South Korea’s export price growth rose to 10.7% year on year in February. This was up from 7.8% in the previous period. The increase was 2.9 percentage points compared with the earlier reading. The data refer to February and measure export prices versus the same month a year earlier.

Global Inflation Signals

This jump in South Korean export prices suggests global inflationary pressures are not cooling as expected. As a key supplier of semiconductors and industrial goods, Korea’s pricing is a leading indicator for costs worldwide. We must now question the narrative of disinflation that has been building over the last few months. The Bank of Korea, which we saw hold its policy rate at 3.5% in late February 2026, will be forced to maintain a hawkish stance. This data makes any near-term rate cuts highly unlikely and strengthens the case for being long the Korean Won. We are watching for the USD/KRW currency pair to potentially break below its recent support level of 1,340. For equity markets, this is a headwind, as persistent inflation implies higher borrowing costs for longer. We recall how sensitive the KOSPI index was to inflation surprises throughout 2025, often leading to sharp sell-offs. Derivative traders should consider buying put options on the KOSPI 200 as a direct hedge against this risk. This Korean data directly impacts the outlook for the US Federal Reserve. With US core PCE inflation recently ticking up to 2.9% in the latest January 2026 report, these rising import costs will complicate the Fed’s path. We see the probability of a June rate cut, previously estimated near 55% by the futures market, diminishing significantly. Overall uncertainty is rising, which points to higher market volatility in the coming weeks. The VKOSPI, Korea’s volatility index, has already climbed over 12% to near 19 on this news. Positioning through long volatility strategies, such as buying straddles on major ETFs, could be prudent.

Market Volatility Outlook

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South Korea’s import price growth rose to 1.2% year on year in February. This compares with -1.2% in the previous period. The move marks a shift from an annual fall in import prices to an annual rise. No further breakdown was provided.

Import Prices Signal Inflation Pressure

The jump in South Korea’s import prices from negative to positive territory is a clear signal of returning inflationary pressures. This suggests that the cost of raw materials and energy is rising globally, which will likely factor into the Bank of Korea’s next interest rate decision. We should therefore watch for a more hawkish tone from the central bank in the coming weeks. For currency traders, this creates tension in the USD/KRW pair, which has been elevated near the 1,350 level recently. While higher import costs can weaken the won, if this price rise is due to strong global demand for Korean exports like semiconductors, it could ultimately provide support. This uncertainty increases the appeal of using options strategies to trade the potential for a breakout in volatility. This data reinforces the recent strength we’ve seen in commodity markets, especially with WTI crude prices now holding above $85 a barrel. South Korea is a major importer of industrial inputs, so rising prices there suggest broader demand is picking up across manufacturing supply chains. We could consider call options on energy and industrial metal ETFs as a direct play on this trend continuing. This sharp reversal in import prices reminds us of the situation back in 2025, when rising input costs initially squeezed corporate profit margins before export revenues caught up. We should be cautious about KOSPI index futures in the short term, as manufacturers may face pressure on their earnings. However, if this trend is confirmed by strong export data next month, it could become a bullish signal for the entire index.

Market Positioning And Risk

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China’s early-2026 data point to firm growth, supported by strong industrial output, exports and infrastructure spending, while the property sector remains weak. High-tech manufacturing and holiday-related services also lifted activity, easing near-term pressure for extra policy support. Commerzbank’s current forecast for China is 4.0% GDP growth, with scope to revise it higher. The economy is described as a “two-speed” pattern, with external demand and state-led investment offsetting soft domestic demand and fragile real estate.

Growth Target Signals Flexibility

At the “Two Sessions” meeting, Beijing moved to a “4.5% to 5.0%” growth target range, implying more flexibility in how growth is pursued. Real-time measures such as the Yicai High-Frequency Economic Activity Index showed a post-holiday pick-up, linked to higher housing sales and subway traffic. External risks include the Middle East conflict, with PBoC Governor Pan Gongsheng warning about increased currency volatility. Prolonged tensions could push up energy prices and disrupt Red Sea routes, raising shipping and export costs. NPF-related industries remain competitive, but property weakness and external shocks add to the longer-run downtrend in potential growth. The article notes it was produced using an AI tool and edited. The Chinese economy has started 2026 stronger than many anticipated. Industrial production for January and February surged 7.0% from a year ago, with exports climbing a similar 7.1%. This suggests looking at bullish positions, such as buying call options on the FTSE China A50 index, to capture this unexpected momentum in the industrial sector.

