US Commodity Futures Trading Commission data shows that net non-commercial positions in oil rose to 233.6k. This was up from 218.7k in the previous report.

Speculative Positioning Turns More Bullish

We’ve seen a notable shift in speculative positioning in oil markets. Net long positions held by non-commercial traders have increased to 233.6K contracts. This move indicates that large funds are growing more confident that oil prices will climb higher in the near term. This bullish sentiment is likely fueled by ongoing supply-side pressures. OPEC+ has signaled it will maintain its production cuts through the second quarter, while geopolitical tensions continue to disrupt key shipping lanes. US crude inventories also posted a surprise draw of 1.9 million barrels this week, further tightening the immediate supply picture. On the demand side, recent manufacturing PMI data from China has surpassed expectations for the second straight month, signaling a rise in energy consumption. This coincides with the seasonal build-up for the summer driving season in the United States, which typically boosts gasoline and crude demand. We see these factors creating a solid floor for prices around the $80 per barrel mark for WTI. Looking back, this pattern is reminiscent of the market setup we saw in the third quarter of 2025. During that period, a similar increase in speculative longs preceded a rally that took WTI crude from the low $70s to above $85. That historical precedent should be a key consideration for positioning in the coming weeks. Given this data, traders should consider positioning for upward price movement. Strategies like buying call options or implementing bull call spreads on crude futures could offer favorable risk-reward profiles to capitalize on potential gains.

Trading Implications And Risk Considerations

We believe remaining on the sidelines or holding significant short positions carries increasing risk in this environment. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

CFTC data shows eurozone EUR non-commercial net positions fell to €9.3K from €21.1K in the previous reading. The change indicates a reduction of €11.8K in net positioning over the latest period. The recent CFTC data shows a significant pullback in bullish bets on the Euro, with net long positions falling by more than half to just €9.3k. This sharp decline signals that large speculators are losing confidence in the Euro’s strength against the dollar. For us, this is a clear warning sign that the prevailing trend may be turning bearish in the near term. This shift aligns with recent economic releases, as February 2026 Eurozone inflation came in at a sluggish 1.7%, well below the ECB’s target. In contrast, the latest US jobs report showed stronger-than-expected wage growth, fueling expectations that the Federal Reserve will hold rates steady. We saw much stronger conviction in the Euro throughout 2025, when net long positions consistently held above the €40k mark even with mixed data. Given this weakening sentiment, we should consider positioning for a potential decline in the EUR/USD exchange rate over the next few weeks. This could involve buying put options on Euro futures or related ETFs to gain downside exposure. Establishing bear put spreads would be another prudent strategy to profit from a modest drop while limiting the upfront cost and defining our maximum risk.

Start trading now – Click here to create your real VT Markets account

Australia CFTC data shows AUD NC net positions increased from 69.1K to 70.9K. This is a rise of 1.8K from the prior reading. We are seeing speculators increase their bets that the Australian dollar will rise. The latest commitment of traders report shows net long positions held by hedge funds and other large traders rose to 70.9K contracts. This is a small but steady increase, confirming a cautiously bullish trend that has been building over the last quarter.

Fundamental Drivers Supporting The Aussie

This positive sentiment is backed by fundamental data. We have seen iron ore prices stabilize around $125 per tonne in March 2026, while recent data from China suggests its economic recovery is gaining traction, with industrial output for Q1 2026 growing at an annualized rate of 5.1%. The Reserve Bank of Australia has also maintained a hawkish tone, signaling that interest rates will remain elevated to fight persistent inflation, which is currently tracking at 3.1%. For those trading derivatives, this environment suggests that long positions in the Aussie dollar could be profitable. Buying short-dated AUD/USD call options is a direct way to play this potential upside, especially as implied volatility remains relatively low, making options cheaper. We believe a bull call spread might be a more prudent strategy, as it caps the potential risk while still capturing gains if the AUD strengthens against the US dollar. Looking back from our perspective in 2025, we recall the deep uncertainty of late 2024 when commodity prices were volatile and central bank policy was unpredictable. The current gradual build-up in long positions is a stark contrast to the frantic market swings we saw then. This more measured pace suggests the current move higher may have a more solid foundation.

What This Positioning Shift May Signal

Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

DBS Group Research expects Indonesia’s March CPI inflation at 4% year-on-year, down from 4.8% in February. It also expects a faster month-on-month pace than earlier averages. The forecast links price pressure to higher energy costs and demand during holiday periods. Base effects are also cited as supporting the firm trend.

