USD/JPY extended a modest pullback from the 159.85 area and moved lower in Asia on Tuesday. It fell to near 159.00, with limited follow-through downside due to mixed drivers.

US-Iran peace talks failed over the weekend, yet markets still expect diplomacy to continue. US Vice President JD Vance said meaningful progress has been made, and this weighed on the US dollar.

Dollar Pressure From Policy Uncertainty

The US dollar also hit its lowest level since early March amid uncertainty over US inflation and Federal Reserve policy. US data released on Friday showed inflation rose by the most in nearly four years, shifting attention towards possible rate rises this year, while some rate-cut expectations remain.

The yen found limited support due to concerns over energy shocks linked to instability around the Strait of Hormuz. US President Donald Trump said a US Navy blockade has officially started and said Iranian warships approaching would be destroyed, while Iran threatened ports in the Persian Gulf and the Gulf of Oman.

Japan relies mainly on Middle East oil imports, raising concerns about economic strain in the near term. This may limit yen strength and restrict deeper USD/JPY declines, while talk of Japanese official action could also cap further yen weakness.

Looking back at the situation in 2025, we saw the dollar soften on hopes of US-Iran diplomacy, while the yen was weakened by energy security fears. This created a limited trading range for USD/JPY, as both currencies faced significant headwinds. The fundamental landscape, however, has shifted dramatically over the past twelve months.

Energy Shock And Market Aftereffects

The US naval blockade in the Strait of Hormuz last year caused a severe energy shock, with Brent crude prices briefly spiking above $145 per barrel. While diplomatic channels have since eased the immediate crisis, oil prices remain elevated, with WTI currently trading around $95, keeping pressure on energy importers like Japan. This sustained high cost of energy continues to act as a major weight on the yen.

In response to the inflation surge of 2025, which saw the Consumer Price Index peak at over 7%, the Federal Reserve was forced into a much more aggressive stance than traders anticipated. The Fed has since raised the federal funds rate to 6.00% to combat these persistent price pressures, which were last recorded at 4.1% for March 2026. This high interest rate environment provides strong underlying support for the US dollar.

Consequently, the USD/JPY pair is now trading near 162.50, far above the levels discussed last year. While the Bank of Japan finally exited its negative interest rate policy, its current rate of 0.10% creates a vast and attractive interest rate differential for holding dollars over yen. This carry trade remains the dominant force driving the pair’s strength.

For the coming weeks, traders should consider strategies that capitalize on this high interest rate differential while being mindful of verbal or actual intervention from Japanese authorities. Selling out-of-the-money JPY call/USD put options is a viable strategy to collect premium, betting that the pair will not see a sharp reversal below key support levels. Alternatively, bull call spreads on USD/JPY could offer a defined-risk way to profit from further upside toward the 165.00 level.

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WTI traded near $91.50 in Asian hours on Tuesday, staying subdued for a third day after reports that the US and Iran may hold further talks. The talks aim to secure a longer-term ceasefire before the current two-week truce ends.

US President Donald Trump said Tehran initiated contact with Washington, while Iranian President Masoud Pezeshkian said he is willing to continue dialogue within international law. US Vice President JD Vance said on Fox News that diplomacy is ongoing and that there has been progress, though no breakthrough.

Supply Disruption Keeps A Floor Under Prices

US Energy Secretary Chris Wright said energy prices may stay elevated and could rise until vessel traffic through the Strait of Hormuz returns to normal. He said continued disruption to the shipping route is supporting price pressures.

Trump also said high oil and petrol prices could persist through the US midterm election period. An OPEC+ report said the group’s output fell by 7.9 million barrels per day in March, largely due to the Strait of Hormuz shutdown.

Attention is also on the upcoming monthly International Energy Agency report for further supply and demand signals.

We are seeing the market caught between conflicting signals from Washington and the physical supply situation. While talk of a ceasefire is pulling prices down, the massive OPEC+ output reduction provides a strong floor. This tug-of-war is setting up a period of significant volatility for crude oil in the coming weeks.

