French President Emmanuel Macron said France will work with several countries to limit steps that restrict exports. He said there is a need to define military and political objectives for the war in Iran, during a G7 leaders’ video conference on Wednesday. Macron said there is no justification to lift sanctions on Russia. He said it will take a few weeks to co-ordinate ship escorts in the Strait of Hormuz.

Market Volatility Outlook

He said France’s release of strategic reserves totals 14.5 million barrels. He added that the government may decide further measures to cushion oil price rises for French consumers. The market is signaling high volatility in the coming weeks, as bullish geopolitical tensions clash with bearish government interventions. Traders should anticipate sharp price swings rather than a clear directional trend. The uncertainty around the war in Iran is the dominant factor supporting prices. The delay in coordinating ship escorts through the Strait of Hormuz creates a window of significant risk. About 21% of the world’s daily oil consumption passes through this chokepoint, so any disruption could send prices soaring. This unresolved military objective will likely keep a high-risk premium in the price of crude oil. The announced release of 14.5 million barrels from French strategic reserves will likely have only a temporary impact. For perspective, this amount is less than the volume of oil that passes through Hormuz in a single day. We saw during the larger coordinated releases in 2025 that the market absorbed the extra supply quickly before focusing again on the underlying supply deficit.

Supply Risk And Strategy

Sanctions on Russia continue to remove a significant volume of oil from the market, and OPEC’s spare capacity remains thin, estimated to be under 3 million barrels per day. This lack of a safety net means any further supply disruption will have an amplified effect on prices. The market simply does not have a buffer to handle another major shock. Given this environment, derivative strategies that benefit from increased volatility are advisable. Buying call options to gain exposure to potential price spikes, while using puts to hedge against sudden bearish news, would be a balanced approach. The CBOE Crude Oil Volatility Index (OVX) has already climbed over 15% in the past month, reflecting the market’s growing anxiety over supply security. Create your live VT Markets account and start trading now.

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Hungary’s inflation is reported to have moved back within the central bank’s target range on core measures. A core gauge based on seasonally adjusted month-on-month changes in the core price level is stated to have moderated to within target for most core inflation measures. The report describes an earlier gap between measures as temporary, with disinflationary forces now said to be more established and broader in scope. It links this to support for the Hungarian National Bank’s earlier rate cut and a more dovish policy stance.

Core Inflation Back In Target

Further gradual interest rate cuts are presented as possible, depending on ongoing easing in price pressures and steady external conditions. The pace and size of any cuts are described as conditional on those factors. The forint is not expected to weaken due to rate cuts, with the currency described as being driven mainly by global developments. A softer consumer price inflation reading is said not to have prevented a rebound in the currency. The disinflationary trend we observed through 2025 has largely played out as anticipated, supporting the central bank’s rate-cutting cycle. With the latest data from February 2026 showing headline inflation at 3.6%, the Hungarian National Bank (MNB) had justification for its measured easing path. This has brought the base rate down to its current 5.0% level. This environment suggests that betting on a major decline in the forint due to further rate cuts may be a losing strategy. Despite the MNB’s dovish stance, the forint has shown resilience, trading in a relatively stable range of 388-395 against the euro for much of early 2026. This confirms that global risk sentiment and major central bank policies, particularly from the ECB, are the primary drivers for the currency.

Trading Implications For The Forint

For derivative traders, this points towards selling short-term forint volatility. Given the MNB’s predictable, data-driven approach, surprises are less likely, making options premiums look expensive if the currency remains range-bound. A strategy involving selling EUR/HUF strangles could be effective if this stability persists in the coming weeks. Furthermore, the narrowing interest rate differential between Hungary and the Eurozone has significantly reduced the cost of holding long forint positions. Traders should look at using forward contracts, as the carry is no longer as punitive as it was in 2025. This makes tactical long HUF positions more attractive during periods of positive global sentiment. The key risk to watch is not domestic policy but a shift in the external environment. Any sudden change in guidance from the ECB or an unexpected global risk-off event would likely overwhelm local factors. Therefore, positions should be hedged against a broader market shock rather than a specific MNB action. Create your live VT Markets account and start trading now.

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Gold traded lower on Wednesday, with prices near $5,180 after a daily high of about $5,223.23. A firmer US Dollar and higher Treasury yields limited gains, after US inflation data came in broadly as expected. US CPI rose 0.3% month-on-month in February, up from 0.2% in January, while headline CPI stayed at 2.4% year-on-year. Core CPI rose 0.2% month-on-month, down from 0.3%, and held at 2.5% year-on-year.