Indonesia March Inflation Outlook

One policy option mentioned is keeping retail fuel prices unchanged by using budget savings to cover higher costs. If conflict continues and fuel prices stay elevated into the second quarter, the probability of fuel price rises or subsidy cuts increases. We are watching for Indonesia’s March inflation data, which we expect to show a firm year-on-year increase from February’s 3.5% rate. This upward pressure comes from increased spending during the Ramadan festive season and persistently high global oil prices, with Brent crude recently trading over $88 per barrel. These factors suggest a faster month-on-month price increase is likely. The government’s immediate response will likely be to hold retail fuel prices steady by absorbing the higher costs, creating a buffer for consumers. However, this situation creates uncertainty for the second quarter, as a sustained period of high energy prices would increase pressure for subsidy cuts or price hikes. This policy uncertainty often leads to higher volatility in the markets. Given these pressures, we see an increasing chance that Bank Indonesia will maintain its hawkish stance to anchor inflation expectations. Looking back from our 2025 viewpoint, we recall how markets in 2022 quickly priced in aggressive rate hikes once inflation took hold, a pattern that could repeat. Traders should consider positioning for higher-for-longer interest rates through instruments like interest rate swaps.

Rupiah Market Implications

This environment also puts the Rupiah under pressure, which has been trading near 15,800 against the US dollar. We anticipate increased volatility in the USD/IDR pair as the market weighs inflation risk against potential policy responses. Derivative traders could look at options strategies, such as buying puts on the IDR, to hedge against or speculate on further currency weakness. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Gold rose over 3% on Friday, trading at $4,510 after rebounding from $4,375. The move came as the conflict entered its fifth week and inflation pressures increased. US equities fell to 7-month lows as US Treasury yields and the US Dollar rose. The US Dollar Index was up 0.30% at 100.16, while the US 10-year yield climbed by nearly two basis points to 4.428%.

Geopolitical Escalation And Market Shock

Reports said President Donald Trump delayed a pause on attacks on Iranian energy sites until April 6. The Wall Street Journal reported the Pentagon is deploying an extra 10,000 troops, and Iran’s Islamic Revolutionary Guard Corps said the Strait of Hormuz is closed. WTI crude gained nearly 5% to $98.33 per barrel. The University of Michigan said March consumer sentiment fell from 55.5 to 53.3, versus a 54 forecast. One-year inflation expectations rose from 3.4% to 3.8%, while five-year expectations stayed at 3.2%. Traders priced in six basis points of tightening by year-end. Gold faced resistance near $4,560; a break above $4,544 could target the 100-day SMA at $4,605, then $4,736 and $4,800. Support levels were $4,500, $4,306, and $4,098. Central banks added 1,136 tonnes of gold worth about $70 billion in 2022. This was the highest annual purchase since records began.

Trade Setup For Elevated Risk Off Conditions

Given the market’s reaction to the escalating Middle East conflict, the normal inverse relationship between gold, the US Dollar, and Treasury yields has broken down. We see all three assets rising simultaneously, which is a classic sign of a flight to safety overwhelming traditional market mechanics. Traders should focus on strategies that benefit from sustained geopolitical fear and rising volatility in the coming weeks. We should consider buying call options on gold or gold-backed ETFs to capitalize on the strong upward momentum. A decisive break above the $4,560 resistance level could trigger further buying, with the 100-day Simple Moving Average around $4,605 as the next logical target. This strategy offers a defined-risk way to profit if tensions continue to drive this haven buying spree. This rally is supported by a multi-year trend of strong institutional demand that we’ve been watching. Central banks added a near-record 1,037 tonnes to their reserves in 2023 and continued to be net buyers through 2024, creating a solid long-term floor for the price. This underlying support means any dips caused by temporary de-escalation are likely to be viewed as buying opportunities. As a hedge against the same fears, we can look at purchasing put options on equity index futures, as US stocks have already fallen to 7-month lows. The sharp drop in consumer sentiment to 53.3, combined with renewed inflation fears, suggests further downside for the stock market. This provides a way to directly profit from the risk-off sentiment gripping the financial world. The closure of the Strait of Hormuz is a significant development that directly impacts energy prices and, by extension, inflation expectations. We can use options to trade the high volatility in crude oil, with WTI already surging nearly 5% to $98.33. Buying straddles on oil would allow us to profit from a large price swing in either direction, which is likely given the uncertainty. We saw a similar market reaction during the early stages of the Ukraine conflict in 2022, where commodity prices and haven assets soared together. The market remembers the inflation shock of the early 2020s and is reacting quickly to the jump in inflation expectations from 3.4% to 3.8%. This explains why money markets are suddenly pricing in a potential rate hike from the Federal Reserve, a shift from just a few weeks ago. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Four weeks into the Iran conflict, uncertainty remains high, and India is facing fallout linked to energy security, trade logistics, price stability, and external balances. The risks stem from dependence on imported energy and potential disruption to key shipping lanes. Even though oil intensity of GDP has been trending lower and the oil trade deficit is relatively contained, reliance on imported energy leaves India exposed if disruptions persist. Higher oil and gas prices can affect many consumer items, including electricity, plastics, fertilisers, and chemicals.

