Canada’s seasonally adjusted housing starts in February were 250.9K. The forecast was 252.5K. This result was 1.6K below the forecast. The figures are reported on a year-on-year basis. The slight miss in February’s housing starts, coming in at 250.9K against a 252.5K forecast, suggests a subtle cooling in the construction sector. While not a dramatic drop, it is a data point that nudges the needle towards a less aggressive monetary policy outlook. For us, this challenges the view that the economy is running too hot. We must view this in the context of recent inflation figures, which clocked in at 2.8% for January, still above the Bank of Canada’s target. However, with the latest jobs report also showing a slowdown, adding only 15,000 jobs, this housing data adds to a growing narrative of a softening economy. The Bank will find it harder to justify any further rate hikes with this trend emerging. Looking back at 2025, the housing market showed remarkable strength, consistently beating expectations as interest rates stabilized. This makes the February 2026 miss, though minor, more significant as it could be the first sign that the momentum from last year is waning. It signals a potential shift that we have been watching for. In response, we see an opportunity in interest rate derivatives that anticipate the Bank of Canada holding its policy rate steady. Traders should consider positions that benefit from rates remaining stable or declining over the next quarter. This could involve using options on CORRA futures to bet against a rate hike this summer. This dovish data point also puts downward pressure on the Canadian dollar. Consequently, speculating on a weaker loonie appears prudent in the coming weeks. Options strategies that favour a higher USD/CAD exchange rate could offer value as rate expectations between the U.S. and Canada diverge. Sectors sensitive to housing, such as Canadian banks and real estate investment trusts, may face headwinds. We believe buying protective put options on ETFs that track these sectors could be a wise move. This allows for managing risk from a potential slowdown in the housing-related economy.

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Nomura economists expect Sweden’s Riksbank to keep the policy rate at 1.75% at the 19 March meeting, and to leave it unchanged through 2026. They see weak CPIF ex-energy inflation and soft GDP indicators, but also inflation risks from the Middle East conflict and higher energy prices. They expect the Riksbank to repeat guidance that the rate is expected to remain at this level for some time. In new forecasts, CPIF ex-energy inflation may be revised down slightly, while CPIF may be revised slightly higher.

Inflation Risks Versus Weak Growth

The analysis notes concerns about second-round effects from higher energy costs, alongside more uncertainty for inflation and economic activity. It also points to possible demand impacts, with uncertainty affecting confidence to spend and invest. Sweden is described as having a fragile recovery after slow or negative GDP growth in 2022 and 2023. Monthly GDP data suggest output fell in both December and January. Nomura expects no rate change this year and a hike at the end of 2027, taking the rate closer to the middle of the neutral range of 1.50%–3.00%. It adds that a quick end to the conflict and weaker inflation could bring a cut this year, while a longer conflict could bring faster inflation and an earlier hike. With the Riksbank widely expected to hold its policy rate at 1.75% this week on March 19, short-term rate volatility should remain low. Given this stability, traders could consider strategies that profit from a lack of movement, such as selling short-dated options on Swedish interest rate futures. This stance is supported by the Riksbank’s likely guidance that rates will stay at this level for some time.

Market Positioning Implications

We are seeing a clear conflict between weak domestic data and external inflation risks. Recent statistics showed that Sweden’s GDP contracted by 0.2% in the final quarter of 2025, and CPIF ex-energy inflation for February came in just under the 2.0% target. However, with Brent crude oil recently trading around $95 per barrel due to Middle East tensions, the Riksbank cannot risk cutting rates yet. This paralysis suggests that the yield curve might steepen, as short-term rates remain anchored while longer-term rates reflect future inflation and growth possibilities. The fragile recovery we have seen since the slowdown of 2023 and 2024 is being hampered by this uncertainty, making long-dated rate hike expectations a key area to watch. Traders might look at instruments betting on higher rates further out, perhaps in late 2027. The primary divergence will be driven by geopolitics, creating a binary outcome for traders to position for. A de-escalation in the Middle East could quickly bring rate cuts back into play, while a wider conflict would almost certainly force the Riksbank to hike sooner than planned. This makes buying longer-dated, out-of-the-money options a viable strategy to position for a significant policy shift in either direction. Create your live VT Markets account and start trading now.

