WTI traded near $74.80 per barrel during Asian hours on Thursday, extending gains for a third session and holding close to $75.00. Prices rose as supply disruption risks continued amid the Middle East war. US and Israeli strikes on Iran and Iranian retaliation have affected energy infrastructure and disrupted oil and gas movements. The Strait of Hormuz, which handles about a fifth of global oil and LNG supplies, remains a key route.

Supply Risks In Focus

Reuters reported that Iraq, OPEC’s second-largest producer, has cut output by nearly 1.5 million barrels per day due to storage limits and blocked exports. Officials said Iraq could shut in up to 3 million bpd within days if flows do not restart. MarineTraffic data showed at least 200 ships, including oil and LNG tankers, anchored off Iraq, Saudi Arabia and Qatar. UKMTO said eight vessels, including Safeen Prestige, have been hit since Saturday. The campaign has entered its sixth day after reports that a US submarine sank an Iranian warship off Sri Lanka. US Defense Secretary Pete Hegseth said it was the “first such attack on an enemy since World War II.” Reuters also cited a scenario of a four- to five-week US campaign and an effective closure of Hormuz, with crude moving toward $100. US President Donald Trump offered risk insurance and naval escorts, while Treasury Secretary Scott Bessent outlined further steps.

Market Echoes And Strategy

Given the market’s memory of the Hormuz crisis in 2025, we see current conditions as a potential echo of that volatile period. Last year’s conflict, which saw WTI crude spike toward $100 a barrel, showed how quickly geopolitical events can upend supply. That price shock has created a persistent sense of caution in the energy markets. The CBOE Crude Oil Volatility Index (OVX) is currently hovering near 29, which is significantly lower than the peaks we saw during the 2025 disruptions. This suggests a degree of market complacency, creating an opportunity for those who anticipate renewed tensions. With the U.S. Strategic Petroleum Reserve still near 40-year lows at around 365 million barrels, the ability to cushion a new supply shock is limited. We believe traders should consider building long positions through call options on WTI for summer 2026 contracts. The tight supply situation, with OPEC+ widely expected to extend production cuts of 2.2 million barrels per day at their next meeting, provides a solid floor under prices. Buying the $85 and $90 strike calls offers significant upside exposure with a defined risk if another supply disruption materializes. Looking back at 2025, Iraq’s output was slashed by almost 1.5 million bpd, a scenario that could easily repeat. We are seeing early signs of renewed friction, with minor shipping delays reported near the Bab el-Mandeb strait last week. A strategy of buying June call spreads could therefore be prudent, allowing traders to finance longer-dated options by selling shorter-term ones. The macroeconomic picture supports this view, as the February 2026 Consumer Price Index reading came in slightly higher than expected at 3.3%. Another energy price surge would complicate central bank efforts to control inflation, potentially amplifying market reactions to any supply threats. This makes the energy sector particularly sensitive to geopolitical headlines in the coming weeks. Create your live VT Markets account and start trading now.

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EUR/USD trades lower near 1.1635 in early Asian trading on Thursday, slipping below 1.1650. The US Dollar strengthens against the Euro as Middle East conflict drives demand for safer assets. The conflict involving the US, Israel, and Iran is in its sixth day on Thursday. Israel said on Wednesday it began a new wave of strikes on military infrastructure in Tehran, and the chairman of the Joint Chiefs of Staff said the US will strike “progressively deeper” into Iran.

Market Focus And Key Data

Markets now await Eurozone Retail Sales and US weekly Initial Jobless Claims, due later on Thursday. These releases may affect near-term moves in the pair. ECB policymaker Martins Kazaks said on Tuesday the ECB should keep rates steady for now because the impact of the war in Iran is uncertain. Rising oil and gas prices linked to the conflict have increased inflation concerns and added to expectations of an ECB rate rise. Money markets price in nearly a 40% probability of an ECB rate hike by year-end, Reuters reported. This follows hotter-than-expected February inflation data released on Tuesday. We remember looking back at 2025 when escalating Middle East tensions fueled a flight-to-safety, pushing the US Dollar higher and sending EUR/USD below 1.1650. That period was a stark reminder of how quickly geopolitical risk can dominate currency markets. The dollar’s role as the ultimate safe haven was reinforced for all of us.