Trading Ideas And Key Risks

We are seeing a clear split between strong, state-backed manufacturing and a weak domestic property market. Back in 2025, we saw how property developer defaults weighed on the entire market. A pair trade, going long futures on a tech-focused index while shorting a real estate ETF, could be an effective way to play this divergence. The central bank’s warning on currency volatility should not be ignored. Implied volatility on USD/CNH options has already ticked up, reflecting uncertainty around capital flows and policy responses. Buying straddles on the Yuan could be a direct play on a significant price swing, regardless of direction. Geopolitical risks from the Middle East are a major wild card, with Brent crude already hovering around $85 a barrel. Any escalation could disrupt shipping and spike energy costs, hitting exporters’ margins. Buying out-of-the-money call options on oil futures offers a relatively cheap hedge against this specific risk. Create your live VT Markets account and start trading now.

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NZD/USD traded near 0.5860 after four straight daily falls. The move followed stronger China data, a key link for New Zealand trade. China’s National Bureau of Statistics said Retail Sales rose 2.8% year on year in February. This was above the 2.5% forecast and the prior 0.9%.

Risk Sentiment Improves

Risk mood improved after reports the US may form an international group to escort ships through the Strait of Hormuz. The Middle East war remained in focus, while the US Dollar was softer. Markets are watching the Reserve Bank of New Zealand rate decision due on 8 April. Pricing points to a 25-basis-point rise around September, with odds of another increase by year-end. On the 4-hour chart, price was at 0.5860 after bouncing from below 0.5800 and retaking 0.5839. It sat above the 20-period SMA at 0.5848, but below the 100-period SMA near 0.5924. RSI returned to 50 but lost momentum. Resistance was seen at 0.5869, with support at 0.5839 and 0.5794, and a higher target area near 0.5920 if 0.5869 breaks.

Options Strategy Considerations

We are seeing a tentative recovery in the Kiwi, primarily driven by better-than-expected Chinese economic figures. The National Bureau of Statistics reported February retail sales grew 2.8% year-over-year, alongside a firming in industrial production. This data provides a bit of a tailwind for the New Zealand dollar, given the close trade relationship. The upcoming Reserve Bank of New Zealand meeting on April 8 is now the main event on our calendars. Looking back, we saw the RBNZ hold rates steady through much of 2025 as global growth concerns mounted. Now, with markets pricing in a 25-basis-point hike by September, traders should prepare for increased volatility. Given the technical picture showing a modest recovery, a bull call spread seems like a prudent strategy for those anticipating a limited rise towards the 0.5920 resistance level. This approach allows us to profit from an upward move while defining our risk. The cost is lower than buying an outright long call, which is appealing since the recovery is still fragile. We must also consider the US dollar side of the equation, which has recently softened. The latest US Consumer Price Index for February showed a slight moderation to 2.9%, leading the market to pare back expectations for aggressive Federal Reserve tightening. This environment helps support pairs like NZD/USD for now. As we approach the April RBNZ announcement, we can expect one-month implied volatility on NZD options to climb. For traders holding long positions, buying puts with a strike below the 0.5839 support level could serve as an effective hedge against a reversal. A clean break below the 0.5794 level would signal that this recent strength has failed. Create your live VT Markets account and start trading now.

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The US Dollar ended a four-day rise on Monday after markets reacted to a US strike on Kharg Island, an Iranian oil outpost in the Persian Gulf. US officials said oil infrastructure could be targeted if Iran keeps disrupting shipping in the Strait of Hormuz, and President Trump asked allies to help secure the route. The US Dollar Index was near 99.80, down from the 100 level reached last week. EUR/USD traded near 1.1500, snapping a four-day decline ahead of ECB and Fed meetings that are widely expected to leave rates unchanged.