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WTI futures on NYMEX traded slightly lower near $98.00 in the European session on Monday, after a four-day rise stalled above $100. The pause followed US President Donald Trump urging countries that import Gulf oil to join operations against Iranian actions near the Strait of Hormuz. Trump said nations affected by Iran’s attempted closure of the strait would send warships with the United States to keep it open. He named China, France, Japan, South Korea and the UK as countries he expected to send ships.

Geopolitical Risk And Oil Prices

Trump warned NATO would face a “very bad” future if European countries do not support his action in Iran. The Strait of Hormuz carries 20% of the world’s oil supply. At the same time, oil loadings at Fujairah port in the UAE stopped after a drone strike. Fujairah is described as the only UAE export route outside the Strait of Hormuz, raising concerns about further supply disruption. WTI stands for West Texas Intermediate, a US-sourced crude benchmark traded via the Cushing hub. Its price is driven by supply and demand, the US dollar, inventory data from API and EIA, and OPEC production quotas. Looking back at the events of 2025, we saw how quickly WTI crude prices could approach $100 a barrel when the Strait of Hormuz was threatened. The market’s reaction last year serves as a critical playbook for the current environment. This historical price action underscores how sensitive oil is to direct threats against major supply chokepoints. The key takeaway for us is that geopolitical risk in the Middle East creates extreme price volatility, making it essential to prepare for sudden upward spikes. Today, the Strait of Hormuz remains the world’s most important oil transit chokepoint, with recent figures from the U.S. Energy Information Administration (EIA) showing that over 20 million barrels per day passed through it in the last quarter. Any renewed tension in that region could easily send prices soaring past last year’s highs.

Strategy And Risk Management

Given this latent risk, we should consider buying long-dated call options on WTI futures to hedge against or profit from a sudden supply shock. Implied volatility is currently moderate compared to the peaks seen during the 2025 crisis, making premiums relatively affordable. This strategy offers a defined-risk way to capture significant upside if history repeats itself. Fundamentally, the market is already tight, which would amplify the impact of any disruption. Last week’s EIA report showed a surprise crude inventory draw of 2.5 million barrels, against analyst expectations of a small build, which is already supporting prices above $85. We saw last year how the drone attack on Fujairah port demonstrated that even infrastructure outside the Strait is not immune, adding another layer of risk. We should also monitor the WTI-Brent spread closely, as it widened dramatically during the 2025 Hormuz incident. Since Brent crude is more directly exposed to disruptions in Middle Eastern supply, a widening spread can act as an early warning signal of rising regional tensions. Setting up trades that profit from this spread widening could be a shrewd move in the coming weeks. Create your live VT Markets account and start trading now.

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EUR/JPY traded near 182.40 on Monday, little changed after two days of falls. The cross steadied as the Euro found support against major peers. The Euro gained from improved geopolitical sentiment after The Guardian reported that US Energy Secretary Chris Wright expects the war involving the US, Israel and Iran to end within “the next few weeks”. An end could help Oil supplies normalise and reduce pressure on global energy prices.

Euro Outlook And Ecb Expectations

The Euro outlook remains mixed as higher energy prices can strain the Eurozone trade balance. Money markets now price in two European Central Bank (ECB) rate hikes this year, compared with none expected last month. Focus is on the ECB meeting on March 19, with markets pricing two 25-basis-point hikes, possibly in June and September. Christine Lagarde is expected to address inflation pressures linked to the Middle East conflict. French President Emmanuel Macron said freedom of navigation through the Strait of Hormuz must be restored quickly. He also called on Iran’s president to stop attacks he cited in countries including Lebanon and Iraq. The Japanese Yen may gain support as Japan warned about sharp currency moves. Finance Minister Satsuki Katayama said the government is monitoring markets and may take strong action.