Options Strategies For Two Way Volatility

This situation feels a lot like the uncertainty we saw back in late 2025 when concerns over the Strait of Hormuz first emerged. Implied volatility on WTI options is likely to surge, much like the oil volatility index (OVX) spiked over 60 during the initial phases of the Ukraine conflict in 2022. This makes outright directional bets expensive and risky for any trader.

Given this setup, we should consider strategies that benefit from a large price swing, regardless of the direction. A long straddle or strangle, which involves buying both a call and a put option, could be effective. This play profits if the price moves sharply up on failed talks or down on a breakthrough agreement.

The physical supply disruption at the Strait of Hormuz cannot be understated, as historically it handles over 20% of global oil consumption. The reported 7.9 million barrel per day output decline is a staggering figure, far exceeding the cuts seen during the 2020 pandemic demand collapse. These supply fundamentals provide a strong argument against any significant price collapse unless a firm deal is signed and ratified.

The political calendar, specifically the upcoming US midterm elections, adds another layer of complexity for the administration. There will be immense pressure to see gasoline prices fall, which could push for a faster resolution with Iran. Traders should watch for any shifts in rhetoric from US officials as a leading indicator of a potential deal.

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EUR/USD extended Monday’s rise of over 100 pips, adding gains in Tuesday’s Asian session. It rose for an eighth straight day, reaching about 1.1765–1.1770, its highest level since early March.

After peace talks failed over the weekend, markets continued to move towards risk assets amid hopes of further Iran diplomacy. US Vice President JD Vance said talks had made meaningful progress, despite no breakthrough, which weighed on the US Dollar.

Dollar Weakness And Risk Appetite

Uncertainty about future US Federal Reserve interest rate moves also kept the Dollar near its lowest level since early March. At the same time, shipping risk linked to the Strait of Hormuz limited risk appetite.

US President Donald Trump said a US Navy blockade of the waterway had started, and threatened action against Iranian warships near it. Iran warned it could target all ports in the Persian Gulf and the Gulf of Oman, keeping tensions elevated.

Concerns that the current ceasefire could fail and fighting could resume supported the Dollar and curbed demand for EUR/USD. Even so, recent price action remained consistent with an ongoing uptrend from the late March low.

We recall a similar period last year, around this time in 2025, when EUR/USD saw a strong rally based on diplomatic hopes with Iran. Despite the positive trend, significant geopolitical risk was building due to the US Navy’s actions in the Strait of Hormuz. This created a tense and uncertain backdrop for the dollar.

Options Strategy And Monitoring

That optimism proved short-lived, as historical data shows the pair reversed sharply, falling nearly 6% through June and July 2025 when the blockade’s economic impact became clear. The situation serves as a reminder of how quickly geopolitical events can override fundamental trends. We saw risk-off sentiment dominate markets for the remainder of that quarter.

Today, the Euro is strengthening for different reasons, primarily driven by a newly hawkish European Central Bank. Recent data shows Eurozone core inflation for March 2026 holding stubbornly at 2.9%, prompting markets to price in at least two ECB rate hikes this year. This contrasts with the Federal Reserve, which has signaled a pause in its own tightening cycle.

Given the memory of last year’s reversal, a cautious approach using options is warranted for capturing further upside. One could consider buying EUR/USD call options with a near-term expiry to benefit from the ECB’s momentum. However, purchasing protective put options or utilizing call spreads would be a prudent way to hedge against any sudden risk-off event, especially as implied volatility remains elevated around 8%.

Moving forward, we should closely monitor speeches from ECB officials for confirmation of their hawkish stance. Simultaneously, any developments in global shipping lanes or new diplomatic tensions could quickly shift sentiment against the Euro. This makes paying attention to both central bank policy and geopolitical headlines essential for navigating the weeks ahead.

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National Australia Bank reported its business confidence index at -29 in March. The previous reading was -1.

The plunge in business confidence from -1 to -29 is a significant shock to the system, signaling a sharp deterioration in economic expectations. We should anticipate downward pressure on the ASX 200, making put options on the index or shorting futures contracts viable strategies for the coming weeks. This data suggests companies will likely halt investment and hiring plans, directly impacting future earnings.

