Commerzbank’s Head of FX and Commodity Research said the US Dollar (USD) remains the main currency for global trade and reserves, despite Iran’s Renminbi toll plans and wider geopolitical tensions. The USD is widely used not only in trade with the United States, but also in trade between other countries.

She said the USD’s share in international payment systems is higher than the United States’ share of global trade. This points to the Dollar’s role as a common vehicle currency in cross-border transactions.

Dollar Dominance In Trade And Payments

She noted a slow decline in the Dollar’s share of global foreign exchange reserves, from around 70% in 2000 to just under 60% recently. She also referred to greater use of non-traditional currencies.

She said these shifts are mainly linked to sanctions and other political actions, rather than economic reasons. Without sanctions, she said there would be little incentive to move away from the USD, as many users still trade in it.

We see the US dollar’s structural dominance as the key factor for the weeks ahead, meaning it is not the time to position for a significant decline. Recent SWIFT data for March 2026 shows the dollar was used in over 47% of global payments, a figure that continues to vastly exceed the US share of world trade. This powerful network effect should provide a strong floor for the currency.

The gradual erosion in the dollar’s reserve status is a known, long-term trend that should not dictate short-term trading strategies. The latest IMF data for Q1 2026 pegs the dollar’s share of global reserves at 57.9%, down only slightly from the 58.8% we observed in early 2025. This slow drip is driven primarily by politically motivated actions from a small group of countries, not a broad economic rejection of the dollar.

Implications For Traders And Volatility

For derivative traders, this environment suggests focusing on volatility rather than a sustained directional bet against the dollar. Geopolitical headlines, like the recent talk of new local currency trade deals, are likely to cause temporary dips that have historically proven to be buying opportunities. Options strategies that benefit from short-term price swings in major pairs like EUR/USD could be more effective than outright short positions on the dollar.

We are also seeing growing liquidity in derivatives linked to currencies benefiting from this political shift, especially the offshore Chinese Renminbi (CNH). For instance, volumes in CNH futures and options have climbed steadily since the expansion of sanctions we witnessed in 2025. This reflects a tactical move by specific actors, not a fundamental challenge to the dollar’s efficient, deep, and still-unmatched system.

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Sterling fell against major peers, down 0.25% to about 1.3425 versus the US Dollar in European trading on Monday. The move followed stalled US–Iran talks on a permanent ceasefire, which reduced risk appetite.

S&P 500 futures fell during European trade, while the US Dollar Index rose 0.3% to near 99.00. The shift supported the Dollar and weighed on the Pound.

Geopolitical Risk And Currency Pressure

US–Iran negotiations did not progress over the weekend after Tehran refused to drop ambitions to build nuclear weapons. The US said it will start blockading vessels entering and leaving Iranian ports on April 13 at 10:00 AM ET (14:00 GMT).

Middle East tensions lifted oil prices, which can pressure currencies of net oil importers such as the UK. Higher energy costs can raise import bills and affect demand for the Pound.

In the UK, markets will watch Bank of England Governor Andrew Bailey’s speech on Tuesday for policy signals. February GDP data is due on Thursday, with growth seen at 0.1% after 0.0% in January, alongside Manufacturing and Industrial Production figures.

In the US, firmer oil prices are leading traders to price in a more hawkish Federal Reserve stance. This has also pushed inflation expectations higher.

Parallels With Last Years Market Shock

We remember this time last year, in April 2025, when the failure of US-Iran talks sent a shock through the markets. The resulting spike in oil prices immediately put pressure on the Pound, a familiar pattern for the energy-importing UK economy. That event serves as a critical reminder of how quickly geopolitical risk can impact currency markets.

Today, a similar risk-off sentiment is taking hold, with the US Dollar Index again climbing, currently trading near 105.50. This renewed demand for the dollar as a safe haven reflects ongoing global uncertainties, squeezing liquidity from assets like equities. As we saw in 2025, a strong dollar often correlates with weakness in currencies like Sterling.

Mirroring the situation last year, tensions in the Middle East are once again pushing oil prices higher, with Brent crude futures hovering around $90 per barrel. These supply-side fears are compounded by recent OPEC+ decisions to maintain production cuts. For the UK, this means higher import costs and persistent inflationary pressures.

