India and Pakistan have maintained a fragile ceasefire since their May 2025 four-day conflict, which began with India’s Operation Sindoor missile strikes on militant infrastructure following a terror attack in Pahalgam, Kashmir. Relations remain frozen with minimal diplomatic engagement, ongoing accusations of cross-border militancy, and periodic warnings from Pakistan’s military about strong responses to any future attacks. Traders assign low implied probabilities to an Indian strike by late 2026 because nuclear deterrence, U.S. mediation precedent, and the absence of fresh major triggers have kept escalation risks contained, though persistent Kashmir tensions and internal political pressures on both sides could still shift sentiment if new incidents emerge before year-end.