Positioning And Volatility

Today, the situation has evolved, with EUR/USD trading significantly lower around 1.0780 as of early March 2026. The interest rate differential remains a primary driver, especially after the latest US Non-Farm Payrolls report showed a robust addition of 275,000 jobs, keeping pressure on the Federal Reserve to maintain its restrictive stance. In contrast, Eurozone inflation has cooled to 2.6%, giving the European Central Bank more room to consider rate cuts later this year. Last year’s conflict caused a dramatic spike in implied volatility, with options premiums surging as traders scrambled for protection. We are not seeing that level of panic now, with key volatility measures like the VSTOXX index trading near 12-month lows. This relative calm in the options market presents a different kind of opportunity for prepared traders. Given the current low volatility, buying put options on EUR/USD offers a relatively inexpensive way to hedge against a sudden geopolitical flare-up or a surprisingly strong US inflation report. This strategy provides downside protection while limiting risk to the premium paid. It is essentially a low-cost insurance policy against a return to the dollar strength we witnessed in 2025. We also recall how money markets in 2025 priced in a 40% chance of an ECB rate hike on energy-driven inflation fears, a hike that never materialized as growth concerns took precedence. A similar dynamic could play out if energy prices, with Brent crude currently holding steady around $85 a barrel, were to spike again. This makes long positions in EUR calls a potential contrarian play on a sudden hawkish shift from the ECB. To balance these risks, derivative traders should consider strategies that benefit from a clear directional move but at a reduced cost. A bear put spread, for instance, allows for a bet on a falling EUR/USD but caps both the potential profit and the upfront cost. This defined-risk approach is prudent in an environment where underlying economic data and dormant geopolitical risks could rapidly shift market sentiment. Create your live VT Markets account and start trading now.

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Australia’s exports fell by 0.9% month-on-month in January. This followed a 1% rise in the previous month. We see the drop in January’s exports to -0.9% as a significant reversal from the growth we saw at the end of last year. This shift signals a potential slowdown in global demand for Australian goods, particularly from key partners. Recent purchasing managers’ index (PMI) data out of China has also been soft, with the manufacturing PMI dipping to 49.8, reinforcing concerns about the strength of our main export market.

Australian Dollar Risk And Positioning

This negative data puts immediate pressure on the Australian dollar, making bearish strategies attractive. We are considering buying AUD/USD put options to profit from a potential decline while limiting our risk to the premium paid. Implied volatility on these options has already increased slightly to 10.2%, suggesting the market is beginning to price in a period of greater uncertainty for the currency. The weakness is also likely to affect the ASX 200, especially the heavily weighted materials and energy sectors. Shorting index futures or buying put options on major mining stocks could be a prudent move to hedge against or capitalize on a market downturn. Resource companies, which saw their share prices rally in the final quarter of 2025, now face headwinds from both lower export volumes and potentially softer commodity prices. This trade data makes a hawkish stance from the Reserve Bank of Australia (RBA) less likely in the near term. We remember how in mid-2025, a similar pattern of weakening external accounts led the RBA to pause its policy tightening for several months. Traders will be closely watching the upcoming RBA minutes for any change in tone regarding future rate movements. The fall in exports, a large portion of which is iron ore and coal, points to weakening fundamentals for these key commodities. Given that over one-third of our total exports typically go to China, their reduced industrial appetite could weigh on prices for weeks to come. This may create opportunities for those positioned to short iron ore futures on exchanges like the Singapore Exchange.

Commodity Headwinds And Tactical Trades

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Foreign buying of Japanese shares rose from ¥402bn to ¥973.9bn in the week ending 27 February. The change shows a higher net inflow into Japan’s stock market over that period. The increase from ¥402bn to ¥973.9bn equals a rise of ¥571.9bn. This compares the latest weekly figure with the previous week’s total.

