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AUD/JPY traded near 111.80 in Wednesday’s Asian session, keeping a positive tone while holding above the 100-day EMA near 107.50. The outlook is supported by RSI in the high-50s, with initial support at 111.00 and an upside barrier around 112.50.
The move came as the Australian Dollar rose against the Yen amid improved risk sentiment after Donald Trump said he agreed to suspend bombing and attacks on Iran for two weeks, if Iran reopens the Strait of Hormuz. Iran’s Foreign Minister Seyed Abbas Araghchi said safe passage through the strait “will be possible” during the two weeks via coordination with Iran’s Armed Forces, subject to technical limits.
Risk Sentiment Lifts Aud Jpy
Reduced demand for safe-haven assets weighed on the Yen, although concerns about potential Japanese intervention may limit Yen weakness. Japan’s top currency diplomat Atsushi Mimura said officials may take “decisive” steps if speculative moves persist.
Technically, price remains in the upper half of the Bollinger Bands, which are still wide. A break below 111.00 could open 110.00, then 109.00 near the lower band area, while resistance is at 112.61 and 113.15.
The Yen’s direction is shaped by Japan’s economy, Bank of Japan policy, Japan–US yield spreads, and risk sentiment. The BoJ’s ultra-loose policy from 2013 to 2024 weakened the Yen, with a 2024 shift away from it narrowing the 10-year yield gap.
Given the temporary de-escalation in the Middle East, we see a short-term window for further AUD/JPY strength. The two-week truce period weakens the safe-haven Japanese Yen, favouring the risk-sensitive Australian Dollar. This environment supports the current upward momentum towards the 112.50 resistance level.
Options Strategies For A Capped Rally
However, we must approach this with caution, as the move is based on a fragile geopolitical agreement. Buying short-dated call options with a strike around 112.50 and an expiry in late April or early May allows for participation in the upside while strictly defining our maximum loss. Implied volatility on one-month options has ticked up to 12.8%, reflecting this very uncertainty, making defined-risk strategies prudent.
The threat of intervention from Japanese authorities to support the Yen is capping the rally. We remember the Ministry of Finance’s decisive action in late 2022 when USD/JPY crossed 150, showing their willingness to act against rapid currency weakness. Japan’s latest national CPI data for March 2026, which came in at 2.4%, also continues to support the Bank of Japan’s gradual policy normalization, providing a longer-term headwind for this cross.
On the other side, recent trade balance figures from Australia showed a narrower-than-expected surplus, partly due to a slight easing in iron ore prices over the last quarter. This suggests the Australian dollar’s rally may not have the fundamental power to push significantly beyond the 113.50 level without fresh catalysts. This reinforces the view that the cross is facing strong resistance ahead.
With these conflicting forces, we can consider strategies that benefit from elevated volatility and a potential range. Selling a bear call spread with the short strike above 113.00 could be an effective way to bet that intervention fears and moderating Australian data will cap the rally. This strategy takes advantage of the current optimism to collect premium, while still being protected from an unexpected surge higher.
NZD/USD rose for a third day after dipping to 0.5700 in Asia and then climbing to a near two-week high on Wednesday after US-Iran ceasefire news. It held above 0.5800 and changed little after the Reserve Bank of New Zealand (RBNZ) decision.
The RBNZ kept the Official Cash Rate at 2.25% for a second meeting in a row, as expected, citing uncertainty around economic and inflation prospects linked to the Iran war. The decision had limited impact on the NZD, with attention turning to Governor Dr Anna Breman’s press conference.
Ceasefire Headlines Lift Risk Sentiment
US President Donald Trump said planned military strikes on Iran would be paused for two weeks if Tehran agrees to an immediate and safe opening of the Strait of Hormuz. Iran’s Foreign Minister Seyed Abbas Araghchi said Iran would stop defensive operations if attacks on the country end.
Araghchi also said safe passage through the waterway would be possible for two weeks, which led to a sharp fall in crude oil prices and reduced inflation concerns. This lowered expectations of a US Federal Reserve rate rise and weighed on the US dollar, supporting NZD/USD.
We recall from last year the brief risk-on rally in NZD/USD that followed the temporary US-Iran ceasefire in 2025. The market reaction pushed the pair towards the 0.5800 level, but the fundamental picture today is vastly different. The Reserve Bank of New Zealand’s Official Cash Rate is no longer 2.25%, but has been held at a restrictive 5.50% for over a year.
