The war between the US-Israel coalition and Iran reshaped market expectations in March 2026. The global finance landscape in Q2 2026 is now expected to be defined by how long the Strait of Hormuz remains closed. While historically, such geopolitical flare-ups last only for a short while, the Russia-Ukraine war and the Israel-Gaza conflict have proven otherwise. Given the current geopolitical environment, supply chain bottlenecks, hawkish central bank policies, and market volatility could persist for a long time. Here’s our quarterly finance trends report to help you strategise for Q2 2026.
Finance Industry News
The closure of the Strait of Hormuz impacts nearly 20% of global oil and 21% LNG supply, most of which is routed to Asian markets. Oil prices have surged worldwide, creating inflationary pressures. By the last week of March, wholesale gas prices in the UK had surged 100%. Gas prices had risen by 24% and 39% in the Dutch and Asian markets, respectively. The supply disruption has widened the price gap between WTI and Brent crude, pushed bond yields higher, and fuelled credit risk concerns as high energy costs affect corporate earnings. While IEA chief Fatih Birol referred to the situation as “very severe,” the WEF’s March 24, 2026, report stated that the markets had not fully weighed in the associated risk.
Weaker Global Growth
The WTO has warned that high oil and gas prices could lower global GDP growth by 0.3%. Europe is among the regions that is likely to be hit the hardest by the Iran war, with potentially 1% less GDP growth than previously expected.
Forex Industry News
Risk-off sentiment in the market drove the DXY index 2.11% higher in the one month of the initial strike due to safe-haven demand against a backdrop of heightened market uncertainty. In their March decisions, both the Federal Reserve (Fed) and the Bank of England (BoE) held interest rates steady, which weighed on the EUR/USD.
Market Sentiment & Currency Trends
The conflict in the Middle East once again exposed the vulnerability of the EU to energy market shocks. The Bank of Canada expects the EUR/USD to stay at around 1.17 through Q2 2026. The conflict benefited the forex pair due to Canada’s existing surplus and growing output capacity. If the tensions continue for long, the CAD is expected to appreciate further through 2026. Meanwhile, the CAD/USD pair is forecasted to hover around 0.74 through Q2.
Given that midterm elections in the US are scheduled for November 2026, curtailing inflation could be a key policy agenda. This means that Washington may put in greater efforts to improve relations with Ottawa, which may further support the CAD.
The new Fed chair takes office in May, which could create policy risks and even growth risks for the country’s economy. The uncertainty among investors may weigh on the greenback. Plus, the Bank of Japan is expected to raise interest rates in Q2, which may accelerate the JPY against USD. In addition, the interest differential between the CNY and USD is set to decline.
ESMA Reminds Firms about CFD Regulations
The European Securities and Markets Authority (ESMA) issued a formal reminder regarding the strict application of product intervention measures to contracts for difference (CFDs). The statement notes the rise of “perpetual futures” and “perpetual contracts,” often linked to crypto assets like Bitcoin.
ESMA clarified that the commercial name of a product is irrelevant if a derivative provides leveraged exposure to an underlying asset. If it requires a cash settlement, it qualifies as a CFD under MiFID II. Firms must conduct a rigorous legal analysis to ensure compliance with national measures.
Some of the highlighted obligations include:
- Leverage limits must range from 30:1 for major currencies to 2:1 for cryptocurrencies.
- Firms must have mandatory margin close-out rules, negative balance protection and a ban on trading incentives (like bonuses).
- Transparency is crucial, and firms must provision for standardised risk warnings and Key Information Documents (KID) under PRIIPs.
- ESMA also requires firms to narrow their target markets to exclude inexperienced retail investors from mass-marketing campaigns.
Major Shakeout as Prop Firms Struggle to Survive
In the two years to March 2026, nearly one-third of prop firms closed. Low cost-per-acquisition is not enough to sustain prop firms. They need to maintain a complex, global portfolio that transcends geographical borders. Prop firms may eye the LATAM and South Asian markets where Return on Ad Sped (ROAS) reaches up to 12x and a break-even is possible within a month.