Foreign Inflows Signal Rising Confidence

We are seeing a massive surge in foreign capital into Japanese stocks, with inflows more than doubling in the last week of February. This is a very strong bullish signal, suggesting that international investors are showing growing confidence in the market’s upward momentum. This level of investment is the highest we’ve seen since the major rally in the second quarter of 2025. Given this, we should consider buying call options on the Nikkei 225 index or related ETFs to capitalize on expected gains in the coming weeks. The current market shows the Nikkei has already broken through the 41,000 resistance level, and this new flood of money could provide the fuel to test 42,500. A similar inflow pattern last year preceded an 8% climb over the following month. This foreign buying spree puts upward pressure on the Japanese Yen, but the Bank of Japan’s policy is a more dominant force. With the BoJ still signaling it will maintain its accommodative stance to ensure inflation remains stable around 2%, the Yen is likely to stay relatively weak. We can use derivatives to bet on the USD/JPY pair remaining above the 152 level, which benefits Japan’s large exporters. The significant capital injection will also likely increase market volatility in the short term. The Nikkei Volatility Index has already ticked up from 16 to 19.3 in the past ten days, reflecting uncertainty about the pace of the rally. We could look at selling out-of-the-money put options to collect premium from this heightened volatility, effectively getting paid to be bullish above a certain price. We should also notice where the money is going, as recent flow data indicates a heavy concentration in semiconductor and financial stocks. These sectors have outperformed the broader market by nearly 5% since the beginning of the year. This suggests that using options on specific sector ETFs, rather than just the broad Nikkei, could provide a more targeted way for us to profit from this trend.

Sector Concentration And Options Positioning

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GBP/USD was almost unchanged on Wednesday, up 0.08% to about 1.3370 in a quiet session. It has dropped from a late-January peak near 1.3870 and is now testing the 200-day EMA, while the one-week forex heatmap shows Sterling down about 1.4% against the US Dollar this week. In the UK, Rachel Reeves delivered the Spring Statement, and the OBR cut its 2026 growth forecast to 1.1% from 1.4% due to weaker activity in late 2025 and higher unemployment. The OBR said its forecasts were finalised before the US-Israeli strikes on Iran, and warned the conflict could have large effects on the global and UK economies.

Energy And Bank Of England Expectations

Energy prices rose after the closure of the Strait of Hormuz, and markets reduced bets on a Bank of England rate cut on 19 March. Futures now price less than a 15% chance of a cut. In the US, demand for the Dollar has been supported by safe-haven flows, with key releases due on Friday, including Nonfarm Payrolls and January Retail Sales. Technically, GBP/USD is below the 50-day EMA, with resistance near 1.3505 and focus returning to 1.3650 if it closes above that level. Support sits near the 200-day EMA around 1.3375, then 1.3360 and 1.3300. A break below these levels would point to further downside on the medium-term chart. We have seen the Pound break below the critical 200-day moving average at 1.3375, a level it was only testing a day ago. The pair is now trading near 1.3350, confirming a bearish technical signal and suggesting that sellers are gaining more control. This break is significant as it had been a key support level for months.

Strategy And Risk Management

The fundamental picture for the UK has worsened since the recent Spring Statement. The February 2026 manufacturing PMI data, released just this morning, came in at 48.5, indicating a contraction and giving credit to the OBR’s decision to cut the growth forecast. This confirms the weaker economic activity we were already seeing in late 2025. On the other side of the pair, safe-haven demand for the US dollar remains strong due to the unresolved tensions around the Strait of Hormuz. Brent crude oil prices have held firm above $95 per barrel for over a week, reinforcing global economic uncertainty. All eyes are now on tomorrow’s US Nonfarm Payrolls report, with consensus forecasts anticipating a solid gain of around 210,000 jobs, which would further support the dollar. This creates a clear policy divergence between the central banks. The Bank of England is stuck between a slowing economy and high energy-driven inflation, making it very unlikely they will act at the March 19 meeting. Meanwhile, the Federal Reserve faces no immediate pressure to cut rates, given the robust US labour market and persistent global risks. Given this outlook, we should consider buying GBP/USD put options to profit from further downside. A sustained break below 1.3360 opens the door to the 1.3300 psychological level in the near term. Options with an expiry date after the March 19th Bank of England meeting could capture any additional volatility. For those wanting to manage risk, the 50-day average near 1.3505 now acts as firm resistance and a logical level for stop-losses on short positions. A bear put spread could also be an effective strategy, allowing us to bet on a decline while lowering the upfront cost of the position. This is a more conservative way to express a bearish view on the pound. Create your live VT Markets account and start trading now.