Yen Policy And Volatility Signals

Japan and South Korea issued a joint statement on the rapid falls in the Yen and the Korean Won. The Bank of Japan is expected to keep its rate at 0.75%, with attention on Kazuo Ueda’s comments. Looking back at the analysis from this time last year, in March 2025, we were watching a tense EUR/JPY cross stuck between a hawkish European Central Bank and a Japanese government threatening intervention. That tension has now resolved into a clearer, divergent path for the two central banks. As a result, traders should be positioned for decisive moves rather than sideways stabilization. The ECB did follow through with the two rate hikes priced in during 2025 as energy costs fueled inflation. However, with the latest Eurozone Harmonised Index of Consumer Prices (HICP) data showing core inflation has fallen to 2.5%, we believe the ECB’s next move will be a rate cut. This contrasts sharply with last year’s view and places downward pressure on the Euro. On the other side of the cross, the warnings from Japanese authorities in 2025 were not just talk, as we saw direct currency market intervention in the second half of last year. The Bank of Japan also followed through on its hawkish signals, and its policy rate now stands at 0.75%. This fundamental support for the Yen is a major shift from the dynamic we were analysing twelve months ago. This growing policy divergence has kept option markets on alert, and we are seeing this reflected in pricing. Three-month implied volatility for EUR/JPY is now hovering around 10.2%, a significant increase from the sub-8% levels seen in early 2025. This suggests the market is expecting larger price swings in the quarter ahead. The geopolitical optimism from last year about a swift end to the conflict in the Middle East proved to be premature. With Brent crude oil prices remaining stubbornly above $85 per barrel, these sustained high energy costs continue to weigh more heavily on the import-dependent Eurozone than on Japan. This factor reinforces the negative outlook for the Euro half of the pair. Given this environment, we see value in purchasing EUR/JPY put options with expirations in the next three to six months to profit from a potential decline. These options provide a defined-risk way to position for a stronger Yen, driven by either further BoJ tightening or intervention. For those anticipating continued sharp movements, establishing long volatility positions through straddles could also prove profitable. Create your live VT Markets account and start trading now.

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Analysts expect Ford (F) shares to trade in a tight range during Q2, with moderate upside if margins stabilise. Most firms keep a Hold rating, citing tariffs and EV losses, while strong cash flow is seen as a support factor. Ford Pro growth is noted as a value support, and some forecasts point to a slow recovery if cost controls improve. Weak pricing and wider industry uncertainty are seen as limits on any rebound towards consensus targets. A prior technical update said wave B rose fast and formed a double correction, with scope to move above 13.97. Sellers defended the 14.88 high, and the bearish case requires price to stay below 14.88 and fall towards 7.79–6.05. In the latest update, wave B did not break the wave (X) high and peaked at 14.80 before falling. The outlook now expects an impulse wave C towards the blue-box zone at 8.28–4.26, while a break above 14.88 would suggest wave II ended at 8.36 and shift the structure to a bullish bias. With the price failing at 14.80 and turning sharply lower, we believe the path of least resistance is down. Derivative traders should now position for a decline in the coming weeks, targeting the 8.28–4.26 area. This aligns with the technical expectation of a powerful wave C impulse to the downside. This bearish sentiment is amplified by fundamental pressures we saw solidify last year. Looking back at the full-year 2025 results, the Model e division posted another significant operating loss of over $5 billion, weighing heavily on the stock. While the Ford Pro commercial business remains a bright spot, posting a record EBIT, it isn’t enough to offset the EV drag. Given this outlook, buying put options offers a direct way to capitalize on the expected drop. For traders wanting to mitigate costs and volatility, establishing bear put spreads could be a more prudent approach. These positions would benefit from a steady decline toward our lower targets while defining risk. All bearish strategies must respect the key technical level of 14.88 from last year as an invalidation point. A sustained move above this price would negate the current downward thesis and force a re-evaluation. For now, this level acts as a firm ceiling and a logical point for placing stop-losses. While the overall structure points down, recent data from February 2026 showed a notable 35% year-over-year surge in hybrid sales, which could create temporary support. We should therefore consider options with expirations in late Q2 2026. This allows enough time for the larger bearish pattern to override any short-term strength from the hybrid segment.