Rate Cut Odds Increase

This dramatic downturn in sentiment strongly increases the probability of the Reserve Bank of Australia cutting interest rates to support the economy. Consequently, we expect the Australian dollar to weaken against major currencies like the USD. This outlook is reinforced by the latest quarterly CPI figures, which came in at 2.8%, falling below the RBA’s target band and giving the central bank more room to act.

Such a drastic data miss will almost certainly lead to a spike in market volatility from its current subdued levels. We should consider buying call options on the A-VIX or implementing straddles on key stocks that are likely to see large price swings. The market was not positioned for a number this poor, and repricing risk will be a violent process.

This is a sharp reversal from the cautious optimism we felt in late 2025, when it seemed like inflationary pressures were finally contained. The current confidence reading is a level of pessimism we have not seen since the initial economic shock of the COVID-19 pandemic in 2020. Back then, the market reacted with a swift and deep correction before policy support kicked in.

The reading aligns with the latest labour force data which saw the unemployment rate tick up to 4.5%, suggesting the weakness is broad-based. We should be particularly wary of cyclical sectors like consumer discretionary and financials, which are highly sensitive to economic downturns. Defensive positions in healthcare and utilities may offer some relative protection in this environment.

Positioning And Sector Rotation

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Singapore’s gross domestic product rose 4.6% year on year in the first quarter. This was below the forecast of 5.4%.

The release compares actual growth (4.6%) with the expected rate (5.4%). It shows growth was 0.8 percentage points lower than forecast.

The gross domestic product figure coming in below expectations points to a cooling economy. This surprise suggests that the growth we anticipated for the start of 2026 has not materialized, creating uncertainty. We should therefore expect downward pressure on Singapore-dollar denominated assets in the near term.

This economic data miss will likely weaken the Singapore Dollar against the US Dollar. We saw non-oil domestic exports fall by 2.8% in February 2026, so this GDP figure confirms a trend of slowing external demand. Derivative traders should consider buying USD/SGD call options to position for a potential slide in the local currency, as the Monetary Authority of Singapore will be less inclined to tighten policy.

For equities, the Straits Times Index (STI) is likely to face headwinds as corporate earnings forecasts are revised downwards. This is reminiscent of the slowdown we observed in late 2025 when global trade figures first began to soften. We can use this opportunity to purchase put options on the STI or establish short positions in index futures as a hedge against a market decline.

Interest rate expectations will also shift, with the market now pricing in a lower probability of any further rate hikes this year. The Singapore Overnight Rate Average (SORA) futures are already reflecting this sentiment, showing a slight dip this morning. We see this as a chance to position for a flatter yield curve through interest rate swaps.

Overall, the data miss has increased market uncertainty, which we are seeing reflected in higher implied volatility on options. Implied volatility on one-month SGD options has already jumped by 15% in early trading, according to our data feeds. Traders should be prepared for larger price swings and adjust their strategies to account for the higher cost of options.

GBP/USD dipped to about 1.3380, then recovered to around 1.3510, up 0.35% on the day. It has risen more than 350 pips from near 1.3160 in early April, and has retraced roughly half of the drop from about 1.3870.

A US blockade of the Strait of Hormuz after failed peace talks in Pakistan weighed on risk appetite early on Monday. Later, the US Dollar eased as markets anticipated a possible resolution, helping GBP/USD to regain 1.3500.

Tuesday brings the March US Producer Price Index (PPI), expected at 1.2% month-on-month versus 0.7% in February. The year-on-year PPI is forecast at 4.6% versus 3.4%, alongside five Federal Reserve speeches from Goolsbee, Barr, Barkin, Collins, and Paulson.

UK CPI is expected to rise to between 3% and 3.5% over coming quarters due to higher fuel and utility costs. This follows a prior move towards the 2% target before the conflict.

GBP/USD trades near 1.3513, above the 50-day EMA at 1.3395 and the 200-day EMA at 1.3367. Stochastic RSI is near 71, with support levels around 1.3395 and 1.3367.

