A senior Iranian official told Reuters that Iran has rejected a temporary US ceasefire proposal. The plan was part of a two-tier deal delivered to Tehran by Pakistan.
Tehran set conditions for any talks with the United States aimed at a lasting peace. These include an immediate halt to strikes, guarantees that strikes will not happen again, and compensation for damage.
Irans Conditions For Peace Talks
Under a permanent peace deal, Tehran also demands fees for ships passing through the Strait of Hormuz. The fees would vary by ship type, cargo, and prevailing conditions.
After Iran’s comments, the US Dollar recovered. The US Dollar Index (DXY) erased earlier losses and was flat near 100.00 at the time of writing.
Market commentary described shifts between “risk-on” and “risk-off” sentiment. In risk-on periods, equities, most commodities except gold, commodity-linked currencies, and cryptocurrencies tend to rise.
In risk-off periods, bonds, gold, and safe-haven currencies tend to gain. The US Dollar, Japanese Yen, and Swiss Franc are commonly cited as beneficiaries in such conditions.
Market Implications And Trading Outlook
With Iran rejecting the temporary ceasefire, we are shifting into a clear “risk-off” environment for the coming weeks. The US Dollar’s immediate recovery to the 100.00 level on the DXY is the first signal of a flight to safety. This geopolitical instability is now the primary driver for market sentiment.
The direct threat to the Strait of Hormuz, through which about 20% of the world’s total oil consumption passes, creates significant upside risk for energy prices. We should anticipate Brent crude oil pushing past $110 a barrel, a sharp increase from the $95 average we saw in March 2026. Derivative traders should be positioned for heightened volatility in oil futures and consider call options on major energy producers.
This uncertainty will weigh heavily on equity markets, likely pushing the S&P 500 to test lower support levels. We expect the VIX, the market’s fear gauge, to surge above 30, a level of volatility not sustained since the banking sector concerns in late 2025. Buying call options on the VIX or put options on major indices like the SPY or QQQ are viable strategies to hedge against this downturn.
In the currency market, we anticipate continued flows into safe-haven currencies beyond just the US Dollar. The Japanese Yen and Swiss Franc are poised to strengthen significantly against higher-risk currencies. The USD/JPY pair could fall back towards the 145 level as investors seek the relative stability of the Yen.
Conversely, commodity-linked currencies will face strong headwinds. The Australian Dollar (AUD), Canadian Dollar (CAD), and New Zealand Dollar (NZD) are particularly vulnerable to a combination of risk-off sentiment and fears of a global slowdown caused by high energy prices. We see opportunities in shorting these currencies against the US Dollar or Japanese Yen.
Gold and government bonds will be the primary beneficiaries of this capital rotation. We expect gold to rally strongly, potentially testing the $2,500 per ounce resistance level as a key safe-haven asset. Simultaneously, demand for US Treasuries will increase, which should push the yield on the 10-year note back down towards 3.5%.