This high interest rate environment is a response to persistent domestic inflation, which, according to data from Stats NZ, was still running at an annualized 3.8% in the first quarter of 2026, well above the RBNZ’s target. Therefore, any strength in the kiwi is now more closely tied to this attractive yield differential rather than fleeting risk sentiment. This makes long NZD positions against lower-yielding currencies a fundamentally sounder play than it was in 2025.
Competing Central Bank Policy Keeps Pair Range Bound
Similarly, the situation for the US dollar has changed dramatically, as the Federal Reserve has also maintained its funds rate above 5% to manage its own inflation issues. This contrasts sharply with the conditions in 2025, when the ceasefire news tempered rate hike expectations. The high US interest rate provides a floor for the dollar, suggesting the NZD/USD pair is more likely to be range-bound by competing central bank policies.
The geopolitical landscape offers another key difference, as the temporary dip in oil prices we saw in 2025 is a distant memory. Ongoing tensions in the Middle East have kept Brent crude prices elevated, hovering around $90 a barrel through early 2026, which continues to fuel global inflationary concerns. This backdrop supports a cautious stance and reinforces central banks’ commitment to keeping rates higher for longer.
Given this, traders should consider using options to trade the volatility around key inflation data releases for both New Zealand and the United States. A straddle on the NZD/USD could be an effective way to profit from a significant move in either direction following a CPI announcement, without betting on the direction itself. The market is now driven by hard data, unlike the geopolitical headline reactions of 2025.
The Strait of Hormuz disruption is driving oil, forex and crypto markets at the same time.
Higher energy prices support the US dollar and pressure energy-importing currencies.
Crypto acts like a risk asset in the short term but still functions as a real-time financial system.
The real driver is not the price but how long the disruption lasts.
Why the Strait of Hormuz is the Defining Macro Story of 2026
There is a narrow strip of water, roughly 21 miles wide, sitting between Iran and Oman that is currently exerting more influence on currency markets and crypto prices than any central bank decision or earnings report.
The Strait of Hormuz has become the defining macro story of early 2026. Traders in forex and crypto who have not fully mapped its implications are operating with a serious blind spot.
Beginning on March 4, Iranian forces declared the Strait closed, threatening and in some cases attacking vessels attempting to transit it. What followed was not just an oil story. It became a cascading shock across every major asset class, with second-order effects that are still unfolding and far from fully priced.
Iran and Israel traded attacks as Tehran defiantly refused to reopen the Strait of Hormuz and accept a ceasefire deal on the eve of a deadline set by President Trump to agree to his demands or get ‘taken out’ https://t.co/jPmnzK5LX5pic.twitter.com/xNHAAi2HyY
How the Strait of Hormuz Closure Impacts Global Energy and Forex Markets
The Strait of Hormuz handles roughly 20% of global oil consumption, alongside a significant share of liquefied natural gas flows, particularly from Qatar. Any disruption here does not gently move markets. It forces a repricing.
Source: Visual Capitalist
During the recent escalation, Brent crude moved above 100 dollars per barrel for the first time in four years, peaking near 120. While exact intraday highs vary across contracts, the direction is what matters. A sharp and aggressive repricing of energy.
The Strait of Hormuz's closure and the resulting surge in global oil prices have handed financial windfalls to Iran, Oman and Saudi Arabia, while other states that lack alternative shipment routes have lost billions of dollars, a Reuters analysis found https://t.co/a8wAyrMrjS
How does the Strait of Hormuz closure impact the USD?
The impact across currencies follows a consistent structure.
The United States sits in a relatively advantaged position. As one of the world’s largest energy producers and a major LNG exporter, it benefits on a relative basis when prices rise. Higher oil supports the dollar through improved terms of trade and safe-haven demand. At the same time, elevated energy prices complicate the Federal Reserve’s path to rate cuts, reinforcing dollar strength.
The euro area faces a structural vulnerability. Heavy reliance on imported energy means rising oil and gas prices push inflation higher while pulling growth lower. This creates a stagflationary setup. The European Central Bank is left constrained and unable to ease aggressively without risking persistent inflation. The result is sustained pressure on EURUSD.