Inflation And Rate Expectations

The figures left inflation above the Federal Reserve’s 2% target, and markets expect rates to stay unchanged next week. The US-Iran war entered its 12th day, with the US and Israel striking Iranian military targets and Iran responding with missile and drone attacks. Shipping through the Strait of Hormuz slowed, and the US military said it destroyed 16 Iranian vessels it believed were preparing to lay naval mines. The IEA agreed to release about 400 million barrels of oil from strategic reserves. On the 4-hour chart, gold held above the rising 100-period SMA near $5,139, with resistance at $5,200. RSI eased to about 53 from above 60, while MACD stayed positive; support sits near $5,139, then $5,000, and resistance is near $5,238 and $5,400-$5,500.

Key Levels And Strategy

Looking back to early 2025, we remember gold struggling to break past $5,200 even with an active US-Iran conflict, as a strong dollar capped its gains. Today, with gold trading around $4,950, the environment has changed, but the underlying tensions in the market persist. The resolution of that conflict saw gold prices pull back, and we are now assessing if the floor has been set. The persistent inflation noted back then, when February 2025 CPI was 2.4%, proved to be a long-term issue. The most recent data for February 2026 shows headline CPI has ticked back up to 2.8%, fueling the view that the Federal Reserve will hold rates steady through the summer. This sticky inflation continues to support the US Dollar, creating headwinds for gold just as it did last year. Volatility is a key consideration for us now. During the peak of the 2025 conflict, implied volatility on gold options was extremely high, making it expensive to bet on price direction. Today, the Cboe Gold Volatility Index (GVZ) is trading at a much calmer 16, presenting a cheaper opportunity to buy call options to position for a potential move higher. The geopolitical risk premium has fallen since the war ended, but it has not vanished. WTI crude oil has stabilized around $95 a barrel, well below its 2025 wartime highs but still elevated enough to signal ongoing supply chain concerns in the Strait of Hormuz. This elevated energy cost continues to feed into global inflation, providing underlying support for hard assets like gold. The technical levels from last year are now critical markers for our current strategy. The $5,000 psychological price point, which was an area of support in March 2025, has now become the key resistance level we must overcome. We should consider building positions below this level, using strategies like bull call spreads to target a break toward the old $5,200 resistance zone in the coming weeks. Create your live VT Markets account and start trading now.

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Euro rates remain sensitive to energy price moves, and markets still price European Central Bank rate rises in 2026. Lower energy costs would be expected to remove those hike expectations and push 2-year rates lower. With falling energy prices, 10-year rates could stay near current levels if risk sentiment improves. This scenario assumes inflation pressure eases as energy falls.

Energy Prices And Short Term Rates

If energy prices remain high for longer, the impact depends on the growth outlook. In a scenario where energy prices rise sharply and stay high for many months, the ECB could be pushed towards hiking, lifting the euro swap curve at first. Higher energy costs and tighter policy could then weaken growth and risk sentiment. Markets could move to price looser policy after the initial inflation shock, pulling longer-dated rates lower. Oil prices suggest the Middle East conflict is not yet close to ending. Equities have moved higher, but the VIX indicates risk sentiment remains fragile. Our outlook for rates from here depends entirely on the path of energy prices. With European Central Bank hikes still priced in for this year, the market is highly sensitive to inflation data, especially after February 2026 core inflation came in stubbornly over 3%. This tense situation creates two very distinct paths for traders in the coming weeks.

Two Paths For Euro Rates

A further drop in energy prices, perhaps sparked by a de-escalation in the Middle East, should remove the chance of an ECB hike and pull 2-year rates lower again. We saw this exact dynamic play out in the second half of 2025 when falling energy costs eased pressure on the central bank. This scenario would favor strategies that profit from falling short-term rates, such as buying 2-year swap receivers. On the other hand, if energy prices stay high, with Brent crude holding near its current level of $95 per barrel, the picture becomes more complex. The immediate effect could be an ECB forced to hike, pushing up the entire swap curve as it fights rising inflation. But with recent Eurozone manufacturing PMIs already showing signs of weakness under the 50 mark, this would severely damage the growth outlook. This risk of stagflation means markets would quickly start pricing in rate cuts further down the line, even as they digest a near-term hike. For traders, this points towards positioning for the yield curve to flatten, where longer-dated rates fall more than short-dated ones. The VIX index remains elevated, suggesting risk sentiment is fragile and supports this view of a slowing economy. Create your live VT Markets account and start trading now.