Domestically, we are closely watching for the Bank of England’s next move, especially with UK inflation remaining stubbornly high, last reported at 3.2% year-over-year. While recent GDP figures showed modest 0.1% growth, the Bank is caught between fighting inflation and avoiding a recession. Upcoming statements will be critical for gauging their tolerance for continued price pressures.

In the US, last week’s Consumer Price Index (CPI) came in hotter than expected at 3.5%, complicating the Federal Reserve’s path forward. This has traders pushing back expectations for interest rate cuts, strengthening the case for a hawkish Fed. This divergence in monetary policy could further widen the interest rate differential in favor of the dollar over the pound.

Given these parallels to the 2025 scenario, traders should consider positioning for potential further weakness in the GBP/USD pair. Options strategies, such as buying puts on Sterling or selling out-of-the-money calls, could offer a defined-risk way to hedge or speculate on a move lower. Volatility in the energy sector also suggests looking at derivatives tied to oil prices to manage exposure to that key driver.

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EUR/HUF fell sharply on Monday, with the Euro weakening as the pair slid to its lowest level since February 2022. It was trading near 367, down about 2.25% on the day.

The Hungarian Forint strengthened after an election win by opposition leader Péter Magyar. His Tisza party won 138 seats in the 199-member parliament with 53.6% of the vote, ending Viktor Orbán’s 16-year rule.

With a supermajority, Magyar can amend the Constitution. He has said he will restore the rule of law, tackle corruption, strengthen democratic institutions, and reset relations with the European Union.

Orbán’s departure is seen as reducing Hungary’s alignment with Russia and easing EU tensions over support for Ukraine. This has increased expectations that withheld EU funds could be released, including a previously blocked €90 billion loan package.

A BHH report said the Forint could rise as political risk premiums fall, and that the election outcome is marginally supportive for the Euro by reducing EU political fragmentation risk. Goldman Sachs said a move towards euro convergence could include lowering Hungary’s inflation target from 3% to the Eurozone’s 2%.

Lowering the target would imply a fall in long-term yields, which could support the Forint over time. However, EUR/HUF later pared some losses amid wider FX volatility linked to US–Iran tensions after weekend talks in Islamabad failed to reach a deal.

The sharp fall in EUR/HUF to the 367 level is a significant break, smashing through technical support levels we saw hold throughout 2025. This move suggests the market is aggressively pricing out the political risk premium that has long weighed on the Forint. We should be cautious about chasing this initial move lower, as profit-taking could trigger a short-term bounce.

Implied volatility in EUR/HUF options has spiked to its highest level in over a year, reflecting the uncertainty that follows such a major political shift. This presents an opportunity to use strategies like selling call spreads above the 375 level, which would profit if the pair fails to rebound significantly. This allows us to capitalize on the new bearish trend while also benefiting from elevated volatility premiums.

Looking back, we saw the pair struggle to break below 380 for most of 2025, largely due to Hungary’s inflation which consistently hovered above the 3% central bank target. The new government’s potential move toward a 2% inflation target, in line with Eurozone convergence criteria, is a fundamental game-changer. This would signal a more hawkish monetary policy ahead, providing a strong, long-term support for the Forint.

The potential release of €90 billion in previously blocked EU funds is another major factor that cannot be ignored. This inflow of capital would dramatically improve Hungary’s balance of payments and boost investor confidence further. We must monitor communications from both Budapest and Brussels over the coming weeks for any confirmation of this development.

Given the new fundamental outlook, we should consider positioning for further Forint strength over the medium term. Instead of taking on direct short positions after such a sharp drop, buying EUR/HUF put options with a three-to-six month expiry seems more prudent. This strategy allows us to profit from a continued downward trend toward the 355-360 range while strictly defining our maximum risk.

WTI rose at the start of Asian trading on Monday but paused below $98.00. It was trading at $96.79 and remained about $10 under last week’s peak of $106.73, staying below $100.00.

The move followed peace talks between the US and Iran in Pakistan ending without agreement. A two-week ceasefire stayed in place and was described as “holding well”, keeping the market range-bound.

Trump Orders Iran Port Blockade

Donald Trump said on Truth Social that he ordered the US military to block any vessel entering or leaving Iranian ports from 10:00 Eastern Time (14:00 GMT) on Monday. The move targets oil flows to China after the Revolutionary Guard closed a waterway linked to 20% of global oil supply.