Japan and broader Asia face a similar dynamic. Economies such as Japan, South Korea, India and China remain heavily dependent on imported energy, much of it historically routed through the Gulf. When shipping risks rise and prices spike, trade balances deteriorate. This translates into depreciation pressure on currencies like JPY, KRW and INR, unless offset by policy intervention.
— Reuters Energy and Commodities (@ReutersCommods) April 7, 2026
There is also the Russia factor. Disruptions in Middle Eastern supply increase the relative importance of alternative producers. Russia’s discounted crude becomes more attractive to major importers such as India and China, supporting export revenues and indirectly stabilising trade-linked currency flows.
The takeaway is straightforward but often underestimated.
Energy is not just a commodity variable. It is a primary driver of currency markets.
Forex Chain Reaction: Impact of Strait of Hormuz Disruption
Currency
Market Position
Impact of Disruption
Economic Drivers
US Dollar (USD)
Strong / Bullish
Benefits on a relative basis as a safe haven.
US is a major energy producer/LNG exporter; high oil prices complicate Fed rate cuts.
Euro (EUR)
Weak / Bearish
Faces sustained pressure and a stagflationary setup.
Heavy reliance on imported energy; rising costs push inflation up while pulling growth down.
Japanese Yen (JPY)
Weak / Bearish
Significant depreciation pressure.
Heavily dependent on imported energy historically routed through the Gulf.
Indian Rupee (INR)
Weak / Bearish
Trade balances deteriorate, leading to currency weakness.
High dependency on Middle Eastern energy imports.
South Korean Won (KRW)
Weak / Bearish
Vulnerable to shipping risks and price spikes.
Heavy reliance on energy imports to sustain the economy.
Russian Ruble (RUB)
Stabilising
Increased importance of alternative supply.
Discounted crude becomes more attractive to major importers like China and India.
Is Bitcoin a Hedge or a Risk Asset? The Impact of Geopolitical Shocks on Crypto
Geopolitical shocks reveal what markets truly are, not what narratives suggest they should be.
In the immediate aftermath of major headlines, Bitcoin and the broader crypto market typically sell off. Liquidity tightens, volatility rises, and risk appetite fades. In these moments, crypto behaves less like a hedge and more like a high beta risk asset, closer to technology equities than digital gold.
But that is only half the story.
Crypto markets operate continuously. They do not close or pause. When geopolitical developments occur outside traditional trading hours, crypto becomes one of the only venues for real-time price discovery. This gives it a structural role that traditional markets cannot replicate.
During periods of heightened tension, trading volumes across major crypto exchanges tend to increase as participants react instantly to new information. This is observable behaviour embedded in market microstructure.
There is also a growing real economy dimension. In regions facing sanctions, capital controls or restricted access to banking infrastructure, crypto usage increases. It becomes not just a speculative asset but a functional alternative for settlement and value transfer.
Perhaps most tellingly, reports have emerged of vessels paying transit-related fees in Chinese yuan or even crypto to navigate the Strait under heightened risk conditions. These cases are still marginal, but they signal something more important. When traditional financial rails are disrupted, alternative systems are not just theoretical. They are used.
Crypto in this context carries a dual identity.
In the short term, it behaves like a risky asset.
In the longer term, it continues to evolve as a parallel financial system.
The Structural Tailwinds Beneath the Noise
Despite volatility, the broader trajectory for crypto remains intact.
Institutional participation continues to expand through Bitcoin exchange-traded funds (ETFs). Regulatory frameworks in the United States are gradually taking shape, with developments such as the CLARITY Act pointing toward a more defined operating environment. Meanwhile, stablecoins are quietly embedding themselves into the global financial system.
The scale is already significant.
In 2025, stablecoin transaction volumes exceeded 34 trillion dollars, surpassing the combined volumes of Visa and Mastercard. That figure carries more weight when viewed alongside real-world scenarios where digital assets are being used in high-friction geopolitical environments.
The underlying infrastructure is not slowing down, even when markets are.
Market Outlook: What Happens if the Strait of Hormuz Remains Closed?
Energy shocks do not hit markets in a single wave. They evolve.
At the outset, the reaction is driven by uncertainty and risk repricing. If disruptions persist, the impact becomes tangible. Shipping delays accumulate, inventories tighten, and volatility becomes sustained rather than temporary.