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EUR/GBP fell for a fifth day on Wednesday, trading near 0.8628, close to its lowest level since 4 February. The move came as traders reviewed the policy outlook for the ECB and the BoE amid concerns about higher oil prices linked to the US-Iran conflict. Before the conflict, markets put the chance of a BoE cut at next week’s decision at about 80%. Higher oil prices have increased uncertainty about inflation, which may lead the BoE to delay cuts.

Energy Prices And Inflation Risk

The Office for Budget Responsibility’s David Miles said energy shocks could lift prices, with an estimate of about 1% higher consumer prices by the end of the year if price conditions do not change. The International Energy Agency agreed to release about 400 million barrels of oil from members’ strategic reserves to address rising energy costs. For the ECB, market pricing points to a 60%–70% probability of a rate rise by June. EUR/GBP was weighed down as reduced expectations of BoE cuts supported the Pound more than prospects of ECB tightening supported the Euro. Joachim Nagel said the ECB would act if an energy price surge leads to lasting higher inflation, and he noted increased inflation risk alongside a weaker economic outlook. Last year, we saw how an oil price shock linked to the US-Iran conflict forced the Bank of England to delay expected rate cuts. This unexpected hawkishness provided significant support for the Pound against the Euro. This dynamic established a clear pattern where energy-driven inflation gives the BoE a reason to remain tighter for longer.

Trading Implications For Eur Gbp

Today, we see a similar divergence brewing, even without a major conflict. Recent statistics show UK inflation remains stubbornly high at 4.0%, while inflation in the Eurozone has fallen more convincingly to 2.8%. This data gives the Bank of England far less room to consider rate cuts compared to the European Central Bank. This reinforces the case for positioning for continued EUR/GBP weakness in the coming weeks. Traders should consider using options to express a bearish view on the pair, such as buying puts on EUR/GBP. This strategy allows for profiting from a downward move while clearly defining the maximum risk involved. The underlying driver is the difference in policy expectations, which can be traded directly through interest rate derivatives. The current environment suggests looking at positions that profit from UK interest rates staying elevated compared to those in the Eurozone. This trade capitalizes on the view that the market is still underpricing the BoE’s need to fight stickier domestic inflation. We can recall the period after the 2022 energy crisis, where the UK’s inflation problem proved more stubborn than the Eurozone’s for an extended period. That history, combined with the fragile growth outlook for Germany, Europe’s largest economy, suggests any new supply shocks would likely hit the Euro harder. This reinforces the bearish outlook for the currency pair moving forward. Create your live VT Markets account and start trading now.

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Canada’s oil and gas sector is smaller than a decade ago, but it still supports output and trade. In 2025 it accounts for 6.6% of GDP and 15% of total goods exports. Higher oil prices raise fuel costs and can reduce household spending power. At the same time, they increase corporate profits and government natural resource royalties.

How Higher Oil Prices Feed Into Inflation

Beyond fuel, higher energy prices can lift costs for items such as packaging and fertiliser across many industries. These effects tend to build only if oil prices stay high for months, as firms review supply chains and pricing. The inflation effect may be softer if weaker household demand lowers spending on non-energy goods and services. RBC Economics expects only gradual and conditional pass-through to broader prices. Oil and gas investment in 2025 is less than half its 2014 share of GDP. Most remaining spending is aimed at maintaining current production, so new investment is limited and less responsive to oil price swings, leaving the overall GDP effect broadly neutral. Given the recent rise in Western Canadian Select prices to around $75 a barrel, we should revisit the analysis from 2025. That view suggested the Canadian economy’s overall reaction to oil price swings would be muted. This implies that current market volatility may be exaggerated, creating openings for trades based on a more neutral outcome.

Trading Implications For Cad Inflation And Equities

Historically, we would expect the Canadian dollar to rally hard alongside oil. However, with forecasts for 2026 confirming that capital investment in the energy sector remains focused on maintenance rather than growth, the mechanism for a stronger loonie is weaker. This supports strategies that bet against significant CAD strength, such as buying call options on the USD/CAD pair. The pass-through to broader inflation appears to be gradual, just as was predicted last year. The latest Statistics Canada data from February showed headline inflation at a manageable 2.4%, indicating that higher fuel costs have not yet broadly infected other sectors. This reinforces the Bank of Canada’s recent decision to hold rates, suggesting that derivatives pricing in imminent rate hikes are likely mispriced. We should focus on the clear split between benefiting energy producers and squeezed domestic consumers. A pair trade, going long derivatives tied to the energy sector ETF while shorting consumer discretionary stocks, seems like a direct way to play this dynamic. This strategy isolates the divergent impacts of expensive oil within the Canadian economy. The thinking from 2025 that the net impact on GDP would be largely neutral seems to be holding true. This means that a spike in oil may not destabilize the broader S&P/TSX 60 index as much as it would have a decade ago. Consequently, selling volatility on the index through option strategies could prove effective, capitalizing on this reduced economic sensitivity. Create your live VT Markets account and start trading now.