On the charts, the 4-hour RSI was above 50 and the MACD line was above the signal line, with a green histogram. Price action formed an expanding wedge, with resistance near $98.00, around $108.00, and at $106.73.

Support levels were near $95.00, with a wider support zone between $84.00 and $86.00. The technical section was produced with help from an AI tool.

We are seeing a market setup now in April 2026 that is very similar to the one we saw in April 2025. Last year, tensions surrounding the Strait of Hormuz caused a sharp spike in WTI, but the price failed to hold its gains as hopes for a diplomatic solution kept it under $100. This provides a useful guide for navigating the current geopolitical crosscurrents affecting prices.

Options Volatility And Range Bound Trade Ideas

Currently, WTI is trading around $87 per barrel, supported by ongoing risk from Red Sea shipping disruptions and conflicts in Eastern Europe. This situation is adding a risk premium to the market, much like the proposed Hormuz blockade did in 2025 when the price jumped towards $98. However, underlying demand concerns are creating a ceiling on this rally, just as the potential for peace talks capped the market last year.

Implied volatility in oil options is elevated, with the OVX index recently trading above 30, making options contracts relatively expensive. This suggests that selling options, rather than buying them, could be a prudent strategy for traders expecting prices to remain range-bound. Considering the strong support seen around the $84 to $86 level in the 2025 scenario, selling out-of-the-money puts below this range could allow traders to collect premium while betting that fundamentals will prevent a major collapse.

On the other hand, we must remember the topping pattern that formed in 2025. Today, fundamental data from the Energy Information Administration shows that U.S. commercial crude inventories have been building, recently rising by 2.7 million barrels against expectations of a draw. This supply pressure suggests the current rally may be fragile, and traders should consider buying puts for downside protection if WTI breaks below the key $85 support level.

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Gold (XAU/USD) rose to a new daily high in early European trading after rebounding from the $4,633–$4,632 area, a four-day low. A Wall Street Journal report said regional countries are trying to bring the US and Iran back to talks within days after weekend discussions ended without an agreement.

US Vice President JD Vance said a final offer was made and rejected, while Iranian state media said excessive demands blocked a deal. US President Donald Trump said the US Navy would start blockading the Strait of Hormuz, and Israeli strikes in Lebanon continued, raising wider regional tension risks.

Geopolitical Tension And Oil Prices

WTI crude climbed back to $98 per barrel following the latest developments. US inflation data for March showed the largest monthly rise in nearly four years, with headline CPI up 0.9% from February and 3.3% year on year, based on US Bureau of Labor Statistics figures.

The shift in rate expectations pushed US Treasury yields higher and supported the US Dollar, which can limit gold gains. The near-term technical tone stayed mildly bearish below the 100-hour SMA, with MACD still negative and RSI near 44.

Resistance sits near the 100-hour SMA at $4,732.63, with a sustained break needed to ease the downside bias. Traders are watching prior lows and recent swing troughs as potential support zones.

We see that gold is currently trading far below the levels seen during the diplomatic crisis of 2025, when it was pushed above $4,600 per ounce. The market has since priced out the extreme risk premium from the threatened US blockade of the Strait of Hormuz. With gold now sitting around $2,354, traders should use last year’s volatility as a guide for potential price ceilings.

The geopolitical landscape remains a key driver, though the immediate threat has shifted. Last year, we saw WTI crude oil rally to $98 a barrel on fears of direct US-Iran conflict, but today it has stabilized closer to $86. While tensions in the Middle East persist, the lack of a direct superpower confrontation has removed the explosive catalyst we saw in 2025.

Inflation And Rates Outlook

We must pay close attention to the inflation data which first caused the market to pivot a year ago. The March 2025 US CPI reading of 3.3% year-over-year now looks persistent, as the latest figures for March 2026 show inflation remains sticky at 3.4%. This reinforces the market’s belief that the Federal Reserve will keep interest rates higher for longer.

This sustained high-rate environment continues to pressure non-yielding gold. Back in 2025, rising US Treasury yields were a major headwind, and that dynamic is even stronger today with the 10-year yield holding firm above 4.6%. For derivative traders, this suggests that upside for gold will be capped, making strategies like selling call spreads on rallies a viable approach.