For traders, positioning becomes less about prediction and more about understanding the path forward.
If the situation stabilises and the Strait reopens, oil prices are likely to retrace from elevated levels. Inflation pressures ease, central banks regain flexibility, and risk assets, including equities and crypto, find support. Energy-importing currencies recover as external pressures fade.
If the disruption persists, the opposite dynamic takes hold. Elevated energy prices keep inflation stubborn, forcing central banks to maintain tighter policy for longer. Growth slows, the US dollar remains firm, and currencies tied to energy imports stay under pressure. In this environment, crypto becomes increasingly sensitive to liquidity conditions rather than acting as a defensive asset.
The market is not pricing where oil is today.
It is pricing how long this disruption will last and how deep its effects will run.
The Big Questions
1) How does the Strait of Hormuz closure impact global oil prices?
The Strait of Hormuz handles approximately 20% of global oil consumption and a significant share of liquefied natural gas (LNG). Any disruption forces aggressive repricing; during the March 2026 escalation, Brent crude spiked above 100 dollars per barrel, peaking near 120 dollars.
2) Why does the US Dollar (USD) strengthen during Middle East energy shocks?
The United States is one of the world’s largest energy producers and a major LNG exporter, which improves its terms of trade when prices rise. Additionally, elevated energy prices fuel inflation, making it harder for the Federal Reserve to cut interest rates, which further reinforces dollar strength.
3) How does the Hormuz disruption affect the Euro (EUR) and Japanese Yen (JPY)?
Both the Eurozone and Japan are heavily dependent on imported energy. Rising oil and gas prices create a stagflationary environment for the Euro—pushing inflation higher while pulling growth lower—and cause trade balances in Asia to deteriorate, leading to sustained depreciation pressure on the EUR, JPY, KRW, and INR.
4) Is Bitcoin a safe haven during geopolitical conflicts?
In the short term, Bitcoin typically behaves like a high-beta risk asset, similar to technology equities, often selling off when liquidity tightens and risk appetite fades. However, it functions as a parallel financial system in the long term, offering real-time price discovery and an alternative for settlement in regions with restricted banking access.
5) What is the role of stablecoins in global finance during disruptions?
Stablecoins are becoming a fundamental part of the global financial system, with 2025 transaction volumes exceeding 34 trillion dollars—surpassing the combined volumes of Visa and Mastercard. They provide critical infrastructure for value transfer in high-friction geopolitical environments where traditional rails are disrupted.
6) What happens to markets if the Strait of Hormuz reopens?
If the situation stabilises, oil prices are expected to retrace, inflation pressures would ease, and central banks would regain policy flexibility. This would likely lead to a recovery in risk assets, including equities and crypto, as well as energy-importing currencies.
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AUD/NZD traded near 1.2170 in Asian hours on Wednesday, ending a run of gains that started on 30 March. The pair edged lower after the Reserve Bank of New Zealand kept its Official Cash Rate unchanged at 2.25% at its April meeting.
Markets had largely expected no change, citing uncertainty around growth and inflation, alongside higher oil prices linked to conflict in the Middle East. Attention later turns to an address by RBNZ Governor Dr Anna Breman at the post-meeting press conference.
Drivers Behind The Earlier Rally
The cross had moved up as the Australian Dollar strengthened on improved risk mood after US President Donald Trump announced a two-week pause in military action against Iran. The plan includes a “double-sided ceasefire” linked to Iran reopening the Strait of Hormuz.
The ceasefire could affect inflation expectations and reduce pressure on the Reserve Bank of Australia to tighten policy further. Markets had priced a rate rise towards 4.35% at the May meeting, partly due to higher energy costs after the Strait’s closure.
The RBNZ holds seven policy meetings each year and sets the OCR at each decision. Higher rates tend to support the NZD, while lower rates tend to weaken it, and briefings often follow the announcements.
As of today, April 8, 2026, we see the AUD/NZD pair trading at a more subdued level of 1.0950. This is a significant change from the high of 1.2170 we observed around this time back in 2025. That previous strength was partly driven by geopolitical events that have since been resolved.
