GBP/USD edged up to about 1.3270 in Asian trade on Monday after four sessions of losses, but it stayed inside a descending channel. The daily chart kept a bearish tone as the pair remained below the nine-day and 50-day EMAs. The 14-day RSI was near 41, below the 50 mark, which points to ongoing downside momentum. Recent lower closes also showed continued selling on rebounds.

Market Backdrop And Risk Sentiment

In early-week trade, GBP was around 1.3240 against USD, the lowest level in almost two weeks. Reports of possible US ground action in Iran reduced demand for risk assets and supported the dollar. S&P 500 futures were down 0.5% at the time referenced. The US Dollar Index rose for a fifth straight session to near 100.35. The recent BoE decision to hold rates kept GBP supported compared with earlier levels. Even so, uncertainty around US-Iran talks left the pair’s near-term outlook mildly bearish. Looking back at the analysis from 2025, we can see the bearish technical setup for GBP/USD around 1.3270 was a clear signal. Those concerns about a strong dollar amid geopolitical risk in the Middle East largely played out over the subsequent year. Now, with the pair trading near 1.2550, the long-term descending channel has proven to be a dominant factor.

Policy Divergence And The Rate Gap

The fundamental picture has since shifted from geopolitics to central bank policy divergence. While we saw the Bank of England attempt a “hawkish hold” back in 2025, the US Federal Reserve has maintained a more aggressive stance. As of March 2026, the Fed’s key interest rate at 5.0% remains significantly higher than the BoE’s 4.5%, a differential that continues to attract capital to the dollar and pressure the pound. This interest rate gap is justified by recent inflation data, with UK CPI falling to 2.8% while US core PCE remains stickier at 3.1%, giving the Fed less room to consider easing policy. The US Dollar Index (DXY) reflects this reality, currently holding strong around 104.50, far above the 100.35 level seen during the 2025 risk-off period. This sustained dollar strength continues to act as a major headwind for any significant GBP/USD recovery. For traders, this environment suggests that selling into strength remains a viable strategy. The bearish momentum we saw in 2025, confirmed by the RSI below 50, is still technically in play, with the pair consistently failing to hold above the 50-day EMA. Volatility options could be attractive, and traders might consider buying put options to capitalize on potential further declines, particularly if the pair breaks below the key psychological support at 1.2500. Create your live VT Markets account and start trading now.

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GBP/USD edged up after four straight losing days, trading near 1.3270 in Asian hours on Monday. The daily chart keeps a bearish tone, with price still moving inside a descending channel. Near-term direction remains mildly bearish because the pair is below the nine-day and 50-day Exponential Moving Averages (EMAs). These EMAs are at 1.3329 and 1.3424, and they continue to limit rebounds.

Near Term Momentum Signals

The 14-day Relative Strength Index (RSI) is near 41, staying under the 50 level. Recent lower closes also point to continued selling on upticks. Support may appear at the three-month low of 1.3218, set on March 13. Another support level sits near the channel’s lower boundary around 1.3160. Resistance is first seen at the nine-day EMA at 1.3329, then the 50-day EMA at 1.3424. The upper channel boundary is near 1.3460, and a move above it could shift the bias higher towards 1.3869, the post-September 2021 high reached on January 27. The technical analysis was produced with help from an AI tool.

Risk Management Considerations

Given the persistent bearish signals for GBP/USD, we should consider strategies that profit from a continued decline. The pair’s position below key moving averages and within a descending channel suggests that selling futures contracts or buying put options are viable approaches. Key downside targets to watch are the immediate support at 1.3218 and the channel’s lower boundary near 1.3160. This technical weakness is reinforced by fundamental pressures we saw in a similar environment last year. Looking back at March 2025, UK inflation had just surged to a 30-year high of 7.0%, yet the Bank of England’s rate hike was viewed as cautious amid growing recession fears. This created a significant headwind for the pound, as the market worried about the UK’s economic outlook. Simultaneously, the U.S. Federal Reserve was taking a much more aggressive stance back then, signaling a series of sharp interest rate hikes to combat its own inflation. This policy divergence strongly favored the US dollar, adding substantial downward pressure on the GBP/USD pair. The current market dynamics are echoing that period, making bearish positions on the pound seem particularly well-supported. For those considering a contrarian position or for hedging purposes, buying call options with strike prices above the 1.3460 resistance level could be prudent. A decisive break above this channel boundary would invalidate the current bearish setup and signal a significant trend reversal. The low implied volatility often seen in range-bound markets could make such options relatively inexpensive. We must remember the price action from 2025, when a sustained break below the 1.3160 support level preceded a much larger downward move over the following months. This historical precedent suggests that if the current support levels fail, the potential for a rapid and extended decline is significant. Therefore, we should manage our risk carefully but be prepared for increased downside volatility. Create your live VT Markets account and start trading now.