Major Pairs In Focus

GBP/USD was near 1.3330, recovering most of last week’s fall ahead of the Bank of England decision on Wednesday, which is also expected to keep rates steady. USD/JPY traded near 159.00 before Fed and BoJ decisions on Wednesday and Thursday. WTI crude traded around $93.80 a barrel after last week’s spike. Gold was at $5,011, broadly steady on the day but lower as risk aversion eased. The calendar lists data and events from Tuesday, March 10 to Friday, March 13 across the UK, China, Germany, the Eurozone, the US, Australia, New Zealand, Spain and Canada. It also notes that API inventory data is released on Tuesdays and EIA data the next day, with results within 1% of each other 75% of the time, and that OPEC has 12 member states and meets twice a year. Looking back a year ago, we saw WTI oil spike to around $94 per barrel following the US strike on Iran’s Kharg Island. Tensions in the Strait of Hormuz have since calmed, and with OPEC+ maintaining its production quotas, prices have stabilized. Last week’s Energy Information Administration (EIA) report showed a crude inventory build of 2.1 million barrels, and WTI is currently trading near $82 per barrel. A year ago, the Dollar Index was pulling back from the 100 mark as the market absorbed geopolitical news. Today, the focus has shifted entirely to central bank policy differences and persistent inflation. The DXY is now trading in a tighter range around 103.5 as the Federal Reserve has signaled a pause in rate hikes, awaiting clearer economic data.

Shifting Central Bank Drivers

In March 2025, EUR/USD was rebounding to the 1.1500 level ahead of central bank meetings that were expected to hold rates. We now see the pair trading much lower, near 1.0850, as the Eurozone’s economic growth continues to lag behind that of the US. The latest German industrial production figures showed a slight contraction, reinforcing this divergence. We can recall GBP/USD recovering to 1.3330 this time last year as traders anticipated the Bank of England’s decision. The pound is now trading closer to 1.2700, weighed down by a UK economy that has narrowly avoided recession. Last month’s UK GDP data showed flat growth of 0.1%, highlighting the challenge for the BoE. The USD/JPY was trading at a very high 159.00 in March 2025, reflecting a massive policy gap between the Fed and the Bank of Japan. Since then, the BoJ has taken initial steps to move away from its ultra-loose monetary policy, causing the pair to retreat. The current level around 149.00 shows a market that is pricing in a less dramatic interest rate differential. Gold was at a remarkable $5,011 an ounce this time last year as risk aversion dissipated from even higher levels. That speculative peak has passed, and with geopolitical fears easing, gold has settled into a more sustainable range. It is now trading near $2,350, supported by continued central bank purchases and its role as a hedge against inflation. Create your live VT Markets account and start trading now.

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USD/CHF slipped to about 0.7869 on Monday as the US Dollar weakened, ending a four-day rise. The pair eased after reaching its highest level since 22 January on Friday. The Swiss Franc has strengthened against most major currencies since the US-Iran conflict began, reflecting demand for safer assets. The US Dollar has held up due to its role as the main reserve currency and demand for liquidity.

Oil Prices Support The Dollar

Higher Oil prices have also supported the US Dollar because much of global crude trade is priced in US Dollars. Rising energy costs can therefore lift demand for the currency. Markets are focused on rate decisions from the Swiss National Bank and the Federal Reserve later this week. The SNB is expected to keep its policy rate at 0%, while the Fed is expected to hold its 3.50%–3.75% target range. A Reuters poll found 28 of 29 economists expect the SNB to keep rates at 0% through 2026. The poll indicated officials may use foreign-exchange intervention rather than negative rates if the Swiss Franc rises too much. Expectations for Fed cuts have fallen, with markets now pricing around one cut by year-end versus at least two before. Inflation is still above the Fed’s 2% target, with energy-linked pressures adding risks.