FCA Consults to Change the Definition of “Professional Client”
The FCA has suggested an “Enhanced Qualitative Assessment” of a client’s expertise to replace the existing quantitative test, which it considers is open to misuse. Plus, the organisation has proposed that firms tighten the safeguards for opting up.
Prop Trading News
Prop firm mergers and consolidation increased in Q1 2026, driven by tightening oversight, rising costs due to larger capital reserve requirements and audits, and platform crackdowns. This is crucial for traders as after M&As, firms can be forced to change rules overnight, lower leverage, delay pay-outs, and even temporarily freeze accounts. But it also brings greater stability for traders as larger prop-firms are backed by real broker capital. They also have the capacity to offer higher profit splits, professional-grade infrastructure and accelerated scaling plans.
FTMO acquires OANDA
This merger turned out to be a regulatory hybrid powerhouse for US traders. While leverage dropped to under 1:30 to meet compliance, US traders now have clean access to MT5. This also means that executions become more transparent with liquidity, and the pay-outs will be backed by institutional capital.
Prop & CFD Brands of Seacrest Merged
With a unified brand, Seacrest can now potentially offer accelerated order fills, thinner spreads, and a unified dashboard for funded and personal portfolios, improving trader experience.
New Era of Prop Trading: Unified Experiences
Upscale, a Web3-based prop trading platform, introduced trading processes within the Telegram messenger app. The in-app experience consolidates communication management and execution, while enabling position management, all in one place. This has highlighted the need for offering new age systems that allow traders to effortlessly trade a variety of instruments, including forex, commodities, indices, as well as digital assets, such as major cryptocurrencies, meme assets and newly listed tokens.
Behavioural Insights
Platforms are shifting towards more meaningful insights, rather than depending on trade history, win rate, holding time, etc. Traders increasingly demand insights that can explain losses, recommend changes to performance patterns, and more. Therefore, the latest trend is including AI-based systems that offer actionable insights, such as conditions under which a trader deviates from strategy, signs of emotional decision-making, and when risk-per-trade goes beyond their set risk limits. Prop firms are now chasing long-term consistency and plan to leverage AI-powered analytics to offer valuable assistance rather than just tracking traders’ results.
Capital-Backed Custom Plans for Every Trader
Prop trading is shifting away from a one-size-fits-all approach to plans tailored to individual traders. By mapping profit targets and risk limits to a trader’s specific style, firms are planning to back them with real money rather than just demo accounts. They are actually rooting for their traders to win. This shift is turning prop trading into a more professional partnership, where advanced technology helps traders remain consistent in the long term.
Market Growth & Performance Metrics
Over 60% of the daily trading volume on major stock exchanges worldwide comes from prop trading firms. Google Trends analysis suggests that global interest in prop firms surged nearly 607% between 2020 and 2024. The global prop trading market is forecasted to expand at a CAGR of 9% from 2023 to 2030.
Fintech and Banking News
There’s no bigger news than Kevin Warsh replacing Jerome Powell as the Fed chair, on President Trump’s recommendation.
Banks are Building Future-Readiness Faster
Fintech-led transformation will reshape banking through 2026 and beyond. A McKinsey study found that banking transformation projects that use fintech-based platforms could complete implementation 40% faster and at 30% lower cost than those using legacy technologies. The report states that by 2028, 3.6 billion customers will use digital banking. The speed advantage could prove to be a differentiator, as traditional banks cannot modernise fast enough to cater to the expanding digital banking customer base. The good news is that even regulatory bodies seem to be encouraging fintech-led transformation. The BoE, European Central Bank (ECB) and Fed have independently published guidance for banks to improve their technology resilience.
AI Readiness
While AI penetrates deeper across finance operations, data readiness and regulatory compliance remain key challenges across the sector. Only 12.2% of financial institutions consider their AI/ML strategies adequately defined and resourced, although deployment across the industry is increasing. That is despite only 9.5% of them having an AI-ready data infrastructure. Data quality continues to be a top challenge for banks and FIs due to the inadequacies of legacy systems and regulatory roadblocks.