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USD/JPY fell 0.42% on Wednesday to about 157.00 after trading near 157.90 earlier. The pair has ranged between roughly 152.00 and 159.00 since late January. Safe-haven demand for the US Dollar eased, helping the Yen recover slightly. Middle East tensions remained a main driver of broader US Dollar demand.

Strait Of Hormuz Shock

US and Israeli strikes on Iran led to the effective closure of the Strait of Hormuz. Higher crude oil prices added pressure to the Yen because Japan relies heavily on energy imports. Japan’s Finance Minister Katayama said authorities are monitoring the currency’s decline. The Bank of Japan is holding rates at 0.75%, and recent volatility has raised the chance of no March hike. In US data, ADP payrolls rose by 63K and ISM Services PMI came in at 56.1. The remaining high-impact releases this week are Friday’s US Nonfarm Payrolls and Retail Sales. On the daily chart, USD/JPY was at 157.07, with resistance at 157.70 and 158.40, then 160.00. Support sits near 156.00 and 155.30, then 153.00.

How The Backdrop Changed

Looking back at the events of early 2025, we recall the extreme tension when USD/JPY was trading near 157.00 due to the Strait of Hormuz crisis. Today, with the pair trading much lower around 148.50, that period serves as a stark reminder of how quickly geopolitical risk can impact the yen. The easing of Middle East tensions throughout late 2025 allowed the focus to shift back to monetary policy fundamentals. The policy divergence that drove the dollar higher last year has reversed significantly. While the Bank of Japan held rates at 0.75% during the March 2025 turmoil, they eventually hiked twice later in the year to 1.25%, where the rate currently stands. This, combined with the Federal Reserve’s two recent quarter-point cuts, has narrowed the U.S.-Japan 10-year yield spread to just under 3.3% from its peak of over 4.1% a year ago. For derivative traders, this means implied volatility is now much lower than the elevated levels seen during the 2025 crisis. Three-month implied volatility for USD/JPY is currently hovering near 8.5%, a sharp contrast to the levels above 15% we saw during the shipping disruptions. This makes buying options relatively cheap, presenting an opportunity to position for future moves without the high premiums of last year. Recent data reinforces the potential for renewed yen strength. Last week’s Tokyo Core CPI came in at 2.8%, beating expectations and fueling speculation that the Bank of Japan may signal another rate hike by summer. This stands in contrast to softening U.S. labor market data, which keeps the door open for further Fed easing. Therefore, strategies should shift from the crisis-driven positioning of 2025. Given the lower volatility, purchasing long-dated JPY calls (or USD/JPY puts) offers a cost-effective way to speculate on a continued policy divergence that favors the yen. The 160.00 level that seemed possible a year ago is now a distant resistance, with traders instead using options to target a move toward the 145.00 support zone. Create your live VT Markets account and start trading now.

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AUD/USD rose 0.5% on Wednesday to about 0.7080 after earlier dipping towards 0.7000. It has moved in a 150-pip range between 0.7000 and the year-to-date high near 0.7150 for over a month, and is down about 0.65% over the past five sessions. Australia’s Q4 GDP grew 0.8% quarter-on-quarter versus a 0.6% consensus, with annual growth at 2.6% from 2.1%. Growth was driven mainly by government spending and a rebound in inventories, after the RBA lifted rates to 3.85% in February.