Shipping Lanes And External Balance Risks

The conflict raises route risks through the Strait of Hormuz and the Red Sea, adding to import and supplier concentration risks. These pressures can feed into the consumption basket and worsen external balances. The proposed policy approach is a calibrated fiscal and monetary mix, with the central bank treating inflation as transitory, ending the easing cycle, and keeping liquidity ample. The government is expected to use targeted fiscal measures, supported by an RBI dividend transfer, to limit price pass-through and support vulnerable households. Given the fresh uncertainty from the Iran conflict, volatility is the new reality. With Brent crude now trading above $95 a barrel, the India VIX has surged nearly 20% in March, making option strategies that profit from price swings, such as long straddles on the Nifty 50, a key consideration. We should anticipate heightened market choppiness in the weeks ahead. We must act on the reality that India imports over 85% of its crude oil, a fact that directly threatens the Rupee. This dependency will strain our current account deficit, likely pushing the USD/INR exchange rate higher. Traders should look at currency derivatives, using futures or call options on the USD/INR pair to hedge against or speculate on a weakening Rupee.

Inflation Rates And Sector Positioning

The resulting inflation is a major concern, as higher energy costs feed into everything. However, we anticipate the Reserve Bank of India will see this as a temporary supply-side shock, holding off on interest rate hikes to support growth. This suggests that the pressure on rate-sensitive sectors like banking and real estate might be less severe than in previous inflationary cycles. This situation creates clear sector-specific opportunities. Industries with high oil input costs, such as airlines, paints, and chemicals, will face severe margin compression, making put options on their stocks a logical play. Conversely, domestic energy producers may see a short-term benefit from higher realisation prices. Looking at the broader market, the Nifty 50 index faces significant headwinds. We saw a similar pattern during the energy price spike of 2022, which led to a notable market correction and foreign capital outflows. Using index derivatives, such as buying Nifty put options, offers a direct way to protect portfolios against a potential downturn. The government will likely use fiscal tools, such as fuel tax cuts or direct subsidies, to cushion the impact on consumers. This could provide temporary support to consumer discretionary and staple stocks. However, we see this as a short-term measure that does not resolve the underlying macroeconomic pressure from elevated energy prices. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

AUD/USD fell for a fourth day on Friday, trading near 0.6866 and hitting fresh two-month lows. The US dollar stayed firm amid geopolitical tensions in the Middle East and higher oil prices. The US Dollar Index (DXY) traded around 100.19 and was set to end the week up by over 0.50%. AUD/USD was heading for a weekly drop of over 2%, its steepest fall since October 2025.

Technical Breakdown Below Key Levels

AUD/USD turned bearish after breaking below 0.7000, near the 50-day Simple Moving Average (SMA) at 0.7015. It also moved under the support area around 0.6900, which now acts as resistance. The Relative Strength Index (RSI) slipped towards 37, showing weaker momentum but not oversold conditions. The MACD stayed below its signal line and moved further into negative territory, with a slightly larger negative histogram. Support sits near the 100-day SMA around 0.6815. A daily close below 0.6815 could open a move towards 0.6700. A recovery would need a move back above 0.6900. Further strength would require a break above the 100-day SMA near the 0.7000 level.

Bearish Outlook Deepens Into 2026

The bearish outlook we noted for the AUD/USD back in late 2025 has intensified, with the pair now trading near 0.6650. The sustained US Dollar strength, which was a key factor then, has been further fueled by recent non-farm payroll data from February 2026 that beat expectations, showing an addition of 215,000 jobs. This trend reinforces the view that downside risks are building. Geopolitical tensions in the Middle East, specifically recent escalations around the Strait of Hormuz, continue to drive safe-haven flows into the US Dollar. At the same time, the Australian dollar is facing its own headwinds from softening domestic data. Australia’s latest inflation print came in at 2.8%, raising expectations that the Reserve Bank of Australia may consider easing policy later this year. This divergence in economic outlook makes bearish derivative strategies attractive in the coming weeks. We are seeing increased demand for put options with strike prices below 0.6600, as the AUD/USD 1-month implied volatility has risen to 11.5%, reflecting growing uncertainty. Traders could consider buying puts to speculate on further declines or selling out-of-the-money call spreads to capitalize on a capped upside. Fundamentally, the picture is further clouded by commodity prices, with iron ore recently dipping below $100 per tonne, placing additional pressure on the Aussie. From a technical standpoint, the support levels mentioned in late 2025 have now become significant resistance. The 0.6815 level, once seen as support, is now a distant ceiling that is unlikely to be tested without a major shift in market sentiment. For now, the path of least resistance appears to be lower. The psychological mark of 0.6700 was broken decisively last month and now acts as immediate resistance for any minor pullback. Any failure to reclaim this level would likely embolden sellers to target the 0.6500 handle in the next several weeks. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