Solaris Takes a Strategic Pivot
Backed by Japan’s SBI Group, Solaris plans to reposition itself as a pioneer AI-native bank. Moving beyond traditional Banking-as-a-Service (BaaS), the firm is rebuilding its core infrastructure. Banking processes will be automated by AI agents, while maintaining human oversight. This strategic pivot aligns with the EU AI Act to provide partners with faster and scalable data-driven financial services through a licensed API framework.
Crypto News
- Institutions Prioritise Tokenisation: Institutions are levelling up from testing crypto to using it for real-word market processes. The Depository Trust & Clearing Corporation (DTCC) plans to use tokenised US Treasuries for official trading from H2 2026. With this market already being worth over $11 billion, products like JPMorgan’s Kinexys now offer 24/7 cash management. While the ECB plans to accept DLT-issued marketable assets, the BoE is also assessing whether tokenised asset usage at scale is viable.
- Kraken Secures Fed’s Master Account: The Wyoming Special Purpose Depository Institution and renowned crypto firm, Kraken, obtained a “limited purpose” Fed Master Account status. This provides it access to Fed payment rails. This also underlines the Fed’s openness to accepting novel institutions alongside traditional ones and its improving acceptance for digital currencies.
Financial Marketing Trends
Marketing in the finance sector has become hyper-targeted and intensely personal. In 2026, generic will be a death sentence for engagement. Here are the trends that will rule in Q2 and beyond:
Building a Trust Infrastructure
This is a key pillar for marketing efforts. It includes transparent payout logic and localised support as regulatory pressures rise globally, while policies diverge. A few ways to assert trust include:
- Public payout policies
- Transparent rules and fair verification processes
- Accessible status page with detailed incident reports
- SLAs, regionally suitable operational windows, and human-driven communication.
Fragile models may be exposed by forums like Google’s financial verification, platform dependence and poor alignment with ad policies, which could threaten the firm’s credibility. Aligning risk analytics with a multi-vendor strategy could help firms navigate the emerging financial services execution model. This may lead the market to fewer and more heavily supervised firms, while moderately compliant ones fade.
Immersive & Interactive Living Reports
Traditional, lengthy PDF analyses are considered too time-consuming and ineffective. Interactive widgets are increasingly replacing static marketing content with the “scrollytelling” feature. These help traders immediately gauge the impact of certain data. For instance, how will a specific spike in inflation affect their portfolio with the existing set of assets? These also help boost engagement, keeping readers on the page longer.
Read our 10 financial marketing predictions for 2026.
Major Geopolitical Events in Q2 2026
According to a report by Geopolitika, 2026 is “becoming the most critical moment in great power frictions.” So much so that it could even destabilise the global political order.
The US Faces Internal Risks
Washington is acting out of fear that its dominance is at risk and could end very soon. The aggression against potential rivals may take away focus from the internal consumption crisis. As cost-of-living surges and the US-Iran war fuels inflationary concerns, trust in governance could shatter. While the Fed is forced to keep interest rates high due to inflation, it makes clearing public debt more expensive. As spending on foreign subsidies or warfare increases, healthcare and pensions may suffer.
According to S&P Global, headline inflation in the US could reach 4%, with core inflation remaining around 3%. A Forrester report states that technology sector spending in the country may reach $2.9 trillion in 2026, growing 8.3% year-on-year.
The EU Eyes Domestic Independence
Amid geopolitical friction, one thing that prevents the EU from acting with sovereignty is its lack of autonomy. Self-reliance in key sectors, such as defence, manufacturing and clean energy, emerged as a common theme across the EU. Given the rapidly changing market, fast-paced negotiations are expected to define how trade partnerships take shape. While Germany plans a €500 billion outlay for strategic investment in infrastructure, manufacturing and energy, Brussels may also announce a budget for fortifying defence and supply-chain resilience.
Another key focus across the EU will be to lay out a plan to build a digital backbone for AI infrastructure, without compromising the climate commitments of the region. This includes evolution in the design of data centres, grid management and demand planning at scale.
Russia Gains Pricing Power
Given that 20% of the global oil supply is stuck in the Gulf region, Russia becomes an increasingly critical supplier, especially for Asian countries. While Russia began 2026 assuming oil prices under $60 per barrel, the US-Israeli strikes on Iran have completely changed the scenario. Major importers, such as China and India, are dependent on Russian supply, which gives the country greater pricing power. But this also means that while benefiting from chaos, Russia is losing its best ally against the US.