What We Are Watching Next
The key driver now is the diverging inflation outlook between the two countries. We have seen Australia’s latest quarterly inflation for Q1 2026 remain stubborn at 3.8%, while New Zealand’s has cooled more significantly to 3.1%. This suggests the Reserve Bank of Australia has more reason to maintain a hawkish stance than the Reserve Bank of New Zealand.
Unlike the temporary relief from the US-Iran ceasefire we saw in 2025, today’s energy markets are influenced by persistent OPEC+ production cuts. These cuts are keeping a floor under oil prices, which continues to feed into Australia’s stickier inflation numbers. This gives the RBA less room to consider easing its policy.
Given this divergence, the interest rate differential is likely to move in the Australian dollar’s favor over the coming weeks. We believe derivative traders should consider buying AUD/NZD call options, possibly with June or July 2026 expiries. This strategy allows for capitalizing on potential upside while clearly defining the maximum risk.
Current implied volatility in the pair is moderate, meaning option premiums are not excessively expensive right now. This presents a favorable entry point for establishing long positions before the central banks’ policy paths diverge more formally. Traders can structure these positions to profit from a gradual grind higher in the exchange rate.
In the near term, we will be watching for the next Australian CPI data and the RBA meeting minutes for further confirmation of this hawkish tilt. Any data point showing persistent price pressures in Australia will likely act as a catalyst for a move higher in AUD/NZD. This will be the main focus for adjusting positions in the weeks ahead.
The Reserve Bank of New Zealand kept the Official Cash Rate at 2.25%, in line with forecasts.
No further details were provided in the supplied text.
Market Reaction And Volatility Outlook
The Reserve Bank of New Zealand’s decision to hold the Official Cash Rate at 2.25% was fully anticipated, removing any immediate surprise from the market. This stability suggests implied volatility on the Kiwi dollar will likely decrease in the coming days. We should consider strategies that benefit from this, such as selling out-of-the-money options on NZD currency pairs.
This policy pause makes sense when we look at the broader data, with the latest quarterly inflation figures showing a welcome drop to 2.8%. That is a significant improvement from the multi-decade highs seen just a few years ago. With the unemployment rate holding steady around 4.1%, the RBNZ has room to wait and assess incoming information before its next move.
Looking back to the market environment of 2025, this period of calm is a notable change from the aggressive hiking cycle we were navigating then. That period of rapid policy tightening created significant directional trends and volatility. The current “wait-and-see” stance suggests range-bound trading conditions are more likely for now.
With the RBNZ on hold, the classic NZD/USD carry trade is less appealing, as United States interest rates are currently higher. We see better relative value in funding trades against currencies with lower yields, such as the Japanese Yen. The key pair to watch will be NZD/AUD, as any difference in tone from the Reserve Bank of Australia could spark a new trend.
Upcoming Data And Positioning
The focus now shifts from central bank commentary to the next round of economic data. The upcoming employment and inflation reports will be the next major catalysts for the Kiwi dollar. We should be prepared to use derivatives to position for any data that suggests the economy is stronger or weaker than currently expected.
Japan’s trade balance on a balance of payments basis fell to ¥2,709bn in February. It was ¥3,145bn in the previous period.
The change was a decrease of ¥436bn from the prior figure. The data point refers to the trade balance measured under balance of payments accounting.
Trade Surplus Declines And Yen Outlook
The drop in Japan’s trade surplus from ¥3.145 trillion to ¥2.709 trillion in February points to a potential weakening of the Yen. This decrease means less foreign currency is flowing into Japan, reducing demand for the JPY. For us, this flags a bearish outlook on the currency over the coming weeks.
We believe this data reinforces the case for a higher USD/JPY exchange rate, especially as the Bank of Japan maintains its accommodative stance while U.S. interest rates remain elevated. The policy divergence, which saw the USD/JPY rate climb over 8% in 2025, continues to strongly favor the dollar. Consequently, buying call options on USD/JPY could be a sound strategy to profit from expected yen weakness.
Historically, a weaker yen has provided a significant boost to Japanese corporate earnings, particularly for major exporters listed on the Nikkei 225. We saw this pattern throughout late 2024 and 2025, where yen depreciation directly correlated with stock market gains. Therefore, we are considering long positions in Nikkei 225 futures or call options to capitalize on this dynamic.
