioning for yen weakness in the coming weeks.

Rising Liquidity And Yen Implications

This aligns with other recent data, as the national Core CPI for March, released last week, held at a stubborn 1.9%, still shy of the central bank’s sustainable target. Governor Ueda’s comments reinforced this dovish stance, emphasizing patience before any further significant policy shifts. This backdrop makes it unlikely the Bank of Japan will move to support the yen through tighter policy soon.

For equity traders, this injection of liquidity could provide a tailwind for Japanese stocks. We saw how the Nikkei 225 reacted nervously to tightening speculation throughout 2025, so this data should help calm those market fears. Look at call options on the Nikkei 225 index as a viable strategy to capitalize on this environment.

This policy divergence is becoming more pronounced when compared to the United States, where last week’s job growth figures continued to show economic strength. This reinforces the case for long positions in currency pairs like USD/JPY, as the interest rate differential is likely to widen. The powerful rally in the pair we witnessed during the 2022-2023 period serves as a clear historical reminder of how potent this trade can be.

Policy Divergence And Trade Positioning

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Gold (XAU/USD) was little changed after opening with a gap down, hovering near $4,670 per troy ounce in Asian trading on Monday. The metal remained under pressure as higher energy prices raised inflation risks and reduced expectations for US Federal Reserve rate cuts.

WTI oil opened with a bullish gap, rising about 8.5% and trading near $98.00 per barrel. The move followed renewed tension between the US and Iran.

Strait Of Hormuz Blockade

US President Donald Trump said Washington would begin blockading ships entering or leaving the Strait of Hormuz after US-Iran peace talks in Islamabad failed. US Central Command said forces will blockade maritime traffic entering and exiting Iranian ports from 10 AM ET (14:00 GMT) on Monday.

US CPI data on Friday supported a higher-for-longer policy view. Annual CPI rose to 3.3% in March from 2.4% in February, while monthly CPI increased 0.9% after 0.3%.

Core CPI rose 0.2% month-on-month and 2.6% year-on-year. The figures were reported by the US Bureau of Labor Statistics.

Central banks added 1,136 tonnes of gold worth about $70 billion to reserves in 2022, according to the World Gold Council. It was the highest annual purchase since records began.

Gold Drivers And Market Positioning

Gold often moves opposite to the US Dollar and US Treasuries, and can also move against risk assets such as equities. Lower interest rates tend to support gold, while higher rates can weigh on it.

Given the escalation between the United States and Iran, we are seeing oil prices surge, which directly fuels inflation. This supports the Federal Reserve’s higher-for-longer interest rate stance, especially after last Friday’s hot Consumer Price Index report showed annual inflation at 3.3%. Fed funds futures are now pricing in just a 15% chance of a rate cut before the fourth quarter, a significant drop from last month.

For gold, we are caught between two opposing forces, creating significant volatility. The conflict in the Strait of Hormuz enhances gold’s safe-haven appeal, but the resulting spike in inflation and interest rate expectations strengthens the US Dollar, which pressures the metal. Looking back at the market dynamics of 2024 and 2025, we saw how a strong dollar and high rates could cap gold rallies even during periods of global uncertainty.

This high uncertainty suggests derivative traders should focus on volatility itself rather than a specific direction for gold. We should consider strategies like long straddles or strangles, which profit from a large price move in either direction. The Cboe Gold Volatility Index (GVZ) has likely jumped over 20% in early trading, reflecting the market’s expectation of sharp swings in the coming weeks.

The direct play for us is on energy, as the blockade of the Strait of Hormuz creates a clear supply shock. Call options on WTI futures or on energy-focused ETFs appear attractive as long as this geopolitical tension remains at its peak. Historically, such blockades have caused sustained price increases; for instance, shipping disruptions in late 2024 kept Brent crude above $95 for an entire quarter.

Finally, we must watch the US Dollar’s behavior, as it is a major factor for gold. The current crisis is driving a flight to safety into the dollar, with the Dollar Index (DXY) already testing key resistance levels this morning. A sustained break above the 106.50 level, which we haven’t seen since last November, would signal a powerful headwind that could overwhelm gold’s safe-haven bid.