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EUR/JPY slipped after small gains, trading near 184.00 in Asian hours on Monday. The move followed a firmer Japanese Yen after comments from Bank of Japan Governor Kazuo Ueda. Ueda said foreign exchange swings have a “huge impact on Japan’s economy and prices” and that the BoJ “will closely monitor FX moves”. The remarks were taken as a warning that authorities may act against one-way moves in the yen.

BoJ Signals And Policy Expectations

A “Summary of Opinions” from the BoJ’s March meeting said several policymakers still expect more tightening soon. One member backed further rate rises if growth and price forecasts are met, while another said the timing will depend on the Middle East and on wages, inflation, and financial conditions. In Europe, ECB Governing Council member François Villeroy de Galhau said policymakers could respond if energy-led inflation spreads. He said an Iran war-related energy shock may raise inflation in the near term, while the ECB cannot stop the first jump. Markets are waiting for Germany’s preliminary March inflation figures later on Monday, including HICP and CPI. The data may affect expectations for the ECB’s next policy steps. We are seeing a familiar pattern in EUR/JPY, which now trades near 188.50. Looking back to this time in 2025, the Bank of Japan was growing concerned as the pair hovered around 184.00. The verbal warnings from Governor Ueda last year did little to halt the Yen’s slide over the long term.

Volatility And Positioning Implications

The key difference now is the domestic pressure from inflation, which has remained stubbornly above the 2.5% target for the last several quarters. This makes threats of currency intervention more credible than they were in 2025. We recall the Ministry of Finance spent over ¥9 trillion intervening back in late 2022, showing their willingness to act decisively when certain lines are crossed. This tension between a hawkish BoJ and a persistently weak Yen is increasing implied volatility in the options market. Traders should consider strategies that benefit from a sharp, sudden move rather than a slow grind. The risk of a rapid decline of 3-4 figures in EUR/JPY is significantly higher now than it was a year ago. On the other side of the cross, the European Central Bank has limited room to maneuver. While last year’s energy shock from the Iran conflict has faded, recent German inflation data for March 2026 came in hotter than expected at 2.7%. This makes it difficult for the ECB to consider cutting rates, providing underlying support for the Euro. Given that EUR/JPY is trading at multi-decade highs, buying out-of-the-money put options on the pair offers a low-cost, defined-risk way to position for a correction. For example, weekly or monthly puts with a strike price around 185.00 could provide significant upside if the BoJ finally acts. The cost of these options is a small price to pay for protection against a sharp reversal. We must now watch the upcoming Japanese Tankan survey for business sentiment and the Eurozone flash CPI estimate. These data points will be the next major catalysts for the currency pair. Any sign of weakening economic conditions could alter the outlook for either central bank. Create your live VT Markets account and start trading now.

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AUD/USD fell 0.3% to near 0.6850 in early Asian trade, after breaking below the 0.6900 support level linked to the February 6 low. The move came as risk-off conditions weighed on the Australian Dollar. S&P 500 futures dropped 0.4% in the Asian session. Reports said the US is considering 10,000 additional troops for possible ground action against Iran, alongside warnings from Tehran.

Risk Off Pressure

In Australia, Prime Minister Anthony Albanese said fuel excise on petrol and diesel will be cut to 50% for three months. The measure aims to ease household costs as energy prices rise amid Middle East supply disruption. The US Dollar was little changed, with the DXY holding above 100.00. Market pricing shifted away from two 2026 rate cuts, and put the chance of at least one Fed hike this year at 24.6%, based on CME FedWatch. Technically, AUD/USD is below the 20-day EMA near 0.6995, with resistance at 0.6920 and 0.6995. Support sits around 0.6750, then 0.6660, while the 14-day RSI moved into the 20.00–40.00 range. Looking back at the analysis from 2025, we can see that the bearish breakdown below 0.6900 was a significant turning point. That risk-off mood has persisted, and the fundamental reasons for Aussie weakness have only deepened over the past year. Today, with the pair struggling to hold above 0.6600, that old analysis remains highly relevant.