Looking Back At The 2025 Conflict

Looking back at the situation in 2025, we recall the tension from the US-Iran conflict which bolstered both the Swiss Franc and the US Dollar. The Franc acted as a classic safe haven while the Greenback benefited from its reserve status and higher oil prices. This set the stage for a divergence in central bank policy that we are still seeing play out today. The key dynamic has been the widening interest rate differential between the US and Switzerland. As we recall, the Swiss National Bank was expected to hold its rate at 0% through 2026, a policy it has maintained. In contrast, the Federal Reserve has been cautious, executing only one rate cut since then, bringing the target range to its current 3.25%-3.50%. This policy gap continues to favor the US Dollar, a trend reflected in the USD/CHF exchange rate, which has climbed from around 0.7870 in 2025 to over 0.8250 this month. Recent US inflation data for February 2026 came in hotter than expected at 3.1%, further dampening expectations for any near-term Fed rate cuts. This sustained inflation keeps the pressure on the Fed to remain restrictive. For derivative traders, this environment suggests that implied volatility in USD/CHF may be undervalued. Given the uncertainty around the Fed’s next move versus the SNB’s stable policy, purchasing straddles or strangles could be a viable strategy. These options plays would profit from a significant price move in either direction without betting on the specific outcome of the next Fed meeting. The interest rate differential also makes carry trades attractive. Traders should consider using forward contracts to go long USD/CHF. This allows one to collect the positive carry, or yield difference, between the high US interest rates and Switzerland’s zero-rate policy over the life of the contract. Considering the established uptrend, bullish strategies with defined risk are also appealing. A bull call spread on USD/CHF would allow traders to profit from a continued rise in the pair. This strategy offers a cheaper alternative to buying a call outright and limits potential losses if the pair were to reverse unexpectedly. Finally, we must continue to monitor energy markets. West Texas Intermediate crude oil has settled near $85 a barrel, down from the highs during the 2025 conflict but still historically elevated. Any new supply shocks could reignite inflation concerns, further supporting the Fed’s hawkish stance and putting upward pressure on the USD. Create your live VT Markets account and start trading now.

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NZD/USD rose on Monday and traded near 0.5850 at the time of writing, up 1.42% on the day. It rebounded after several days of falls, helped by firmer risk mood and support for the New Zealand Dollar. China’s latest data aided the NZD. Retail Sales rose 2.8% year on year in February, above the 2.5% forecast and up from 0.9%, while Industrial Production increased 6.3% versus a 5.1% forecast.

Reserve Bank Outlook

Markets are watching the Reserve Bank of New Zealand policy path. Pricing includes a possible 25-basis-point rise around September and some chance of another increase by year end. The US Dollar eased versus most major peers. The US Dollar Index fell back below 100 after recent highs. Risk appetite improved as Middle East tensions appeared to cool. The US may announce an international coalition to escort ships through the Strait of Hormuz, which could reduce worries about energy supply. Attention remains on the next Federal Reserve decision. Markets are still adjusting expectations for interest rate cuts in coming months.

Looking Ahead

We recall how the market felt in 2025 when strong Chinese data helped lift the NZD/USD from its lows around 0.5850. Now, with the pair trading near 0.6150 in March 2026, the situation has evolved. That initial optimism from China has given way to a more mixed reality, as their latest Q1 2026 GDP growth came in at 4.8%, slightly below consensus forecasts. The central bank divergence story that drove the pair higher last year has also matured significantly. We saw the Reserve Bank of New Zealand (RBNZ) follow through with a hike to 5.75% in late 2025, but they have signaled a firm pause as inflation has eased to 3.1%. Meanwhile, the Federal Reserve’s rate cuts in 2025 have also stopped for now, with sticky US services inflation keeping them on the sidelines. This convergence in monetary policy suggests the strong directional trend we saw is likely over for the near term. For derivative traders, this means buying outright long calls on the NZD/USD is less attractive than it was a year ago. The environment now favors strategies that profit from range-bound price action and volatility. Considering this, we should look at selling call options with strike prices around the 0.6300 level to collect premium, betting on a ceiling for the pair. Alternatively, constructing an iron condor could be a prudent way to capitalize on the expectation that NZD/USD will remain between roughly 0.6000 and 0.6350 in the coming weeks. These strategies limit upside potential but offer a higher probability of profit in a sideways market. The US Dollar’s weakness from 2025, when the DXY was below 100, has also reversed course. The index is now holding firm around 103.50, supported by recent US Non-Farm Payroll data for February 2026 showing a resilient labor market with over 210,000 jobs added. This underlying dollar strength will continue to act as a headwind for any significant NZD/USD rally. Create your live VT Markets account and start trading now.

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EUR/USD rose on Monday as the US Dollar paused after a recent rally, lifting the pair from seven-month lows seen on Friday. EUR/USD traded near 1.1497, up nearly 0.70%, while the US Dollar Index was around 99.85 after a 10-month high of 100.54 on Friday. Risk aversion linked to the US-Iran war continued to support demand for the Dollar, which could limit further EUR/USD gains. Markets await the Federal Reserve and European Central Bank meetings this week, with both expected to keep rates unchanged.