Key Us Data And Geopolitical Risk

In the US, ADP payrolls and the ISM Services PMI beat forecasts on Wednesday. US Nonfarm Payrolls, the unemployment rate, and January retail sales are due Friday, while conflict in the Middle East and the Strait of Hormuz closure has supported USD safe-haven demand. AUD/USD traded at 0.7079, above rising 50-day and 200-day exponential moving averages, with the Stochastic easing from overbought levels. Support is near 0.7040 and 0.7000, with the 50-day EMA around 0.6930; resistance sits near 0.7120 and then 0.7160. AUD drivers include RBA policy, a 2–3% inflation target, China’s economy, trade balance, and iron ore, worth $118 billion a year in 2021. Looking back to early 2025, we recall a period of optimism for the Aussie dollar, fueled by strong fourth-quarter GDP growth of 2.6% annually. This strength supported the Reserve Bank of Australia’s decision to raise rates to 3.85% at the time. Today, however, the landscape has shifted, with AUD/USD trading significantly lower around 0.6650.

Outlook And Strategy Considerations

The series of rate hikes that followed the period in 2025, peaking at 4.35%, have clearly cooled the economy as intended. The most recent data for the fourth quarter of 2025 showed annual growth slowing to just 1.5%, a noticeable drop from the robust pace seen a year prior. This slowdown suggests the RBA will remain on hold for the foreseeable future, removing a key pillar of support for the currency. Furthermore, the outlook for Australia’s key trading partner, China, has softened, which weighs on the Aussie. Recent figures like the Caixin Manufacturing PMI dipping to 49.8 show a manufacturing sector in slight contraction. This has contributed to iron ore prices falling to around $115 per tonne, well off their highs from last year. Given the divergence, where the US economy remains resilient and keeps the Fed on a ‘higher-for-longer’ path, the path of least resistance for AUD/USD appears to be lower. Unlike the range-bound trading we saw around 0.7100 in early 2025, the current trend is decidedly downward. Derivative traders may consider buying put options to hedge or speculate on further downside, especially with key support levels now under pressure. Create your live VT Markets account and start trading now.

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Gold traded near $5,145 in early Asian hours on Thursday, holding gains around $5,150. The move followed increased demand linked to the US–Iran conflict, with US weekly Initial Jobless Claims due later and Fed official Michelle Bowman scheduled to speak. Israel’s military said it began a new wave of strikes targeting military infrastructure in Tehran, according to the BBC. US officials said the US will start striking “progressively deeper” into Iran, and Republicans rejected a resolution seeking to require congressional approval for future US military action against Iran.

Federal Reserve And Data Focus

US data showed the ISM Services PMI rose to 56.1 in February from 53.8, above the 53.5 forecast. This may support expectations of higher interest rates for longer, which can lift the US Dollar and pressure dollar-priced commodities. Markets largely expect the Fed to keep rates unchanged until the summer. Separately, central banks added 1,136 tonnes of gold worth around $70 billion to reserves in 2022, the highest yearly purchase since records began, according to the World Gold Council. We remember how last year, around this time, gold was pushing over $5,100 as the conflict with Iran escalated, creating a strong safe-haven bid. Today, with those direct military tensions having eased, the price has pulled back to around $4,900. The market’s main focus has now shifted from geopolitics to the Federal Reserve’s interest rate path. The recent economic data gives us a mixed picture that creates uncertainty. February’s inflation numbers came in slightly hotter than expected at 3.1%, and last month’s jobs report showed a solid gain of 225,000 new payrolls. This strong data gives the Fed justification to keep interest rates higher for longer, which typically weighs on non-yielding gold.

Derivatives Positioning And Volatility

For derivatives traders, this environment suggests implied volatility could rise as we approach the next Fed meeting. The battle between stubborn inflation and the market’s hope for a summer rate cut creates a tense balance, making long straddle or strangle positions attractive to capture a significant price move. Selling covered calls against existing gold positions could also be a viable strategy to generate income if we anticipate the price will remain range-bound in the immediate weeks. We must also consider the strong underlying support from central banks, which provides a floor for the price. The World Gold Council recently confirmed that central banks added another 1,050 tonnes to their reserves in 2025, continuing the aggressive buying trend we have seen for years. This persistent demand from official sources helps absorb any major dips caused by short-term sentiment. The strong US Dollar, fueled by the current interest rate outlook, remains the primary headwind for gold. Traders should watch the Dollar Index (DXY) closely, as any sign of softening Fed rhetoric could weaken the dollar and trigger a sharp rally in gold. A surprise shift in tone from a Fed official could be the catalyst that breaks gold out of its current trading range. Create your live VT Markets account and start trading now.