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The Australian Dollar rose as global risk sentiment improved and the Reserve Bank of Australia adopted a more hawkish tone. Market pricing for a near-term rate rise increased, while expectations for the next move remain centred on May. Overnight index swap markets added 8bp of tightening to March pricing, taking it to 14bp. The repricing followed comments from Deputy Governor Hauser that inflation remains too high and that too little policy tightening would be a problem.

Rba Turns More Hawkish

Higher energy prices also supported the currency through Australia’s export profile. Australia is a net exporter of LNG and coal, which can benefit indirectly when oil prices stay elevated. The article states it was created with the help of an AI tool and reviewed by an editor. It is attributed to the FXStreet Insights Team, described as journalists who select market observations and add internal and external analysis. We are seeing a notable shift in the Reserve Bank of Australia, which is now signalling a more aggressive stance against inflation. Markets are now pricing in a greater than 50% chance of a rate hike this March after recent official comments, a significant change from just a few weeks ago. This is underpinned by inflation data from late 2025, which showed the annual rate at 3.9%, still well above the RBA’s target band. Given this heightened possibility of a near-term rate hike, traders should consider buying short-dated Australian dollar call options. An AUD/USD call with a late March or April 2026 expiry would capture potential upside from a surprise move this month while limiting risk if the RBA waits until May. The increased uncertainty has pushed up option volatility, making these positions more expensive but also more responsive to sharp currency movements.

Energy Exports Support The Aussie

The case for a stronger Aussie dollar is also supported by Australia’s strong export position in a time of elevated energy prices. As a major net exporter of liquefied natural gas and coal, Australia’s terms of trade are improving. We’ve seen this reflected in the Japan-Korea Marker for LNG, which has remained over 25% higher than its five-year average through the start of this year, directly benefiting Australian export revenues. This dynamic creates a favorable backdrop, especially as we see global risk sentiment stabilizing from the turbulence we experienced in 2025. Looking back at similar periods of high energy prices, the Australian dollar has often performed well once initial market fears subside. With market volatility gauges like the VIX trending lower in recent weeks, the focus is shifting back to fundamental drivers like interest rate differentials and trade balances, both of which are moving in the Aussie’s favor. Create your live VT Markets account and start trading now.

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The International Energy Agency said its 32 member countries unanimously agreed to make 400 million barrels of oil from emergency reserves available to the market. It described this as the largest coordinated release of strategic oil reserves to date. The IEA said the release would take place over a period tailored to each country’s national circumstances. It also said it will continue to monitor global oil and gas market developments.

Middle East Conflict And Energy Market Impact

The agency stated that the Middle East conflict is affecting global energy markets. It added that Asia is the region most affected by disruptions in gas supply. The announcement followed earlier indications from some governments about releasing reserves. Japan said it could start releasing oil reserves as early as 16 March, and Germany also indicated it would release part of its reserves. West Texas Intermediate US oil traded around $85.30 on Wednesday. Since the start of the European session, it moved between $82 and $88 with no clear direction. With the largest-ever coordinated reserve release announced, the initial reaction should be to prepare for downward price pressure on crude. This 400 million barrel figure is a significant supply shock, making bearish positions like buying put options on WTI or selling front-month futures contracts a primary consideration. The market’s current stability around $85 suggests it may be underestimating the full impact of this supply hitting the market over the coming weeks.

Potential Trading Approaches Under Heightened Uncertainty

However, we must remember the precedent set back in 2022 when a large strategic release was announced to counter the effects of the Ukraine conflict. While prices dipped initially, the underlying geopolitical tensions and strong demand caused them to rebound within months. That release provided only a temporary cap on prices, not a long-term solution, a pattern that could easily repeat itself now. Recent data reinforces the idea that underlying fundamentals remain strong, potentially limiting the downside. The latest Energy Information Administration (EIA) report showed global oil demand for 2026 was just revised upwards by 1.9 million barrels per day, citing robust consumption in Asia. Furthermore, last week’s U.S. commercial crude inventories saw a surprise draw of 2.1 million barrels, indicating the market is already tight even before accounting for the conflict’s disruptions. This creates a high-uncertainty environment, which points directly to a spike in volatility. The CBOE Crude Oil Volatility Index (OVX) is currently trading near 42, a relatively elevated level that signals trader nervousness. This suggests that strategies that profit from large price swings, such as long straddles or strangles, could be effective whether the price breaks below $80 or rallies past $90. Given the release will be staggered over time, a time-based strategy using calendar spreads is also attractive. We could see near-term contracts, like for May delivery, weaken significantly while longer-dated contracts for September or December remain stronger. A trader might consider buying December 2026 call options while selling May 2026 calls to capitalize on this expected curve flattening. Create your live VT Markets account and start trading now.