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The US Dollar remained supported as the Middle East conflict kept oil prices high and maintained a risk premium in markets. DXY was testing the top of its nine-month range near 100.35/40. Markets were waiting for central bank decisions, with eight G10 central banks scheduled to set monetary policy this week. Attention was also on whether any ceasefire path or negotiated settlement might reduce current pricing pressures.

Fed Meeting In Focus

The Federal Open Market Committee meeting was expected to be supportive for the Dollar, as the Federal Reserve was seen as resisting current expectations for rate cuts. At the January FOMC meeting, the Fed indicated it wanted clear evidence of lower inflation before delivering further rate cuts. The conflict was linked to a view that US inflation could move towards 3.5% rather than 2.0% this summer. Markets still had about 23bp of additional Fed rate cuts priced in by year-end. A calmer equity tone at the start of Monday suggested DXY might not break higher immediately. The original article stated it was produced using an AI tool and reviewed by an editor. Looking back at the analysis from early 2025, the view was for a stronger dollar driven by Middle East conflict and a Federal Reserve reluctant to cut interest rates. This perspective was based on a DXY testing the top of its range near 100.40. That situation gave us a clear signal for dollar strength at the time.

What Changed Since Then

The conflict premium in energy markets did initially materialize, pushing WTI crude to nearly $95 per barrel in mid-2025, but that pressure has since eased. As of early March 2026, WTI is trading much lower, around $78 per barrel, as global supply concerns have abated. This has removed a key pillar of support for the dollar that was anticipated last year. The Federal Reserve did push back against rate cut expectations for most of 2025, as expected. However, with the latest CPI report for February 2026 showing headline inflation has cooled to 2.8% year-over-year, the FOMC finally delivered a 25 basis point cut in January. This pivot from the central bank is a major change from the environment we were watching last year. While the DXY did break higher through 2025, it has since retraced and is now holding near 101.50, well off its peaks. Current market pricing, reflected in fed funds futures, now indicates a more than 70% probability of another rate cut by the May 2026 meeting. This suggests the path of least resistance for the dollar is now lower. Given this shift, we should consider strategies that benefit from a softer dollar and falling interest rate volatility. Buying call options on pairs like EUR/USD offers exposure to dollar weakness with defined risk. Additionally, with the Fed’s path now appearing clearer, selling volatility through instruments tied to the VIX index could prove profitable as uncertainty subsides. Create your live VT Markets account and start trading now.

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Brown Brothers Harriman’s Elias Haddad expects the Reserve Bank of Australia to raise the cash rate target by 25 bps to 4.10% for a second meeting in a row. The decision is described as a close call, with cash rate futures implying 53% odds of a hike. A rise to 4.10% is presented as the base case, with the Australian Dollar expected to be supported if the RBA tightens policy. The context given is elevated domestic inflation.

Rba Decision Outlook

Headline inflation in Australia is reported at 3.8% year on year, even before an energy shock takes effect. The RBA’s internal models are said to show a positive output gap, linked to tighter capacity constraints. The article states it was produced using an Artificial Intelligence tool and reviewed by an editor. A back-to-back rate hike to 4.10% is seen as likely, though we recognize this is a close call. Market pricing from cash rate futures implies a 53% chance of a 25 basis point increase by the Reserve Bank of Australia. Our view is that a hike would provide some needed support for the Australian dollar. This situation feels similar to what we saw back in mid-2025 when high inflation was the primary driver of policy. Looking at the data today, the most recent quarterly figures show headline inflation is stubbornly high at 3.6% year-over-year, which is well above the RBA’s target range. This persistent price pressure, especially in services, makes a strong case for the central bank to act again.

