EUR/USD traded near 1.1515 in early Asian trading on Monday, after edging lower towards 1.1500. Support for the US Dollar came from stronger US jobs data and rising Middle East tensions.
US President Donald Trump indicated a deadline for Iran to reopen the Strait of Hormuz on Tuesday. He also renewed threats to bomb power plants and other infrastructure if Iran does not end its effective blockade of the waterway.
Strait Of Hormuz Deadline
Iran said it would respond to attacks on its infrastructure by targeting similar infrastructure owned by, or linked to, the US. Tehran also said the strait will remain blocked until Iran receives payment for war damages.
The US added 178,000 jobs in March 2026, following a 133,000 decline that was revised from -92,000. The result beat expectations for a 60,000 increase.
The Unemployment Rate fell to 4.3% in March from 4.4% in February. It also came in below estimates.
In Europe, the ECB’s restrictive stance on inflation may limit euro weakness. Officials have said policy will stay restrictive until inflation returns to the 2% target.
Options Market Signals
Given the strength of the US dollar, we see increased demand for options protecting against a further decline in the EUR/USD. Implied volatility in the pair has surged, with the VIX, a broad measure of market fear, climbing above 20 for the first time since last quarter. This suggests traders are pricing in significant price swings and are willing to pay a premium for protection.
The focus this week is on the Tuesday deadline for the Strait of Hormuz, a critical chokepoint for global energy. We’ve already seen Brent crude futures spike above $110 a barrel in anticipation, stoking global inflation fears. A continued blockade would likely fuel further safe-haven flows into the US dollar, regardless of the European Central Bank’s stance.
The robust US jobs report, showing a 178,000 gain against expectations, has altered our view on Federal Reserve policy. The market is now pricing out the possibility of a summer interest rate cut, a significant shift from just a few weeks ago. This divergence, with a strong US economy and a potentially more cautious Fed, provides a fundamental tailwind for the dollar.
Looking back, this reminds us of the initial market reactions during the geopolitical turmoil in 2022, where the dollar benefited immensely from a flight to safety. This is a starkly different environment from the broad disinflationary trends that allowed for looser policy discussions throughout most of 2025. Therefore, old assumptions about central bank pivots need to be re-evaluated in light of new risks.
In response, we are considering buying EUR/USD put options to hedge against a sharp move lower, especially through the 1.1450 level. For those with a bearish but less aggressive view, establishing bear call spreads could offer a way to profit if the pair remains below key resistance levels. The heightened volatility makes selling options risky, but it makes buying protection more urgent for those with exposure.