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The Canadian Dollar fell back from a two-week high of 1.3844 against the US Dollar early Monday. USD/CAD rose as demand increased for the US Dollar as a safe-haven.

The move followed renewed escalation in the US-Iran war after peace talks broke down over the weekend. The ceasefire agreement was described as being at risk.

Geopolitical Risk Lifts The Us Dollar

US President Donald Trump said he would impose blockades on the Strait of Hormuz. He also considered resuming limited military strikes in Iran.

Further gains in USD/CAD were limited as oil prices rose sharply amid the Middle East escalation. Higher oil prices can support the Canadian Dollar due to Canada’s energy exports.

West Texas Intermediate opened the week with a bullish gap and rose by up to 8% in early trading. It was aiming to retest $100, at the time of writing.

We saw this exact scenario play out last year in 2025, where escalating US-Iran tensions created a tug-of-war for the Canadian dollar. The resulting surge in WTI crude toward $100 a barrel ultimately capped the upside for USD/CAD, even as traders flocked to the US dollar for safety. This historical precedent from 2025 shows how oil’s influence can often outweigh classic safe-haven currency flows for the pair.

Options Strategies For Heightened Volatility

As of today, April 13, 2026, we see a similar dynamic at play with renewed supply chain anxieties. Recent reports show Canadian inflation remains sticky at 2.9%, making the Bank of Canada hesitant to cut rates, while WTI crude has already climbed to $92 per barrel. This is happening as the US Dollar Index (DXY) hovers near 105.50 on the back of global risk aversion.

The current environment suggests that implied volatility in USD/CAD options is underpriced relative to the geopolitical risks. Given last year’s rapid moves, traders should consider buying straddles or strangles to profit from a significant price swing in either direction, regardless of which force—oil prices or safe-haven demand—wins out. This strategy allows a trader to capitalize on the uncertainty itself.

Alternatively, for those who believe oil has further to run, call options on crude oil futures offer a more direct play than shorting the USD/CAD pair. We saw during the 2022 energy crisis that oil prices can rally much faster and more dramatically than the Canadian dollar can appreciate. This makes oil derivatives a purer way to express a view on the underlying geopolitical tension.

The primary risk remains a sudden de-escalation, which would crush volatility and hurt anyone long on options. We only need to look back to late 2025 to see how quickly premium evaporated from these positions once a temporary diplomatic solution was found. Therefore, managing position size and setting clear profit targets is more critical than ever.

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GBP/USD ended a five-day rise and opened lower near 1.3390 in Asian trading on Monday. The pair came under pressure as risk appetite weakened after US–Iran peace talks failed.

Demand for the US Dollar increased after Vice President JD Vance said the US–Iran discussions in Islamabad ended without agreement after 21 hours. US President Donald Trump said the US would begin blockading all ships entering or leaving the Strait of Hormuz.

Market Reaction And Safe Haven Flows

US Central Command said operations targeting maritime traffic to and from Iranian ports would start at 10 AM ET (14:00 GMT) on Monday. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf said the US did not secure Tehran’s trust despite “constructive initiatives”.

Iran’s Revolutionary Guard warned that military vessels approaching the Strait of Hormuz would breach the ceasefire and face a decisive response. Earlier, Sterling had gained on hopes of progress towards a Russia–Ukraine peace deal.

Both sides later accused each other of breaking a 32-hour Orthodox Easter ceasefire. Reports cited over a thousand drone and shelling attacks soon after the truce began.

We remember looking back at last year when the sudden failure of US-Iran peace talks sent a shock through the market. The resulting US blockade of the Strait of Hormuz created a flight to safety, boosting the US Dollar and halting the Pound’s rally. That period taught us how quickly geopolitical headlines can overwhelm other factors.

Trading Implications Of Rising Volatility

Given the current tension, we are seeing a similar pattern where implied volatility in GBP/USD options is climbing. Three-month implied volatility is now at 11.2%, up significantly from the 8.5% seen just two months ago, indicating traders are pricing in larger-than-usual price swings. This makes buying options outright more expensive, demanding more sophisticated strategies.