Trading And Positioning Ideas

However, the futures market is currently pricing in only a slight chance of a hike at the next meeting, with most participants expecting a prolonged pause. This disconnect between persistent inflation data and market expectations creates an opportunity. The market seems to be underestimating the RBA’s resolve to fight inflation, much like it did at key points last year. For traders who believe a hike is more probable than the market suggests, buying near-term Australian dollar (AUD) call options is a defined-risk way to position for a stronger currency. This allows for upside participation if the RBA delivers a hawkish surprise. Selling out-of-the-money AUD put options is another strategy to collect premium, based on the view that the downside for the currency is limited. Given that this is considered a close call, implied volatility on the AUD is likely to rise heading into the RBA meeting. A long straddle, which involves buying both a call and a put option with the same strike price and expiry, could be effective. This position profits from a significant price move in either direction, whether from a surprise hike or a surprisingly dovish statement. Traders can also look at interest rate futures to express a view on the RBA’s path. If we anticipate a hawkish surprise, shorting Australian 3-year government bond futures would be a direct play on rising yields. This position would profit if the central bank signals that rates will need to stay higher for longer than the market is currently pricing in. Create your live VT Markets account and start trading now.

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EUR/GBP has moved below its 200-day moving average, with the 200-DMA now at 0.8690. The pair is testing the February low near 0.8610, which may act as short-term support. If EUR/GBP cannot move back above 0.8690, the decline may continue. A break below 0.8610 would keep the pattern of lower highs and lower lows on the daily chart.

Key Downside Levels

Further downside levels include the lower edge of the falling channel near 0.8580. Another projected level sits around 0.8535. The euro, sterling, Bunds and Gilts are described as at or near oversold levels. The note also says they are due a bounce. The EUR/GBP cross has broken below its 200-day moving average and is now testing the key 0.8610 support level. This technical weakness suggests that the path of least resistance is lower. We should be prepared for an extension of this downtrend in the coming weeks. Given this outlook, we believe positioning for further downside is the appropriate strategy. Traders could consider buying put options with strike prices near 0.8580 or even 0.8535 to capitalize on a breakdown. These levels represent the next logical targets if the 0.8610 support fails to hold.

Fundamental Backdrop

This bearish view is reinforced by fundamental factors, as recent data from early 2026 shows UK inflation remaining stubbornly above target at 2.8%, while Eurozone inflation has cooled to 2.1%. This divergence suggests the Bank of England will be forced to keep interest rates higher for longer than the European Central Bank. The current interest rate differential of a full percentage point between the BoE and ECB continues to favor sterling. However, we must note that the pair is technically oversold, making a short-term bounce possible. A prudent approach would be to use any rally back towards the 0.8650-0.8690 resistance area as an opportunity to enter new bearish positions at more favorable levels. This allows us to sell into strength rather than chase the market lower. Looking back, we saw a similar dynamic play out in the fourth quarter of 2025 when the pair repeatedly failed to sustain gains above the 0.8700 level. Each failure was followed by a swift decline, reinforcing the underlying bearish trend that has been in place for some time. That period confirmed the market’s willingness to sell the euro against the pound on any sign of relative economic strength from the UK. Create your live VT Markets account and start trading now.

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Gold (XAU/USD) fell for a fourth straight session, trading near $5,000 per troy ounce in European hours on Monday. Rising energy prices have fuelled inflation concerns and reduced expectations of interest-rate cuts by the US Federal Reserve and other major central banks. The US attacked Iran’s main oil-export hub on Kharg Island over the weekend, raising fears over global supply. President Donald Trump said oil infrastructure was not hit, but Iran launched retaliatory strikes on Israel and energy sites in other Arab countries, as the US–Israeli war on Iran entered its third week.