Central Bank Policy Divergence

The key difference now is the clear policy divergence between the central banks, which wasn’t as pronounced last year. The Reserve Bank of Australia is now hinting at rate cuts after the latest quarterly inflation data came in at 2.8%, just inside their target band. This contrasts sharply with the firm stance from the US Federal Reserve. In the United States, recent Non-Farm Payrolls data showed a robust addition of over 250,000 jobs, and core inflation remains sticky above 3.1%. This strength gives the Fed no reason to ease policy, keeping the US dollar supported on interest rate differentials alone. The market has now fully priced out any Fed cuts for the first half of 2026. Furthermore, the risk sentiment that hurt the Aussie last year has shifted from Middle East conflict fears to concerns over slowing growth in China. Iron ore, Australia’s key export, has fallen over 15% in this first quarter of 2026, trading near $105 a tonne. This directly weighs on the Australian dollar’s value. For derivative traders, this environment favors strategies that profit from a further decline or sideways consolidation at these lower levels. Buying put options with strike prices around 0.6500 or 0.6450 offers a clear directional bet on the continuation of this trend. Alternatively, selling out-of-the-money call options or establishing bear call spreads can generate income by betting the pair will not rally significantly above current resistance. Given the steady downtrend, implied volatility in AUD/USD options may be relatively low compared to historical peaks. This can make purchasing puts more affordable, providing a cost-effective way to position for another leg down toward the multi-year lows seen in late 2023. We should monitor central bank statements closely, as any unexpected shift could quickly alter this outlook. Create your live VT Markets account and start trading now.

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EUR/USD rebounded slightly after revisiting a one-week low on Monday and traded near the 1.1500 level in the Asian session. The pair remained under pressure, with the US Dollar supported by higher geopolitical risk. US defence planning for weeks of ground operations in Iran, and involvement by the Iran-backed Houthis in Yemen, increased fears of broader conflict in the Middle East. Higher energy prices also lifted inflation concerns and supported expectations for a more hawkish Federal Reserve stance.

Near Term Technical Outlook

Technically, the near-term bias stayed mildly bearish as the pair held below the flat 200-hour EMA near 1.1550. MACD was close to the zero and signal lines with a muted histogram, while RSI sat near 43, below the 50 mark. Resistance was seen at 1.1535 and then 1.1550, with a move above 1.1550 pointing to 1.1580. Support levels were 1.1490 and 1.1475, with a break below 1.1475 opening the way towards 1.1450. Looking back at analyses from 2025, we recall the bearish sentiment surrounding EUR/USD near the 1.1500 mark. The primary driver then was escalating Middle East tensions, which fueled a strong demand for the safe-haven US dollar. This perspective made any upward movement in the pair seem vulnerable. However, the situation today on March 30, 2026, is fundamentally different as the pair now trades near 1.1950. The diplomatic accords reached early this year have significantly reduced geopolitical risk, causing the dollar’s safe-haven appeal to wane. This has shifted the market’s focus squarely back to economic fundamentals. Recent data shows Eurozone Core CPI for February 2026 remains elevated at 3.1%, surprising analysts who expected a faster decline. Conversely, the latest US Core PCE data has cooled to 2.4%, suggesting inflation is more under control stateside. This divergence is now the main catalyst for the euro’s strength.

Trading Strategy And Risk Considerations

This data has forced a policy shift, with European Central Bank officials now hinting at another rate hike while the Federal Reserve signals a prolonged pause. This is a complete reversal of the hawkish Fed expectations we saw throughout 2025. The interest rate differential is now tilting in favor of the euro. In the coming weeks, traders should consider strategies that benefit from further euro strength against the dollar. Buying EUR/USD call options with strike prices above the 1.2000 psychological level could be a viable play. This approach allows participation in the upside while defining the maximum risk. To manage risk, we can use the options market to create bull call spreads, which lowers the initial cost. It is also wise to remain cautious ahead of major data releases, such as the upcoming US jobs report for March. An unexpectedly strong number could cause short-term dollar volatility and test this bullish outlook. Create your live VT Markets account and start trading now.