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DBS Group Research economists Radhika Rao and Chua Han Teng said Indonesia’s growth outlook remains intact despite Middle East tensions. They said the direct effect on Indonesia’s trade and economic growth is marginal at present. Indonesia’s trade exposure to Iran has been negligible over the past six years. Total trade with the wider Gulf region reached $17.8bn in 2025, equal to 3.4% of total trade.

Building Regional Economic Partnerships

Indonesia is strengthening links through existing agreements and Comprehensive Economic Partnership Agreement talks with Kuwait, Bahrain, Oman, and Qatar. These steps aim to broaden economic ties in the region. Indonesia is a net oil importer but also a net commodity exporter. It said pressure on the trade balance could be offset if metals and minerals prices remain firm. DBS kept its economic forecasts unchanged. It linked part of the buffer to a structural shift in energy subsidies, which were 0.8% of GDP last year. The market seems to be overstating the risk to Indonesian assets from current Middle East tensions, creating a potential opportunity in the volatility space. We should consider selling out-of-the-money puts on the Jakarta Composite Index, as fundamentals suggest a limited downside. With the Rupiah holding steady around 15,600 per dollar despite Brent crude touching $95, implied volatility on currency options also appears elevated and attractive to sell.

Relative Value Trade Positioning

Looking back, the economic model from 2025, where Indonesia acted as a net commodity exporter, remains our key thesis for its resilience. The surge in nickel and coal prices we saw last year provided a significant buffer against higher oil import costs, a trend we expect to continue. This suggests long positions in Indonesian commodity futures could act as an effective hedge against broader emerging market downturns. From a relative value perspective, Indonesia stands out against other regional economies that are pure net oil importers. The Jakarta Composite Index has already outperformed the MSCI Emerging Markets Index by over 2% year-to-date, and we see this trend continuing. A pairs trade, going long on an Indonesian equity ETF while shorting an ETF of a more vulnerable neighboring market, is a logical expression of this view. The government’s fiscal position provides another layer of security, supported by the energy subsidy reforms we saw in 2025 that lowered the burden to 0.8% of GDP. This fiscal space, combined with recent inflation data for February coming in at a manageable 3.1%, suggests Bank Indonesia will not be forced into aggressive tightening. This stability supports a calm outlook for short-term interest rate swaps. Create your live VT Markets account and start trading now.

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AUD/USD rose 0.61% to 0.7077 on Wednesday, with broad US dollar weakness linked to improved market mood. The pair was near the day’s high at the time of writing. The pair had fallen almost 1% on Tuesday, reaching a four-week low of 0.6944. The Relative Strength Index remained above 50 and was moving higher.

Key Upside Levels

A move above the March 3 daily high of 0.7122 would open the way to the yearly high at 0.7147. The next level above that is 0.7200. On the downside, initial support is at 0.7000. A drop below 0.7000 could lead back to 0.6944 and the 50-day simple moving average at 0.6904. With the AUD/USD pushing towards 0.7080 on broad US Dollar weakness, we should position for further gains. The latest US inflation report showing a cooldown to 2.8% supports this soft dollar view, reducing pressure on the Federal Reserve. This makes buying call options with strikes above the 0.7122 resistance an attractive strategy for the coming April expirations. The Aussie’s strength isn’t just a dollar story; the Reserve Bank of Australia’s recent hawkish tone has put rate hikes back on the table. Adding to this, iron ore prices have climbed back above $120 a tonne, a significant rise from the range-bound trading we saw in late 2025. This fundamental backdrop provides a solid foundation for upside exposure targeting the yearly high of 0.7147.

Downside Risk Management

We must also manage risk if the sentiment reverses and the pair fails to hold the key 0.7000 psychological level. Buying put options with a strike price around 0.6980 could offer effective protection against a sharp downturn. A decisive break below this support would shift our focus towards the recent low of 0.6944 as the next target. Create your live VT Markets account and start trading now.

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