Given the memory of last year’s sharp price swings, implied volatility in gold options should be watched closely. Any renewed escalation in geopolitical rhetoric could cause volatility to spike, presenting opportunities for those positioned to profit from it. We should therefore consider buying long-dated straddles or strangles at current levels, as they may be underpriced relative to the latent risks.

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Hungary’s parliamentary election saw Péter Magyar’s centre-right, pro‑EU Tisza party defeat Viktor Orbán’s nationalist Fidesz. Early results projected a two‑thirds majority in the 199‑seat parliament, and Orbán conceded defeat.

Turnout was reported at a record 77.8%, up from 67.8% at the previous parliamentary election. The result reduced concerns about Hungary blocking or delaying talks on the EU’s next seven‑year budget and aid packages for Ukraine.

The Forint strengthened after the vote, with EUR/HUF falling by more than 2% to its lowest level since February 2022. This move was linked to lower political risk premia.

Magyar, a former Orbán ally, campaigned on rebuilding trust with the EU and NATO, restoring the rule of law, and joining the euro area by 2030. He did not set out a clear shift away from Orbán’s broader approach, and did not call for an abrupt cut in ties with Russia or clearly support providing military aid to Ukraine.

Following the decisive victory for Péter Magyar’s Tisza party last year, we saw an immediate and sharp reaction in the currency markets. The Hungarian Forint strengthened significantly as the political risk premium that had been weighing on it for years began to evaporate. EUR/HUF fell over 2% in the immediate aftermath, a move we hadn’t seen since early 2022.

Looking back from today, April 13, 2026, that initial move was the start of a longer-term trend. The Forint has since stabilized and maintained most of its gains, as the central bank has been able to focus on inflation, which has cooled to 3.6% as of last month’s reading. This is a stark contrast to the double-digit inflation we were seeing a few years ago.

The new government’s pro-EU stance has also been very positive for the country’s debt, reducing borrowing costs. Hungarian 10-year government bond yields have compressed by over 150 basis points since the election, now trading around 5.25%. This sustained decline suggests that derivative plays on interest rates, such as receiving fixed in swap agreements, remain attractive.

With the main political uncertainty resolved last year, implied volatility on the Forint has fallen to multi-year lows. This makes strategies like selling options, such as strangles, potentially profitable as long as the currency continues its gradual appreciation or remains range-bound. We saw a similar collapse in volatility in the Polish Zloty following their own pro-EU election result in late 2023.

However, we must remember that the new government is not seeking an abrupt break in ties with Russia. This lingering geopolitical uncertainty puts a potential cap on the Forint’s strength against the Euro. Any escalation in regional tensions could quickly reverse some of the recent gains.

The improved sentiment has spilled over into the wider Central and Eastern European region. We have seen increased inflows into regional equity ETFs, with the iShares MSCI Emerging Markets Eastern Europe Capped ETF (IEUR) up over 12% in the last six months. This suggests that positive sentiment towards Hungary is lifting its neighbors, like Poland and the Czech Republic, as well.

Iranian state media IRIB reported that a spokesperson for Iran’s Khatam al-Anbiya Central Headquarters said on Monday, during European trading hours, that Tehran condemns US plans to blockade vessels entering and leaving Iranian ports.

Earlier on Monday, US President Donald Trump posted on Truth Social that the United States will blockade ships entering or exiting Iranian ports on April 13 at 10:00 A.M. ET (14:00 GMT).

Iran Responds To US Blockade Plans

The spokesperson said there would be no security for ports in the Persian Gulf if Iran’s own security is threatened. The spokesperson also described US restrictions on vessel movements as illegal and as piracy.

The spokesperson added that vessels linked to Iran’s enemies would not be allowed to pass through the Strait of Hormuz.

With the US set to blockade Iranian ports and Tehran threatening the Strait of Hormuz, we are bracing for major energy market volatility. Roughly one-fifth of the world’s daily oil consumption passes through this chokepoint, making any disruption a significant supply shock. We believe this makes long positions in WTI and Brent crude futures for the front months an immediate priority.