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The US Dollar Index (DXY), which measures the US Dollar against six major currencies, edged down to about 100.15 in Asian trading on Monday after reaching 100.35 earlier in the session. It remains close to a two-week high. The US Dollar opened higher amid rising Middle East tensions, linked to reports about a possible US ground invasion of Iran. Such tensions tend to increase demand for safe-haven assets, including the US Dollar.

Middle East Tensions And Dollar Demand

The Wall Street Journal reported on Thursday that the US Pentagon is considering sending 10,000 extra troops to Iran for ground attacks. Iran’s Parliament speaker Mohammad Bagher Ghalibaf said Iran would “rain fire” on any US troops entering Iranian territory, according to the BBC. A ground attack could escalate the war and disrupt energy supply, adding pressure to oil prices. WTI crude was up almost 2.5% above $102.00 at the time of writing. Higher oil prices can increase expectations of tighter Federal Reserve policy, as petrol costs rise in the US. CME FedWatch showed markets have almost ruled out a rate cut and implied a 24.6% chance of at least one rate rise by year-end, compared with two cuts expected before the war. US President Donald Trump told the Financial Times that a deal with Iran would come “very quickly”. The US calendar also includes March Nonfarm Payrolls data due on Friday.

Looking Back And Market Drivers

We recall this time last year when fears of a US ground invasion in Iran pushed the Dollar Index towards 100. Looking back, those geopolitical tensions created a significant, though temporary, demand for safe-haven assets. Today, with the DXY trading firmly around 104.5, it is clear that persistent inflation and a resilient US economy provided more lasting support for the dollar than those initial war fears. The spike in WTI crude oil above $102 in 2025 was a direct reaction to the threat of a widening conflict disrupting supply lines. That threat never fully materialized, and as of February 2026, EIA data shows a consistent build in US crude inventories, reflecting slowing global demand. Consequently, WTI is now trading in a much lower range, near $84 a barrel, shifting the market’s focus from supply shocks to demand weakness. The market’s pricing-out of rate cuts in 2025 was the correct call, as the Federal Reserve held rates steady through the end of the year to watch inflation. That hawkish stance is now softening, as the latest CPI data for February 2026 showed inflation cooling to 2.8%, well below the peaks of last year. The CME FedWatch tool now indicates a near 80% chance of a first rate cut by July, a dramatic reversal from the hike probabilities we saw during the Iran scare. Volatility was the key trade then, with the VIX index jumping to over 25 during the peak of the Middle East tensions. Now, with the VIX hovering at a much more subdued level of 15.6, implied volatility in options is relatively cheap. This suggests traders could consider buying options, such as puts on energy stocks, to protect against a further slide in oil prices driven by economic slowing. The main driver for markets has clearly shifted from geopolitical shocks to the timing of the Fed’s easing cycle. Traders should be less focused on broad dollar strength and more on interest rate-sensitive instruments. Using options on Treasury ETFs or SOFR futures can allow for more precise positioning on whether the Fed cuts in June or delays until later in the third quarter. Create your live VT Markets account and start trading now.

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S&P 500 futures fell about 0.6% to 6,370, reaching seven-month lows during Asian trading hours ahead of the US session on Monday. Futures stayed under pressure as risk aversion rose amid uncertainty over a resolution to the Iran conflict. Reuters reported that US President Donald Trump told the Financial Times the US could “take the oil in Iran,” including seizing the export hub of Kharg Island, which he said is undefended. He also said discussions with Tehran are “doing extremely well,” with indirect talks via emissaries and a deal possibly achievable “fairly quickly.”

Geopolitical Risk Drives Futures Lower

The Wall Street Journal reported last week that the US Pentagon is considering deploying 10,000 additional troops to Iran. On Iranian state TV, Ebrahim Zolfaqari said “US troops will be good food for sharks of the Persian Gulf.” Markets are also focused on US economic releases this week, including labour market data such as Nonfarm Payrolls and the ISM Purchasing Managers’ Index. Nike, McCormick & Company, and Conagra Brands are due to report earnings in the week ahead. We remember the market jitters in 2025 when S&P 500 futures fell to 6,370 on fears of a US-Iran conflict. That sharp, geopolitically driven drop serves as a key reminder of how quickly sentiment can turn. Today, the market feels different, but the underlying risk of a sudden shock remains a primary concern for us. Currently, the CBOE Volatility Index (VIX) is hovering near 13, which is significantly lower than the spikes we saw during last year’s tensions. This suggests a degree of complacency in the market, making protective put options on indexes like the SPY relatively inexpensive. A small allocation to puts could be a cost-effective hedge against unforeseen turmoil, learning the lesson from 2025’s sudden sell-off.