Recent increases in global crude oil prices, now hovering above $90 per barrel, likely contributed to this shrinking surplus by raising Japan’s import costs. This trend further supports our view of continued pressure on the yen. We must, however, watch for signs that the cause is a slowdown in global demand, which would be negative for Japanese equities despite a weaker currency.
Japan’s balance of payments trade balance fell to ¥2.709B in February. It was ¥3,145B in the previous period.
The latest figure shows a drop of about ¥3,142.291B from the prior level. The release compares February with the immediately preceding data point.
Trade Surplus Weakens
The decline in Japan’s February trade surplus is a signal we need to watch closely. This weakening suggests that either global demand for Japanese goods is cooling off or that domestic import demand is rising faster than exports. For us, this immediately points to potential weakness for the Japanese Yen (JPY).
Given this data, we should anticipate the USD/JPY currency pair to find renewed strength in the coming weeks. The Bank of Japan will likely view this as a reason to remain cautious about raising interest rates, further weakening the Yen’s appeal. We are seeing increased interest in buying USD/JPY call options with strike prices above the 158 level.
This export slowdown could also create headwinds for the Japanese stock market. We are particularly concerned about slowing demand from key partners, as recent data showed China’s imports from Japan fell 9.2% year-over-year in March. Traders should consider buying put options on the Nikkei 225 index as a hedge against a potential downturn in exporter stocks.
This is a notable shift from the dynamic we observed through 2025, where the trade balance was largely dictated by volatile energy import costs. The current weakness appears more linked to a fundamental drop in global demand, which could introduce more volatility. This environment suggests that buying straddles on major JPY pairs could be a viable strategy to trade the uncertainty.
Silver rose to a fresh weekly high in Asian trading on Wednesday, moving above $77.00 as the US Dollar fell broadly. The move supported dollar-priced commodities, including XAG/USD.
On Tuesday, US President Donald Trump said he would pause planned military strikes on Iran for two weeks, if Tehran fully reopens the Strait of Hormuz. Iran said it has accepted a two-week ceasefire, with talks due to start on Friday in Islamabad, Pakistan.
Market Reaction To Hormuz Developments
Iran’s foreign minister said safe passage through the Strait of Hormuz would be available for two weeks, which pushed Crude Oil prices lower. Lower oil prices eased inflation worries and reduced expectations of Federal Reserve rate rises, adding pressure to the Dollar and helping silver.
The report noted a lack of follow-through buying, which may limit further gains in the near term. Silver is a non-yielding asset and often benefits when interest rate expectations fall.
More broadly, silver prices can be influenced by geopolitics, recession fears, US Dollar moves, demand from exchange-traded funds, mining supply and recycling. Industrial use in electronics and solar power can shift demand, and silver often tracks gold, with the gold/silver ratio used to compare relative value.
We remember how the temporary US-Iran ceasefire last year sent Silver surging past $77 as optimism flooded the market. That rally was driven by a plummeting US Dollar as traders quickly priced out potential Federal Reserve rate hikes. The situation today, however, presents a very different landscape for precious metals.
Comparing Current Conditions With Last Year
Unlike last year’s diplomatic relief, we now see a stronger US Dollar, with the DXY index holding firm above 106 amid renewed geopolitical uncertainty in other regions. The Federal Reserve is signaling a “higher for longer” interest rate policy to combat stubborn core inflation, which the latest CPI report showed is still hovering at 3.1%. This hawkish monetary policy provides underlying support for the dollar and typically acts as a headwind for silver.
Despite the challenging interest rate environment, we are watching the robust industrial demand for silver. Global solar panel installations are up 15% year-over-year according to a recent report from the International Energy Agency, and demand from the electric vehicle sector has also exceeded forecasts. This strong underlying consumption provides a solid price floor that did not exist to the same extent last year.
The Gold/Silver ratio is a key indicator for us, and it is currently trading near a two-year high of 88:1. Historically, ratios above 85 have often preceded periods where silver begins to significantly outperform gold. This suggests that silver may be undervalued relative to gold, creating a potential opportunity for pair trades or outright long positions in silver.
Given this dynamic, we are considering strategies that capitalize on silver’s industrial strength while hedging against the strong dollar. Buying long-dated call options could provide upside exposure to a potential rally driven by industrial demand or a sudden geopolitical shift. This allows us to define our risk while positioning for the possibility that the Gold/Silver ratio begins to revert to its historical mean.