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February US CPI met forecasts, with core inflation easing and supercore cooling after January’s tariff-related rise. CPI supercore slowed from 0.59% month on month to 0.35% in February. TD Securities projects PCE supercore at 0.28% for February and core PCE at 0.31% month on month. The note says tariff pass-through appears to have moderated versus January.

Inflation Outlook

The report expects an oil-driven rise in energy prices to feed into near-term inflation data. It forecasts March CPI will show higher energy prices, pushing year-on-year inflation towards 3%. Energy inflation was linked to higher petrol prices, with an expectation of a further rise in March after oil prices jumped during the Iran conflict. The Federal Reserve is expected to remain patient while Middle East developments remain uncertain. US 10-year Treasury yields are expected to stay rangebound until the second half of the year. The projected range for 10-year yields is 4.0–4.3%, after a brief move above the range ahead of strikes in Iran. We recall that the moderation in supercore inflation back in February 2025 was a temporary signal. As we expected, the oil shock stemming from the Iran conflict that spring did indeed push headline inflation higher throughout last year. That persistence is now clear, as the latest Bureau of Labor Statistics data for February 2026 shows headline CPI remains elevated at 3.2% year-over-year.

Rates Strategy

The Federal Reserve’s patience, which we anticipated through the second half of 2025, is now clearly exhausted. Recent speeches from Fed governors have signaled a more hawkish stance, effectively taking rate cuts off the table for the first half of this year. This is a significant shift from the more neutral position the market had priced in just a few months ago. Consequently, the 4.0-4.3% range in 10-year Treasury yields that defined much of last year’s trading is no longer the ceiling. With the 10-year note currently yielding around 4.45%, the strategy of buying dips has become risky. Traders should now consider positioning for higher rates, possibly using options on Treasury futures to protect against further yield increases. The view from 2025 that real rates would outperform nominals proved to be correct, and this trend should continue. Concerns about persistent inflation make derivatives tied to Treasury Inflation-Protected Securities (TIPS) attractive. Volatility in the rates market is picking up, suggesting that straddles or strangles on interest rate futures could be effective for capturing bigger moves. Energy remains the primary driver we identified a year ago. WTI crude prices, which spiked to over $90 a barrel during the 2025 conflict, have stabilized but remain stubbornly high, trading this week near $85 a barrel. This continues to feed into inflation, meaning call options on major energy ETFs or futures contracts are warranted to position for sustained price pressure. Create your live VT Markets account and start trading now.

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US EIA data for 6 March showed a rise in crude oil stocks. The change was above the forecast of 1.1M. The actual increase was 3.824M. This was 2.724M higher than expected.

Inventory Surprise And Price Pressure

The crude oil inventory build of 3.824 million barrels is significantly higher than the 1.1 million barrel forecast, signaling a bearish sentiment for oil prices in the immediate term. We see this as putting direct downward pressure on front-month WTI and Brent futures contracts. This surprise build suggests that either demand is weaker than we thought or supply is more robust. Looking deeper, this inventory increase aligns with other recent data points we’ve been tracking. U.S. crude production has been holding strong near a record 13.2 million barrels per day, while refinery utilization is hovering at a modest 86% as we are in the midst of spring maintenance season. This combination of high output and lower processing capacity naturally leads to more barrels going into storage. On the demand side, the picture is also softening, giving us more reason for a cautious outlook. Recent figures show that gasoline supplied, a proxy for demand, is tracking roughly 2% lower than at this same point in March of 2025. This points to potential economic sluggishness or changing consumer habits that are weakening consumption. For derivative traders, this environment favors strategies that profit from falling or stagnant prices. We believe selling out-of-the-money call spreads on May or June contracts could be an effective way to collect premium while capping risk. The oversupply is also likely to strengthen the market’s contango, making calendar spread trades—selling the front-month contract and buying a longer-dated one—increasingly attractive. This situation confirms the demand concerns that were beginning to build toward the end of 2025. While much of the volatility we saw in previous years was driven by geopolitical supply risks, the narrative now is clearly shifting. The market’s focus for the coming weeks will be firmly on this oversupply picture.

Near Term Market Focus

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