The British Pound stayed steady in the North American session on Friday and remained above 1.3300 against the US Dollar. It was set to end the week down 0.20%. Market caution linked to an energy shock tied to conflict in the Middle East supported demand for the US Dollar. GBP/USD was also on track for monthly losses of more than 1%.

Middle East Tensions And Dollar Demand

Looking back to 2025, we recall the pressure on GBP/USD due to Middle East tensions and the resulting rush to the safe-haven US Dollar. That period saw the pair struggle to hold key levels like 1.3300 as risk aversion dominated markets. This sentiment cemented a trend of dollar strength that has largely continued. Today, the pair is trading significantly lower, near 1.2850, as the economic divergence between the US and the UK has become more pronounced. We see the US economy demonstrating resilience while the UK continues to face headwinds. This divergence is the central theme for positioning in the coming weeks. Recent UK inflation data showed the headline rate still stubbornly high at 3.1%, and the Bank of England held interest rates steady again last week. Their cautious tone suggests they are in no hurry to provide stimulus, which could continue to weigh on the Pound. This environment makes us wary of any significant, sustained rallies for the Sterling. Conversely, the latest US Non-Farm Payrolls report from early March showed a robust addition of 265,000 jobs, beating expectations. This strength gives the Federal Reserve flexibility and reinforces the dollar’s appeal based on strong economic fundamentals. We anticipate this dynamic will keep a floor under the US Dollar against its major peers.

Options Strategies For GBP USD

For traders, this suggests that buying put options on GBP/USD with a strike price around 1.2750 could be a prudent move. This strategy allows for profiting from a further decline in the pound while strictly limiting the potential loss to the premium paid. It is a defined-risk way to express a bearish view on the pair. We are also seeing an uptick in one-month implied volatility, now hovering around 8.5%, up from 6% at the start of the year. This indicates the market is pricing in larger price swings, likely ahead of upcoming central bank announcements in April. For those less certain of direction, volatility-based strategies like long straddles could be considered. However, should UK economic data unexpectedly improve, we could see a sharp reversal. To position for this lower probability outcome, purchasing out-of-the-money call options with a 1.3000 strike offers a cheap way to capture potential upside. This acts as a hedge against a sudden shift in market sentiment. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

South Korea’s March exports are expected to stay in double-digit growth and pick up from January to February. Drivers include demand linked to AI and data centre infrastructure, higher memory chip prices, and supply shortages. Faster import growth is expected due to higher oil and LNG costs. Even so, the trade surplus is forecast to widen in March.

Inflation Outlook And Policy Backdrop

Consumer price inflation is projected to remain above the 2% level and rise to about 2.3% year on year in March. This is linked to higher global energy prices and a weaker KRW. The government has set out steps aimed at stabilising prices and reducing the impact of the Iran conflict. These include fuel price caps, releasing reserves, energy-saving campaigns, and a KRW 25 trillion supplementary budget. Given the outlook, we should position for continued strength in the South Korean technology sector. Robust export growth, driven by AI and memory chips, suggests call options on major semiconductor stocks or the KOSPI 200 index could be profitable. We saw a similar setup in late 2025 when semiconductor exports surged over 40% year-on-year, providing a strong tailwind for the market. The Korean won presents a more complex picture, creating opportunities for currency traders. While a widening trade surplus is typically bullish for the won, high energy import costs and geopolitical risks are exerting downward pressure, keeping the USD/KRW volatile, likely in the 1370-1420 range. This suggests strategies like selling strangles on the USD/KRW pair could be effective if we expect it to remain range-bound despite the noise.