Safe Haven Demand Cools

Gold also weakened as demand for safe-haven assets eased after reports that the US may form a coalition to escort shipping through the Strait of Hormuz. Trump urged the UK, France, China, and Japan to help secure the route, while EU foreign ministers met in Brussels to discuss a possible naval response to the Strait’s effective closure. US Energy Secretary Chris Wright said he expects the conflict to end within “the next few weeks”. He suggested this could allow oil supplies to recover and energy prices to fall. Central banks added 1,136 tonnes of gold worth around $70 billion to reserves in 2022, according to the World Gold Council. This was the largest annual purchase since records began. With Gold pulling back from the $5,000 level, the immediate derivative play is cautious and short-term bearish. The market is currently selling off based on hopes that a multinational naval coalition will secure the Strait of Hormuz and that the conflict will end soon. This suggests that short-dated put options or selling covered calls on gold ETFs could be viable strategies for the next one to two weeks.

Managing Event Risk

However, we must recognize the immense risk if this de-escalation narrative fails. About 20% of the world’s total oil consumption passes through the Strait of Hormuz, and any further disruption would cause a severe energy shock. This makes holding purely bearish positions dangerous, as a single negative headline could send gold prices surging again. The key driver here is the impact of energy prices on US Federal Reserve policy, a pattern we saw repeatedly through 2024 and 2025. Persistent inflation from high energy costs is pushing expectations for interest rate cuts further out, strengthening the US Dollar. This environment is a direct headwind for non-yielding gold and supports the current downward price pressure. Despite this, we should not ignore the underlying support for gold from central banks. The massive buying trend we observed from 2022 to 2025, led by institutions like the People’s Bank of China which bought gold for 17 straight months, has established a strong floor. This suggests the current pullback could be an opportunity to purchase longer-dated call options at a lower premium, positioning for a potential re-escalation of the conflict. Given the uncertainty, volatility itself is a tradable asset. The wide gap between the official optimistic statements and the severe on-the-ground risks means implied volatility in both gold and oil options is likely to remain elevated. We remember how quickly markets turned during the initial phases of the Ukraine conflict in 2022, and this situation feels similarly unstable. Create your live VT Markets account and start trading now.

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USD/JPY is close to 160, which is linked to higher chances of official action to support the yen. Japan and South Korea have increased verbal efforts to defend their currencies, including a rare joint statement on concern about fast falls in the JPY and KRW. Japan has said it is in closer contact than usual with US authorities. This has raised attention on possible steps such as a rate check or direct yen-buying intervention.

Imported Inflation And Energy Risks

Officials are concerned that further yen weakness could lift imported inflation through higher energy prices linked to the Iran War. The aim is to limit extra pressure on household living costs. A surprise Bank of Japan rate rise at its 19 March meeting is presented as a possibility. The BOJ has told Parliament that exchange rate swings now have a stronger effect on underlying inflation and inflation expectations than in the past. The article notes it was produced using an artificial intelligence tool and then edited. It also describes the FXStreet Insights Team as selecting market observations from experts and adding analysis from internal and external sources. We see USD/JPY approaching the critical 160 level, dramatically increasing the chance of direct market intervention. Japanese and South Korean officials are now openly expressing serious concern over their weak currencies. Tokyo’s closer-than-usual contact with US authorities suggests that coordinated action is a real possibility.

Policy Intervention And Positioning Risks

The Bank of Japan meeting on March 19 is now a major risk event, with a surprise rate hike on the table. This potential for a sudden policy shift has caused one-week implied volatility for USD/JPY to spike above 15%, reflecting deep uncertainty. Traders should be wary of holding simple long positions going into the announcement, as a hike could trigger a sharp sell-off. We must prepare for the Ministry of Finance to act independently, even if the BOJ remains on hold. Authorities are worried that high energy prices will fuel more inflation, giving them a strong motive to defend the currency. Buying out-of-the-money JPY calls (USD/JPY puts) could be a prudent way to hedge against a sudden, multi-yen drop caused by intervention. Looking back at 2025, we saw authorities step in with yen-buying operations when the currency’s weakness became a political issue, so this isn’t an empty threat. Recent CFTC data shows speculative net short positions against the yen have swelled to their largest since early last year, creating a crowded trade vulnerable to a sharp reversal. Japan’s core inflation, which came in at 2.4% last month, provides the domestic justification for a more aggressive policy stance. Create your live VT Markets account and start trading now.

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