We remember watching the pound recover to 1.3500 in April 2025, even as the US blockade of the Strait of Hormuz began. That market optimism about a quick resolution proved temporary, as the stagflationary risks discussed at the time took hold and weighed on the UK economy throughout the past year. Today, with GBP/USD hovering near 1.2850, our focus has shifted from geopolitical hope to the hard reality of stubborn inflation.

The inflation shock from the 2025 conflict has left a long tail that we are still managing. The latest March Consumer Price Index data showed US inflation remains sticky at 3.1%, while the UK’s figure came in at 3.2%, both stubbornly above the 2% target. Consequently, both the Federal Reserve and the Bank of England have signaled that the rate cuts we had anticipated for this quarter are likely delayed.

Tensions in the Strait of Hormuz have eased from the direct blockade of 2025, but they have not disappeared, with sporadic shipping disruptions still a concern. This persistent risk keeps a floor under energy prices, with Brent crude recently trading back above $92 a barrel. This complicates the path back to lower inflation and keeps the risk of another price spike in our minds.

Given this backdrop of sticky inflation and central bank hesitation, we should position for continued range-bound trading marked by sharp bursts of volatility. Using options to buy straddles or strangles ahead of key inflation reports could be a good way to play the expected price swings. This allows us to profit from a significant move in either direction without having to guess the outcome of finely balanced policy decisions.

For those of us who believe the UK’s economic challenges will ultimately limit the pound’s upside near the 1.3000 level, selling out-of-the-money call options on GBP/USD offers a way to generate income. On the other hand, with the market highly sensitive to any shift from the Fed, buying short-dated puts can serve as a cost-effective hedge. This protects against any hawkish surprises that could send the dollar sharply higher and push the pound back toward its yearly lows.

OCBC strategists Sim Moh Siong and Christopher Wong expect the Monetary Authority of Singapore (MAS) to tighten policy on 14 April 2026. They anticipate MAS will raise the slope of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band to address imported inflation.

They note market expectations are already skewed towards tightening, so attention is on which policy levers MAS uses and the statement’s tone. A more hawkish tone could keep the S$NEER near the top of its band and trigger modest, immediate downside in USD/SGD, assuming broader USD moves stay balanced.

Mas Policy Levers And Market Tone

If MAS uses more balanced messaging, they expect the USD/SGD reaction to be more muted. They also set out technical levels for USD/SGD, with resistance at 1.2780, 1.2810, and 1.2840/50.

They identify key support at 1.2710, with the next support at 1.2620 if there is a decisive break lower. The resistance levels cited include the 38.2% and 50% Fibonacci retracements, plus the 21, 100, and 200-day moving averages.

Our base case is for the Monetary Authority of Singapore to tighten policy today by increasing the slope of the S$NEER policy band. This move is aimed at countering rising imported inflation, especially as the latest data showed the first-quarter import price index rose 2.5%, its fastest pace in over a year. We expect this will put downward pressure on the USD/SGD pair.

Looking back from 2025, we saw how aggressively central banks, particularly the US Federal Reserve, acted against the inflation surge in 2022. The current situation, with Brent crude futures hovering above $95 a barrel for the past month, presents a similar challenge for Singapore’s import-reliant economy. This historical context reinforces our view that the MAS will act decisively to strengthen the currency.

Usdsgd Trading Strategy And Key Levels

Given that market expectations are already leaning heavily towards a tightening, the immediate reaction will hinge on the tone of the policy statement. We see implied volatility on one-week USD/SGD options has already climbed to 8.2%, reflecting market anticipation. Therefore, a simple increase in the slope without a hawkish message may not cause a significant move.

If the MAS delivers a hawkish statement alongside the tightening, we should prepare for a test of key support for USD/SGD at 1.2710. A break below this level could be a trigger for buying short-dated USD/SGD put options to capitalize on further downside towards 1.2620. This would signal a strong commitment from the MAS to let the Singapore dollar appreciate more quickly.

However, if the statement is more balanced and simply meets expectations, we might see a muted reaction or a brief relief rally in USD/SGD. In this scenario, traders could consider selling call options with strikes near the 1.2780 to 1.2810 resistance zone. This strategy would benefit from both the price failing to rise and the expected drop in option volatility after the event.