Positioning With Options While Volatility Is Low

The focus on oil in the 2025 dispute is particularly relevant now, with WTI crude oil prices firming up above $82 a barrel amid ongoing production cuts and tensions in the Red Sea. We see traders positioning for potential supply shocks by using call options on energy sector ETFs like the XLE. This allows for upside exposure if geopolitical risks in the Middle East were to escalate unexpectedly. Looking back, traders in 2025 were watching Nonfarm Payrolls and PMI data closely. This week, our attention is fixed on the upcoming Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge. A hotter-than-expected number could dampen hopes for rate cuts and add volatility, making any existing hedges more valuable. The conflicting messages from officials during the 2025 event highlight the need to trade the market’s reaction, not the headlines themselves. We are watching implied volatility levels across different sectors to see where fear is being priced in. Right now, the low cost of options presents an opportunity to establish defensive positions before a potential crisis, rather than during one. Create your live VT Markets account and start trading now.

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GBP/JPY fell for a third day after a small rise in Asia to about 213.00 on Monday. It later hit a one-week low and traded just below 212.00, down 0.30%, as the Japanese yen strengthened. Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, warned that authorities are ready to act if speculative currency moves continue. The comments followed USD/JPY moving above 160, a level linked to past support action.

Yen Strength Drives Gbpjpy Lower

Bank of Japan Governor Kazuo Ueda said the central bank will watch foreign exchange moves closely. This supported yen buying and added pressure to GBP/JPY. Market focus also includes the Iran war and the risk of supply disruption from the Strait of Hormuz. These factors could worsen Japan’s trade balance and raise inflation, making BoJ policy plans harder. The Bank of England has recently kept a hawkish tone and earlier this month pointed to a possible rate rise as early as April. On charts, repeated failures near 213.30–213.35 suggest a double-top, and the pair may stay range-bound after holding a similar band for about three weeks. The current weakness in the GBP/JPY cross reminds us of the situation in the spring of 2025. We recall Japanese officials issuing stern warnings as USD/JPY approached the 160 level, a threshold that triggered significant market memory of past interventions. This created a ceiling for the pair, making call options above the 213 strike price look increasingly risky.

Options Hedging And Range Trading

Looking back at 2025, those threats were credible because we saw the Ministry of Finance spend over ¥9 trillion to support the yen back in late 2022. Therefore, traders holding long positions should consider buying put options as a hedge against a sudden, sharp drop. This strategy provides a floor for their investment, protecting against a repeat of that rapid JPY strengthening. However, we must also remember the opposing force from the Bank of England’s hawkish stance in 2025. With UK inflation having peaked above 10% not long before that period, the central bank was actively signaling more rate hikes to combat rising prices. This fundamental pressure created a strong support level for the pound, limiting the downside for the cross. This created a classic tug-of-war, with the technical double-top pattern near 213.35 confirming a difficult ceiling for the pair to break. Adding to Japan’s challenges were fears of stagflation, especially given how the country’s trade deficit ballooned to over ¥21 trillion in 2022 on the back of soaring energy costs. For derivative traders, this suggests that strategies betting on the pair remaining within a defined range, such as selling an iron condor, could prove effective. Create your live VT Markets account and start trading now.

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The Japanese Yen rose against major peers in Asian trading on Monday. It ended a four-day decline versus the US Dollar and was 0.2% lower at about 160.00 per dollar. The move followed comments from Bank of Japan Governor Kazuo Ueda. He said foreign exchange moves have a “huge impact on Japan’s economy, and prices”, and that the central bank will watch FX moves closely.

Bank Of Japan Signals On Policy And Markets

His remarks came after the Summary of Opinions from the March policy meeting. The summary said several policymakers still expected more monetary tightening soon. It also stated that one member said the BoJ should raise the policy rate without hesitation if the economic environment does not deteriorate and if small and midsized firms keep their stance. Other members discussed how the war in the Middle East could affect the economy and prices. Most members chose to keep interest rates unchanged at 0.75%. One member said rates could stay steady due to uncertainty over Middle East developments. The US Dollar gave back early gains after President Donald Trump told the Financial Times a deal with Iran was expected “fairly quickly”. He also said Washington could seize Iran’s Kharg Island “very easily”.