Rates Currency And Risk Positioning

With inflation remaining above the central bank’s 2% target, the prospect of an imminent interest rate cut is low. This implies that bond futures may face headwinds in the coming weeks. We should remember the persistent inflation we dealt with back in early 2024, which kept the Bank of Korea on hold longer than many anticipated. The government’s significant fiscal stimulus, including the KRW 25 trillion budget, is designed to support the domestic economy while it manages inflation with price caps. This dual approach could buffer certain domestic consumer-facing sectors from the full impact of higher rates. This may create relative value trades, favouring domestic stocks over more rate-sensitive sectors. The ongoing conflict in Iran remains a major source of market volatility, directly impacting oil prices and risk sentiment. This elevated uncertainty makes buying protection, such as out-of-the-money put options on the KOSPI, a prudent move to hedge existing long positions. The recent spike in the VKOSPI, South Korea’s volatility index, from below 15 to over 20 in the last month underscores the market’s anxiety. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

The Dow fell about 510 points, or 1.1%, below 45,500 and moved into correction territory. The S&P 500 dropped about 1% and was more than 8% down from its record, while the Nasdaq lost 1.3% after entering a correction the day before. The fall marked a fifth straight weekly decline, the longest losing run since 2022. Markets reacted to disruption risks in the Strait of Hormuz and reduced expectations of near-term diplomacy with Iran.

Strait Of Hormuz Escalation

Iran’s IRGC said the strait was effectively closed and warned of a harsh response to any shipping. Iranian state media said two Chinese-flagged vessels were turned away and a Thai-flagged cargo ship was struck and ran aground. Brent rose about 3% to above $110 a barrel and WTI climbed about 4% to near $100. The supply risk was described as the most tangible since the US-Iran conflict began on 28 February. Donald Trump extended a deadline to resume strikes on Iranian energy sites to 6 April. Iran’s foreign minister said Tehran did not plan direct talks, and the Pentagon was reported to be weighing an extra 10K troops. UoM sentiment fell to 53.3 from 55.5, versus 54 expected, and expectations slid 8.7% to 51.7 versus 54.1. One-year inflation expectations rose to 3.8% from 3.4% (3.4% expected), while five-year held at 3.2%. OECD lifted its US 2026 inflation forecast to 4.2% versus the Fed’s 2.7%. FedWatch showed a 52% chance of a rate rise by end-2026, with rates at 3.50% to 3.75% and the next decision due 29–30 April.

Rates And Inflation Repricing

Import prices rose 1.3% in February and gold traded near $4,400 an ounce. Meta fell 2.4% after an 8% drop, Alphabet lost 1.3%, Microsoft fell 2%, and Micron was down nearly 20% over five sessions. Chevron gained over 1%, while Verizon and Walmart edged up. The VIX rose above 27, up about 8%, with the March NFP report due on 3 April. Given the market’s entry into correction territory and the spike in the VIX to over 27, we should be buying protection against further downside. Purchasing put options on broad market indices like the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ) for April expirations is a direct way to hedge portfolios. We saw the VIX surge past 35 during the geopolitical shock in early 2022, so with the April 6 deadline looming, there is precedent for volatility to climb even higher from here. The closure of the Strait of Hormuz, a chokepoint for roughly 20% of global oil consumption, makes long energy positions the most obvious tactical trade. With Brent crude already above $110, buying call options on oil futures or the Energy Select Sector SPDR Fund (XLE) allows us to profit from any further escalation or prolonged disruption. The current supply shock is tangible and presents a clearer upward path for energy prices compared to the uncertainty facing other sectors. The sharp rise in inflation expectations is forcing a major repricing of Federal Reserve policy, a situation we saw unfold rapidly in 2022 when CPI eventually hit a 40-year high of 9.1%. With the market now pricing in a greater than 50% chance of a rate hike by year-end, we can position for higher interest rates by purchasing puts on long-duration Treasury bond ETFs, such as the iShares 20+ Year Treasury Bond ETF (TLT). This trade benefits directly if the stagflation narrative continues to build, forcing the Fed to remain hawkish. Technology remains acutely vulnerable to rising rates, geopolitical tensions with China, and new regulatory and legal pressures. The recent weakness in names like Meta and Micron Technology looks set to continue, making bearish positions attractive. We should consider buying puts on the Nasdaq 100 or on specific semiconductor stocks, which are facing headwinds from both trade disputes and disruptive new AI efficiencies that could curb demand. Amid the broad sell-off, we are seeing a classic rotation into defensive sectors and energy, which should guide our stock-specific strategies. While we favor call options on energy leaders like Chevron, we can also use options on consumer staples and utility ETFs to position for continued risk-aversion. Selling out-of-the-money put options on stable companies like Walmart or Verizon could also be a way to generate income, assuming we are willing to own these defensive names at lower prices. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account