We saw a similar playbook back in 2019 when attacks on Saudi Arabian oil facilities caused the largest single-day jump in oil prices in decades. Brent crude futures surged almost 20% in a single session, showing how quickly the market prices in supply risk. This historical precedent supports a strategy of buying call options on major oil ETFs to capture potential upside.

Volatility Gold And Equity Hedges

The threat of a direct US-Iran confrontation will almost certainly send a wave of fear through the broader market. The CBOE Volatility Index (VIX), which has been hovering in the mid-teens, is poised for a significant spike above the 25 or even 30 level. We are therefore looking at buying VIX call options or VIX futures to hedge against a market-wide selloff.

In times of significant geopolitical stress, capital invariably flows into safe-haven assets, and we expect this time to be no different. Looking back at early 2022, gold prices rallied over 10% in the weeks following the start of the conflict in Ukraine, pushing near record highs. Consequently, we see value in adding exposure through gold futures or call options on gold-backed ETFs.

Higher energy prices and the risk of a wider conflict create a powerful headwind for global equity markets. The combination of inflation pressure from oil and general risk-off sentiment will likely weigh on indices like the S&P 500. We view buying put options on the SPY or SPX as a prudent hedge against a potential market correction in the coming weeks.

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S&P 500 futures fell as the Iran conflict escalated and energy prices rose, weighing on global risk sentiment. Deutsche Bank strategists also referenced a risk-off move after US-Iran talks ended without a deal, alongside plans for a US blockade of the Strait of Hormuz for vessels entering or leaving Iranian ports.

Brent crude was up +7.39% to $102.24/bbl, raising concerns about a stagflationary shock. S&P 500 futures were down -0.73%, while DAX futures were down -1.47%, with Europe framed as more exposed to an energy shock.

Key Market Focus For The Week Ahead

The Iran conflict is set to remain the main focus in the week ahead, alongside the start of the Q1 earnings season. Releases this week include several US financial firms.

Deutsche Bank’s US equity team said bottom-up analyst consensus expects mid-teens S&P 500 earnings growth of 16%, supported by macro conditions. They also projected stronger growth led by megacap technology and financials during the reporting season.

The article notes it was produced using an Artificial Intelligence tool and reviewed by an editor.

We are currently seeing a similar tug-of-war between geopolitical headlines and underlying economic fundamentals. This environment mirrors the risk-off sentiment from 2025, when the US-Iran conflict caused a sharp spike in oil prices and a dip in equity futures. The key for traders now is to gauge whether strong corporate earnings can once again overcome these external pressures.

Options Positioning And Risk Management

Given the persistent geopolitical uncertainty, implied volatility is on the rise, with the VIX climbing to over 17 in recent sessions. This presents an opportunity to purchase protection against sudden market drops, much like the one feared during the Strait of Hormuz blockade. Traders should consider buying puts on broad market indices like the SPX or SPY to hedge their portfolios against an unexpected escalation.

The energy sector remains a primary focus, with Brent crude currently holding firm near $90 per barrel. While not at the $102 panic level seen in 2025, this elevated price keeps inflation concerns active and could pressure other sectors. Call options on energy ETFs could be a direct way to profit if tensions worsen and oil prices climb further.

However, the earnings picture today is different from the optimism of 2025, when mid-teens growth was expected. Current Q1 2026 consensus forecasts point to more modest S&P 500 earnings growth, closer to 4-5%. This lower bar could make it easier for companies to deliver positive surprises, potentially rewarding traders who sell cash-secured puts on fundamentally sound companies ahead of their reports.

Just as in 2025, the earnings season is kicking off with major financials, which will set the tone for the coming weeks. Their results, particularly guidance on loan growth and credit losses, will be critical indicators of economic health. A defined-risk strategy like an iron condor on a financial sector ETF could be used to capitalize on post-earnings volatility compression.

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The euro fell 0.32% in early Asian trading, despite weekend election news from Hungary. Peter Magyar’s pro-EU Tisza party defeated Viktor Orban’s Fidesz.

Tisza secured a two-thirds majority in Hungary’s 199-seat parliament. The result was compared by some in Brussels and EU capitals to the 1956 Hungarian Uprising.

The outcome may reduce one internal barrier to EU policy action. However, Magyar was not described as a Eurocrat.