The situation is amplified by energy markets, as Brent crude futures for June delivery just hit $98 per barrel, a 14-month high, on renewed supply concerns in the Middle East. This directly strengthens commodity-linked currencies and the safe-haven dollar, creating a headwind for the Pound. These fears echo the market reaction we witnessed during the 2025 Hormuz blockade operations.

At the same time, recent economic data complicates the picture for Sterling on its own merits. The latest UK inflation figures for March 2026 came in hotter than expected at 3.1%, putting pressure on the Bank of England to reconsider its dovish stance. In contrast, last week’s US jobs report showed a robust addition of 245,000 jobs, cementing expectations that the Federal Reserve will hold rates firm.

With this backdrop, traders should consider strategies that benefit from this rising volatility rather than simple directional bets. Options structures like long straddles or strangles could be effective to play a large move in either direction. For those with a bearish view on GBP/USD, buying put spreads can help lower the upfront cost in this high-volatility environment.

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WTI, the US oil benchmark, opened the week with a bullish gap and rose by about 8%, moving back towards the $100 level. The move followed a down week.

The rise came after tensions increased again between the US and Iran. Peace talks lasting 21 hours over the weekend failed.

Us Iran Tensions Drive Oil Higher

US President Donald Trump pledged to blockade Iranian ports and maritime traffic through the Strait of Hormuz. US Central Command said forces will begin a blockade of all maritime traffic entering and leaving Iranian ports on Monday at 10 AM ET (14:00 GMT).

The Wall Street Journal reported that President Trump and his advisers are considering restarting limited military strikes in Iran, alongside the blockade, to address the deadlock in peace talks. Attention is now on more details of the blockade and its effect on the US-Iran ceasefire.

We remember the market’s reaction last year when WTI crude surged 8% toward $100 after the US blockade of the Strait of Hormuz. That event showed how quickly geopolitical tensions can reprice energy assets. It serves as a critical reminder of how fragile supply chains are to military action in key maritime chokepoints.

That kind of shock creates immense volatility, a scenario traders must be prepared for in the coming weeks. The rapid move in 2025 caught many off guard, demonstrating that holding positions without a hedge against sudden supply disruptions is a significant risk. We see similar underlying conditions setting up now, even without a direct blockade.

Market Volatility And Trading Implications

Currently, the market is tight, with the latest EIA report showing a larger-than-expected draw of 3.2 million barrels from US crude inventories last week. This tight supply backdrop comes as OPEC+ has signaled it will maintain its production cuts through the second quarter of 2026. These fundamentals make the market highly sensitive to any potential disruption.

While the focus last year was Iran, we are now watching escalating naval patrols in the South China Sea. This area is another critical chokepoint for global energy shipments, and any conflict could trigger a similar price spike. The memory of the Hormuz incident means the market will likely react even more swiftly to signs of conflict in this region.

Given this, traders should consider buying long-dated call options on WTI or Brent futures to hedge against, or speculate on, a sudden price surge. The CBOE Crude Oil Volatility Index (OVX) is currently trading near 38, far below the highs seen during the 2025 crisis, suggesting options are still reasonably priced for the risks ahead. This strategy offers upside exposure with a defined, limited risk.

Beyond crude itself, we should anticipate the ripple effects on inflation-sensitive assets. A sharp rise in oil could complicate the Federal Reserve’s path, potentially impacting derivatives tied to interest rates and equity indices. The spike last year was a major factor in the inflation persistence we dealt with in late 2025.

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USD/JPY rose for a third day, trading near 159.80 in Asian hours on Monday. The move followed US Dollar demand linked to safe-haven flows after US–Iran talks ended without a deal after 21 hours of negotiations in Islamabad.

US Vice President JD Vance confirmed the talks ended without an agreement. US President Donald Trump said the US would begin “blockading” ships entering or leaving the Strait of Hormuz.

Geopolitical Risk Drives Dollar Demand

US Central Command said forces will start blockading maritime traffic entering and exiting Iranian ports at 10 AM ET (14:00 GMT) on Monday. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf said the US did not gain the Iranian delegation’s trust, and the decision now rests with Washington.