Central Bank Guidance And Oil Inflation

Attention is on guidance from Christine Lagarde and Jerome Powell, as higher Oil prices tied to Strait of Hormuz disruptions raise inflation concerns. Before the conflict, markets expected the ECB to hold rates through 2026, but a rate rise is now fully priced in by July. In the US, markets now price only one Fed rate cut this year versus at least two previously. Traders will watch the Dot Plot and Summary of Economic Projections for the policy outlook. Technically, EUR/USD remains in a downtrend after peaking at 1.2082 on 27 January, below the 50-day SMA (1.1740) and 100-day SMA (1.1690). RSI recovered from 24 to about 34 and MACD stayed negative; resistance sits near 1.1600 and 1.1700, with support at 1.1411 then 1.1350. Looking back to 2025, we saw the EUR/USD pair attempt a technical rebound toward 1.1500 amid significant geopolitical stress. As of today, March 17, 2026, that rebound has long since failed, with the pair now trading near 1.0750. The fundamental pressures that were just emerging then have now become the market’s dominant theme.

Policy Divergence And Trading Implications

The policy divergence between the Federal Reserve and the European Central Bank, which we were watching closely, has widened significantly. Persistent US core inflation, which recently printed at 3.1% year-over-year, has forced the Fed to maintain its restrictive stance with no rate cuts materializing yet. This contrasts sharply with market expectations from early last year when at least one cut was anticipated. Meanwhile, the Eurozone economy has borne the brunt of the elevated energy costs, narrowly avoiding a technical recession with fourth-quarter 2025 GDP growth of only 0.1%. With Eurozone HICP inflation now down to 2.6% and falling, the ECB is signaling a clear easing bias, with markets pricing in a 75% chance of a rate cut by June. This economic weakness has kept sustained pressure on the Euro. For derivative traders, this environment suggests playing the range with a downward bias. Selling call options with strike prices near the old support level of 1.1000 could generate income, as this level now represents significant resistance. This strategy profits if EUR/USD continues to trade sideways or drifts lower, which aligns with the current macroeconomic picture. Given the potential for sharp moves around central bank meetings, purchasing put options is a prudent way to position for further downside with limited risk. For instance, buying puts with a 1.0500 strike price and a three-month expiry offers a clear way to profit from a continuation of the trend that began after the peak near 1.2082 last year. This allows us to capitalize on the strong downward momentum while defining our maximum loss. Volatility itself remains a key factor, driven by the lingering geopolitical tensions in the Strait of Hormuz. Traders can use straddles or strangles around key data releases, such as the upcoming US CPI report, to bet on a large price move in either direction. This strategy is agnostic on direction but profits from the uncertainty that has characterized the market since the conflict began. Create your live VT Markets account and start trading now.

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USD/JPY fell on Monday to about 159.20, down 0.33%, as traders awaited policy decisions from the US Federal Reserve on Wednesday and the Bank of Japan on Thursday. The move came as the Yen firmed slightly at the start of the week. The Federal Reserve is widely expected to keep rates unchanged in the 3.50%–3.75% range. Oil price rises linked to the Middle East war and disruption risks around the Strait of Hormuz have increased inflation concerns, and CME FedWatch data shows no rate cut is expected before the October meeting.

Dollar Index Slips

The US Dollar Index (DXY) slipped below 100 after reaching a more than nine-month high of 100.54 on Friday. DXY tracks the dollar against six major currencies. The Bank of Japan is expected to keep its policy rate at 0.75% while keeping open the option of further tightening if inflation stays persistent. Comments from Governor Kazuo Ueda are expected to be monitored for indications on energy-driven inflation and growth risks. Japan has started releasing oil from strategic reserves to support domestic demand amid possible supply disruption concerns. Japanese officials also repeated warnings about excessive currency moves, and Japan and South Korea issued a joint statement on the fast falls in the Yen and the Won. We are seeing USD/JPY pull back to around 159.20 as traders brace for this week’s Federal Reserve and Bank of Japan meetings. The main driver of concern is rising oil prices, with Brent crude recently pushing past $95 a barrel, which complicates the inflation outlook for everyone. This uncertainty heading into major central bank decisions suggests an increase in short-term market volatility.