Further tensions between the EU and Budapest may still occur. Czechia and Slovakia were also described as having Orban-like positions.

We are seeing the Euro drop by 0.32% in early trading, which is notable because it ignores the positive news of a pro-EU party winning in Hungary. This suggests that the market is focused on bigger problems facing the European economy. The victory for Peter Magyar’s party is not enough to outweigh the underlying negative sentiment.

Traders should not interpret this political shift as a reason to be bullish on the Euro. Recent data shows the wider Eurozone economy is struggling, with German industrial output unexpectedly falling by 0.8% in the latest figures for February 2026. This fundamental weakness is a much stronger driver for the currency than a single election result.

The Hungarian election outcome may remove an internal EU headache, but it doesn’t solve everything. We know Magyar is not a complete follower of Brussels, and populist-leaning governments in Czechia and Slovakia still pose challenges to unified EU policy. These lingering political risks create uncertainty, which typically weighs on a currency.

Broader global pressures are also capping any potential gains for the Euro. We are seeing renewed trade friction with China over electric vehicle subsidies and Brent crude oil prices have climbed back above $95 a barrel, reviving memories of the energy cost pressures we saw in 2025. These external factors are far more significant for the Euro’s valuation right now.

Given this backdrop, we should consider strategies that protect against further Euro weakness. Buying puts on the EUR/USD pair or selling out-of-the-money call options could be prudent ways to position for a sideways or downward trend in the coming weeks. Volatility may be low, but the risk of a sudden drop linked to poor economic data remains elevated.

EUR/GBP traded in a tight 25-pip range on Monday, staying between 0.8695 and 0.8725 and hovering around 0.8700. Market sentiment weakened after US–Iran peace talks failed, although a two-week ceasefire remained in place and volatility stayed relatively low.

Higher oil prices and a US vow linked to blocking the Strait of Hormuz limited the Euro’s upside. On Tuesday, speeches by Bank of England Governor Andrew Bailey and European Central Bank President Christine Lagarde may move the pair.

Technical Momentum Signals

The pair kept a mild bullish tilt, but momentum was fading. The 4-hour RSI was near 50, while the MACD sat just above zero, pointing to no clear direction.

Resistance was seen at 0.8722, with further levels at the April high area near 0.8740 and the year-to-date high at 0.8789. Support sat around 0.8705, then 0.8687, with lower support near 0.8635.

The report noted that an AI tool assisted the technical analysis. A correction on April 13 at 11:40 GMT pointed to Tuesday’s speeches as more relevant than those on Wednesday.

Looking back to this time in 2025, we saw the EUR/GBP pair trapped in a state of hesitation around the 0.8700 level. The market was nervous due to geopolitical tensions and was waiting for cues from central bankers. That period of calm was a warning sign for the volatility that followed.

Lessons From 2025 Price Action

Those doji candles in April 2025 correctly signaled a turning point, as the pair broke sharply lower in the subsequent weeks. The Bank of England maintained a more aggressive stance on inflation through the summer of 2025 than the ECB, pushing the pair down to test 0.8550 by August. We can see from historical data that a divergence in central bank policy, with UK inflation proving stickier at 3.1% in late 2025 versus the Eurozone’s 2.5%, often precedes major trends.

Today, we see a similar tight consolidation, but now it is happening around the 0.8620 mark. With Eurozone Q1 2026 growth figures coming in at a disappointing 0.1% and the UK economy showing surprising resilience, the fundamental pressure on the Euro persists. This historical parallel from last year suggests we should be wary of the current quiet market.

Given the memory of last year’s breakdown, traders should consider buying put options with a strike price below current support at 0.8600. This provides a clear hedge against a repeat of 2025’s sharp decline. The cost of this insurance is limited to the premium paid for the options.

Implied volatility for EUR/GBP options is currently low, hovering around 6.2%, which is below the five-year average. This makes strategies like a bear put spread attractive, as it lowers the upfront cost while still profiting from a moderate drop in the exchange rate. This allows for a defined-risk way to position for a potential slide towards the 0.8500 level.

However, we must remember how the market was caught off guard by ECB commentary in the second half of 2025. Any strategy should therefore be flexible. Using options allows traders to position for a directional move without being immediately stopped out by short-term noise, which proved to be a valuable approach last year.

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