Over the coming weeks, our broader strategy should be to sell into any strength shown by the USD/SGD pair. The fundamental policy direction is towards a stronger Singapore dollar to combat inflation. We will view any rallies towards the 1.2840/50 resistance area as opportunities to initiate bearish positions or add to existing ones.

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Silver (XAG/USD) recovered some ground on Monday but was set to end the day down 0.33% after a weekend gap lower linked to negative news on the US-Iran conflict. At the time of writing, it traded at $75.58 after rebounding from a daily low of $72.61.

Silver faced resistance at the 100-day Simple Moving Average (SMA) of 76.09 and found support at the 20-day SMA of 73.28. A four-day low of $72.61 raised the risk of further declines, even with price ending above $75.50.

Momentum And Key Catalyst

The Relative Strength Index (RSI) moved sideways near the neutral level, suggesting limited momentum. Traders were awaiting a potential catalyst from the US Producer Price Index (PPI) release on Tuesday.

If the price rises above the 100-day SMA, levels to watch include $77.98, the March 3 low turned resistance, and the 50-day SMA at $79.21. If it falls below the 20-day SMA, targets include the April 2 low of $69.58 and then $60.95, the March 23 cycle low.

Looking back at the situation around this time in 2025, we saw silver caught in a tight range following a geopolitical scare. The price was stuck between its 100-day moving average at $76.09 and its 20-day average at $73.28. This technical setup from last year provides a clear map for how we should be positioned today.

For derivative traders now, a break below that old support level of $73.28 would be a significant bearish signal. We saw a similar pattern in late 2025 when unexpectedly strong US jobs data boosted the dollar, pushing silver down nearly 10% in the following month. Buying put options or establishing bear put spreads would be the logical response to capitalize on a potential move toward the $69.58 target.

Options Positioning And Breakout Levels

Conversely, a sustained move above the $76.09 resistance level should be seen as a strong bullish trigger for buying call options. Current industrial demand reinforces this view, with recent reports showing silver consumption in the solar panel and 5G technology sectors is up 8% year-over-year for the first quarter of 2026. This fundamental strength could easily propel prices toward the higher target of $77.98.

The market is currently showing signs of indecision, much like the neutral RSI period we observed last year. The CBOE Silver Volatility Index (VXSLV) is hovering near 34, suggesting traders are anticipating a significant price swing in the near future. All eyes are on this week’s US Producer Price Index data, which will likely be the catalyst that breaks the deadlock.

Therefore, we should use those key price levels from 2025 as our guideposts for the coming weeks. Traders who are uncertain of the direction but are confident a large move is coming could consider long strangles to profit from a breakout. The strategy is to wait for a confirmed daily close outside of the $73.28 to $76.09 range before building a directional position.

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USD/JPY moved in a wide range on Monday, rising to about 159.86 before easing to around 159.35, close to flat. Since early April it has traded in a band of roughly 200 pips, between about 158.00 and 160.00.

Focus is on the Bank of Japan ahead of the 27–28 April meeting, as market talk of a rate rise increases. Japan imports nearly all of its crude oil, and the effective closure of the Strait of Hormuz since late February has pushed energy costs higher.

Dollar Softens As Markets Watch Iran

The US Dollar softened as risk appetite improved, with attention on the Iran conflict and hopes of a resolution. On Tuesday, March PPI is forecast at 1.2% month-on-month versus 0.7% in February, and 4.6% year-on-year versus 3.4%, alongside speeches from Goolsbee, Barr, Barkin, Collins, and Paulson.

On the five-minute chart, price is below the day’s open at 159.73, with the Stochastic RSI falling from near 90 to the high-30s. On the four-hour chart, price remains above the 200-period EMA at 158.51, while Stochastic RSI is 74.46.

The yen is influenced by Japan’s economy, Bank of Japan policy, yield gaps with the US, and risk sentiment. Ultra-loose policy between 2013 and 2024 weakened the yen, and the 2024 shift away from it has narrowed the gap with US yields.