Options Volatility Set To Rise

For the Fed meeting on Wednesday, the market is pricing in a near-zero chance of a rate change from the current 3.50%-3.75% range. Recent US inflation data for February 2026 came in stubbornly high at 3.1%, giving policymakers little reason to consider easing policy soon. As a result, traders should anticipate a cautious tone, which will likely keep the US dollar supported against other currencies. Given this event risk, we should see a rise in implied volatility for USD/JPY options expiring this week. Traders could look to buy straddles or strangles to profit from a larger-than-expected move in either direction following the announcements. The cost of these options will increase as we get closer to the meetings, so acting sooner may be beneficial. Turning to the Bank of Japan on Thursday, we expect them to hold their policy rate at 0.75% but pay close attention to Governor Ueda’s language. Japan’s own core inflation remains persistent at 2.8%, and the high cost of imported energy is putting serious pressure on the domestic economy. Any hint that the BoJ is considering further tightening to combat inflation could cause a sharp, temporary strengthening of the yen. The biggest risk for anyone shorting the yen is direct government intervention, and the warnings are getting louder. We saw the Ministry of Finance step in to defend the currency in late 2025 when the rate was much lower than it is today. With Japanese and South Korean officials now issuing joint statements about currency weakness, the threat of action above the 159 level is very real and should not be underestimated. This heightened intervention risk makes buying out-of-the-money USD/JPY put options an attractive strategy. These options provide a cheap way to gain downside exposure, offering a significant potential payout if Japanese authorities suddenly enter the market to strengthen the yen. The fundamental interest rate difference between the US and Japan continues to favor a weaker yen over the long term, but intervention creates a powerful short-term risk. Create your live VT Markets account and start trading now.

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WTI crude fell by over 3% on Monday. It opened near 100.00 and ended below 95.00 per barrel after selling off through the session. Last week’s price spike rose above 113.00 after panic buying. Since that high, prices have posted a run of lower daily closes, though levels remain well above where they were before the Strait of Hormuz closure.

Geopolitical Shock And Supply Disruption

The Strait of Hormuz closure followed a US-Israeli military operation against Iran. The closure removed an estimated 20% of global seaborne oil supply, driving a near-vertical rise from the mid-February breakout near 65.00. There is no clear timetable for reopening, and tanker re-routing is adding days to delivery schedules. Reports say the White House is considering a coordinated release from the Strategic Petroleum Reserve (SPR), which has added mild downward pressure. High prices are also raising concerns about weaker demand, especially in Asia. China’s National Development and Reform Commission plans to draw down state reserves instead of buying spot, while India is speeding up talks with Middle Eastern producers outside the strait corridor. Looking back at the Strait of Hormuz closure in 2025, we remember how quickly WTI crude spiked from $65 to over $113 per barrel. That event fundamentally changed market psychology, embedding a significant risk premium that persists today even with prices currently hovering near $82. The memory of that volatility means any new geopolitical tension in the Middle East will likely trigger an outsized market reaction.

Options Market Signals And Trading Approach

This market memory is reflected in current options pricing, with the CBOE Crude Oil Volatility Index (OVX) sitting at an elevated 35, well above its pre-2025 average. This suggests traders are still willing to pay a premium to protect against another sudden supply shock. For derivative traders, this elevated implied volatility presents opportunities to sell options if we believe the market will remain range-bound in the coming weeks. On the supply side, the market appears tightly balanced, leaving little room for error. OPEC+ confirmed last week they will maintain current production quotas through the second quarter, while recent EIA data shows U.S. shale output growth has slowed to just 1.5% year-over-year. This constrained supply picture provides a firm floor under prices and makes the market highly sensitive to any disruption. Simultaneously, demand concerns are putting a ceiling on prices, much like they did during the peak of the crisis last year. The IMF recently revised its 2026 global growth forecast down to 3.0% from 3.2%, citing weakness in Europe and parts of Asia. We are seeing this reflected in softer import numbers from key emerging markets, limiting the potential for a major price rally without a new catalyst. Given these opposing forces, a viable strategy involves selling premium through strategies like iron condors, capitalizing on the view that oil will trade within a defined range, perhaps between $75 and $90. The lesson from last year’s spike, however, suggests holding some cheap, long-dated call options as a hedge. This protects against the low-probability but high-impact risk of another sudden supply disruption. Create your live VT Markets account and start trading now.

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