Dollar Moves And Intervention Risk

The US Dollar Index was flat near 100.15. We remember when the Bank of Japan issued a strong warning in 2025 as the dollar approached 160 yen. Now, on March 30, 2026, with the pair trading around 172.50, that past intervention threat has become a very real and present danger for anyone holding long dollar positions. The market’s memory is short, but the Ministry of Finance’s is not, especially after they spent a record ¥9.8 trillion on intervention back in late 2025. The core issue remains the vast interest rate differential, which has only widened since last year. While the BoJ has nudged its policy rate to 1.00%, this is dwarfed by the US Federal Reserve’s rate, which has held firm at 5.25% to combat stubbornly persistent services inflation. This gap continues to fuel the carry trade, creating constant upward pressure on the USD/JPY pair despite the verbal warnings from Tokyo. For traders, this signals a period of heightened tail risk and a spike in expected volatility over the coming weeks. One-month implied volatility on USD/JPY options has already climbed above 12%, reflecting the market’s anxiety about sudden, sharp downside moves. This makes buying protection or placing speculative bets via options increasingly attractive. The most direct strategy involves purchasing out-of-the-money USD/JPY puts with expirations in late April and May 2026. These positions offer a defined-risk way to profit from a potential plunge of several hundred pips should the BoJ decide to act decisively. The cost of these options is rising, so timing is becoming critical. We must also watch for key US data, as a surprisingly weak Non-Farm Payrolls report, due this Friday, could do the BoJ’s job for it. A faltering in the US jobs market would weaken the dollar across the board and could trigger a rapid unwind of long USD/JPY positions. This confluence of intervention risk and potential US data weakness makes holding unhedged long positions extremely precarious. Create your live VT Markets account and start trading now.

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On Monday, the People’s Bank of China (PBOC) set the USD/CNY central rate at 6.9223, compared with Friday’s fix of 6.9141. The PBOC’s main monetary policy aims are to keep prices stable, including exchange rate stability, and support economic growth. It also carries out financial reforms linked to opening and developing China’s financial market.

Pboc Governance And Role

The PBOC is owned by the state of the People’s Republic of China, so it is not an autonomous institution. The Chinese Communist Party Committee Secretary, nominated by the Chairman of the State Council, shapes the bank’s management and direction, and Pan Gongsheng holds both posts. The PBOC uses several policy tools, including the seven-day reverse repo rate, the Medium-term Lending Facility, foreign exchange intervention, and the reserve requirement ratio. China’s benchmark interest rate is the Loan Prime Rate, which affects loan, mortgage, and savings rates and can also affect the renminbi exchange rate. China has 19 private banks. The largest include digital lenders WeBank and MYbank, and in 2014 China allowed domestic lenders fully funded by private capital to operate in the state-led sector. Today’s move by the People’s Bank of China to set the USD/CNY rate higher, at 6.9223, signals a clear tolerance for a weaker yuan. This is a significant adjustment from last week’s fixing and suggests that supporting the economy is a top priority. For us, this opens the door to positioning for further depreciation in the Chinese currency. We see this decision as a direct response to recent economic data which has shown some weakness. Industrial output for February 2026 registered at 4.9%, missing forecasts, while new export orders have also softened according to the latest PMI data released last week. A weaker currency makes Chinese goods cheaper for foreign buyers, providing a necessary tailwind for the manufacturing sector.

Market Implications And Positioning

Looking back, we remember how the central bank defended the yuan for much of 2025, holding it in a tight range to ensure financial stability amidst a shaky property market. This new stance contrasts with last year’s policy, indicating a pivot where growth is now being prioritized over exchange rate stability. It suggests the authorities are now more comfortable with a controlled depreciation to stimulate activity. For the coming weeks, we should consider strategies that profit from a rising USD/CNY. Buying call options on the currency pair is a straightforward way to position for further yuan weakness while limiting downside risk. Implied volatility has ticked up to 9.2% from last month’s average of 8.5%, but there is likely room for it to move higher if the currency continues its trend. We will be closely watching for follow-through signals from the PBOC, particularly the next setting of the Loan Prime Rate (LPR). A cut to the one-year LPR, which was last trimmed in August of 2025, would confirm this easing stance. Any such move would likely accelerate the yuan’s managed decline against the dollar. Create your live VT Markets account and start trading now.

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