For Russia, the Iran war could be proof that the Western-led world order is breaking down. This confirms the nation’s strategy to just wait long enough, and the West will become too distracted by new crises to keep opposing Russia. Goldman Sachs expects Brent crude to trade at up to $115 per barrel, starting April, and settle at around $80 per barrel by the end of the year.
Inflationary Risks Turn Central Banks Hawkish
The Middle East conflict has forced central banks worldwide to keep their interest rates elevated. BNY forecasts a base case of easing conflict at 50% probability, with potentially one Fed rate cut in 2026. According to the report, there is a 30% probability of a rate hike if energy shocks escalate. The organisation still estimates a 20% chance of two interest cuts, if tensions ease. The ECB revised its inflation forecast from 1.9% to 2.6% for 2026.
Some other events to watch:
- April 7-10: IMF/World Bank Spring Meetings (Washington, DC): Focus areas are expected to be debt-restructuring, risks in emerging markets, and global policies amid Middle-East tensions.
- May 18-21: G7 Ministerial Follow-up: Coordination on sanctions and tech-governance (semiconductor export controls).
- June 7: 41st Full OPEC+ Ministerial Meeting (Vienna): To decide supply quotas through late 2026.
- June 14-16: G7 Leaders’ Summit (France): High-level coordination on global energy security and financial sanctions.
- June 2026: BRICS India 2026 Economic Forum (New Delhi): Discussions on local-currency settlement and de-dollarisation infrastructure.
Q2 Volatility Watch: What Brokers & Banks Should Do
Iran held on to its stance of not entertaining any peace talks at the end of Q1. Given the potential broad-based impact of energy shortage on industries that use it or need it for transportation, financial institutions need to be prepared. This may also be a time to stress-test AI monetisation, especially because poor performance of any one company (especially the bellwethers) could trigger strategic de-risking across the industry.
Liquidity Intelligence
Brokers need to shift to AI-driven smart order routing (SOR) that predicts liquidity fades across asset pools before they happen. Plus, keeping a constant watch on value at risk using generative stress-test suites could offer predictive insights into order book imbalances.
Guardrails as Growth Drivers
Automated margin adjustments when death spiral signatures emerge may be crucial to navigating the volatility induced by geopolitical uncertainty. Plus, employing guardrails not just as capital preservation tools, but as marketing selling points, is increasingly crucial to demonstrate risk management capacity as a competitive edge.
Regulatory Spotlight
The regulatory landscape of 2026 will be defined by change and resilience.
SEC and CFTC Define When a Digital Asset Becomes a Security
The leaders of the two financial watchdogs issued well-defined guidelines for crypto. Recognising that most crypto assets are not securities and that investment contracts can end, they intend to harmonise regulations and make the US digital asset market more predictable and transparent.
FIS Launched Prediction Clearing
FIS launched a cloud-native post-trade solution, FIS CD Prediction Clearing, for the regulated prediction markets. The new platform offers real-time clearing, high-volume transaction handling, and 24/7 operational support. By integrating this into the existing FIS Cleared Derivatives suite, the firm allows Futures Commission Merchants (FCMs) to enter the space without building the infrastructure from scratch. This move addresses the projected 500% growth of the prediction markets by 2030, ensuring market integrity through modernised risk management and real-time settlement.
ESMA Publishes a New Methodology for Calculating Clearing Thresholds
Going forward, financial counterparties are required to include their uncleared position and their aggregate OTC exposure (separately) to determine if they reach the clearing threshold. It suggests that non-financial counterparties can include only their uncleared positions. Once EMIR III is enforced, NFCs will have to make the entries at the entity level and not the group level, as they have been previously doing.
Contentworks Agency closely monitors shifts in regulations and finance trends to best serve our banks, forex brokers and fintechs. For a full breakdown of the latest regulatory moves, don’t miss our monthly regulations roundup reports. Ready to improve your financial marketing in 2026? Book a free Zoom call with our team.
Sources
We used the following sources to produce the finance trends report:
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