Looking back to April 2025, we saw USD/JPY struggling to break the significant 160.00 level. Speculation was high that the Bank of Japan would raise rates that month due to rising energy costs linked to Middle East tensions. This created a ceiling for the pair as the market anticipated a stronger yen.

Intervention Risk Rises Near Old Highs

That 160.00 level was eventually breached later in 2025, which prompted direct intervention from Japanese authorities to buy yen and push the dollar down. However, the move was temporary because the fundamental driver, the interest rate difference between the U.S. and Japan, remained overwhelmingly wide. The Bank of Japan’s actions have since been seen as only slowing the yen’s depreciation, not reversing it.

Fast forward to today, April 14, 2026, and the pair is trading near 165, showing the underlying upward pressure has continued. The U.S. Federal Reserve has only recently begun a slow cutting cycle, with its policy rate at 4.75%, while the Bank of Japan has moved incredibly slowly, bringing its rate to just 0.25%. This gap continues to make holding U.S. dollars far more profitable than holding Japanese yen.

This history suggests that while the fundamental uptrend remains strong, the risk of sudden, sharp pullbacks from intervention is very high as we approach old highs. Derivative traders should therefore focus on volatility, perhaps by buying yen call options or USD put options to profit from a potential surprise intervention. These options provide a way to bet on a sudden yen strengthening with limited risk.

At the same time, the powerful carry trade—borrowing cheap yen to buy high-yielding dollars—is still the dominant strategy. The yield on the 10-year U.S. Treasury note is currently around 4.1%, while the Japanese equivalent sits at only 0.9%, making the dollar attractive. Traders can use currency futures to execute this long-USD/short-JPY position while collecting the positive swap, or interest rate differential.

In the immediate weeks ahead, we will be watching the upcoming U.S. inflation report for any signs of slowing that might accelerate Fed rate cuts. The Bank of Japan also meets on April 28, and while no major policy shift is expected, traders will scrutinize the language for any stronger commitment to normalizing policy. The market remains skeptical that the BoJ will act aggressively enough to close the rate gap meaningfully this year.

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NZD/USD rose on Monday, 13 April, moving back towards 0.5880 as broad US Dollar weakness set the tone for trading. The move was driven more by a softer dollar than by New Zealand-based factors.

Reports said Iran–US talks had failed and that President Donald Trump was sending the US Navy to close the Strait of Hormuz. The Middle East conflict remained in focus, with attention on the Strait and mixed diplomatic messages from Iran.

Dollar Safe Haven Demand Fades

Even with these tensions, the US Dollar struggled to keep safe-haven support. Trading flows moved away from the dollar as markets reduced earlier demand linked to risk concerns.

Looking back to April of last year, we saw the US Dollar weaken even when faced with significant geopolitical risk in the Middle East. The market chose to fade the safe-haven bid, allowing the NZD/USD to push higher. This indicated a shift where underlying economic data was becoming more important than headline risks.

This trend has become more pronounced over the past year. Recent data from March 2026 showed US core inflation cooling slightly to 2.8%, increasing the probability of a Federal Reserve rate cut later this year. This has kept the US Dollar Index (DXY) suppressed, struggling to hold gains above the 103.00 level it briefly touched in late 2025.

Meanwhile, the Reserve Bank of New Zealand has signaled it will hold its official cash rate steady at 5.5% through the second half of 2026 to combat stubborn domestic price pressures. This growing policy divergence between the two central banks provides a fundamental reason for NZD strength, unlike last year when the rally was mostly about USD weakness. A 3.5% rise in global dairy prices since January 2026 also adds direct support to the New Zealand economy.

Options Positioning For Further Upside

For derivative traders, this environment suggests positioning for further NZD/USD upside. We should consider buying call options with strike prices above the current spot, perhaps targeting the 0.6200 level with expirations in June or July. This strategy provides a fixed-risk way to capture potential gains if the pair continues to climb.

Implied volatility for the NZD/USD pair is currently trading near its 12-month lows, around 8.9. This makes long options strategies, like buying calls or setting up bull call spreads, relatively inexpensive. Low volatility suggests the market is not pricing in any major surprise shocks, making it a favorable time to place directional bets.

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