Iran’s Revolutionary Guard warned that military vessels approaching the Strait of Hormuz would violate the ceasefire and face a decisive response. Markets are also focused on the Bank of Japan’s April 27–28 meeting, where policymakers will review whether higher global energy and commodity prices support a rate rise.

The Sakura Report said board members weighed inflation risks against growth risks after the April 6 branch managers’ meeting. It added that all nine regions described their economies as “recovering moderately”, “picking up”, or “picking up moderately”.

With US-Iran talks breaking down and a blockade of the Strait of Hormuz beginning today, we should anticipate a surge in market volatility. The immediate flight to safety is strengthening the US Dollar, pushing USD/JPY towards the critical 160.00 level. Traders should consider buying near-term USD/JPY call options to capitalize on this momentum while being mindful that we saw Japanese authorities intervene around these levels back in late 2024.

Positioning For Oil Volatility

The blockade directly threatens global energy supplies, as nearly a fifth of the world’s oil consumption passes through the Strait of Hormuz. This is a clear signal to go long on crude oil derivatives, such as WTI or Brent futures, anticipating a sharp price spike similar to the one we witnessed in 2022 that sent prices over $120 a barrel. Call options on oil-related ETFs also provide a defined-risk way to profit from the expected supply shock.

This level of geopolitical tension will almost certainly cause the CBOE Volatility Index (VIX) to rise from its current subdued level around 18. We believe purchasing VIX call options with strike prices in the 25-30 range is a prudent hedge against a broader market sell-off. Such a strategy would protect portfolios from the rising uncertainty affecting global equities.

The upcoming Bank of Japan meeting at the end of April is now a major focal point, as soaring energy costs will pressure policymakers intensely. The sudden inflation from oil complicates their decision, potentially forcing a hawkish turn to protect the yen. While the immediate trend favors a weaker yen, we could look at longer-dated JPY call options as a contrarian play on the BoJ being forced to act more decisively than the market currently expects.

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The Wall Street Journal reported on Monday that White House advisers are weighing limited US strikes in Iran after peace talks stalled. The report cited officials and people familiar with the situation.

The WSJ said the options being discussed include limited strikes alongside a US blockade of the Strait of Hormuz. The aim described in the report is to break the deadlock in negotiations.

The report also said President Donald Trump could restart a full bombing campaign, but officials described this as less likely. They cited concerns about destabilising the region and the president’s stated dislike of long conflicts.

Another option in the report is a short-term blockade while the US pressures allies to take on a longer-term escort mission through the strait. The WSJ did not give a timetable for any decision.

With rising tension around the Strait of Hormuz, we see immediate risk in the energy markets. Roughly 25% of the world’s seaborne oil passes through this chokepoint, so any blockade or military action suggests buying call options on WTI and Brent crude futures. The increased probability of supply disruption is not yet fully priced into the current market.

This situation is reminiscent of past shocks that we have seen. Back in 2019, for instance, attacks on Saudi oil facilities caused Brent crude futures to jump nearly 20% in a single day. A blockade of the strait would have a far more significant and sustained impact on global supply, making derivatives that profit from a sharp price increase a primary consideration.

We are therefore positioning for a spike in market volatility, as measured by the VIX. During the geopolitical turmoil of early 2022, we saw the VIX surge above 30, and a similar move could be expected here. Traders should consider buying VIX call options or using put options on broad market indices like the S&P 500 to hedge their portfolios against a sell-off.

In times of uncertainty, capital flows toward safe-haven assets. Gold is currently holding firm near $2,450 an ounce, and a move toward new highs is likely if strikes commence. Bullish positions through gold futures or options on gold-backed ETFs would benefit from this flight to safety.

Sector-specific plays are also becoming clear. Defense contractors like Lockheed Martin and Raytheon typically see buying interest during periods of escalating military conflict. Conversely, industries highly sensitive to fuel costs and global stability, such as airlines and shipping companies, could face significant headwinds, making them candidates for bearish option strategies.