The EIA reported a drop in the United States’ crude oil stocks by 3.831 million barrels. This decrease comes as a surprise since analysts expected an increase of 1.1 million barrels in January. This unexpected trend fits with other mixed economic indicators in the US, which are affecting commodity and currency movements. Gold prices fell from $4,500 due to strong US economic data, which lessened its appeal as a safe haven. On the other hand, the USD/JPY remained steady, influenced by mixed data from the US and the Bank of Japan’s policies. Despite the mixed data, the US dollar stabilized, while the Canadian dollar was impacted by lower oil prices.

Forex and Commodity Insights

The EUR/USD found support around 1.1670, while GBP/USD dipped to daily lows near 1.3470. Gold has been trading around $4,450, and XRP is under pressure as on-chain metrics change and ETF inflows decrease. Looking ahead to 2026, a positive economic outlook is expected, but traders should remain cautious. This publication encourages using regulated brokers for trading and stresses the importance of thorough research before making investment choices. It aims to inform readers, not recommend specific financial actions. The author does not hold any financial positions in stocks mentioned and is not liable for any errors in content. The US dollar shows strong performance, boosted by solid economic data. We saw this reflected in the final GDP numbers for 2025, which exceeded expectations at 3.1%, and the recent non-farm payroll report that added a healthy 215,000 jobs. This strength puts pressure on currency pairs like EUR/USD and GBP/USD.

Impact of Economic Data on Markets

The strong US dollar is creating a notable gap in central bank policies that traders should monitor. The latest US core inflation data from December 2025 remained at 2.9%, keeping the Federal Reserve in a hawkish stance. In contrast, the European Central Bank has indicated caution due to sluggish growth. This divergence may make shorting EUR/USD—perhaps by buying put options—an appealing strategy during failed rallies. Gold’s recent decline from its peak of $4,500 directly relates to the dollar’s strength and rising US bond yields. After a significant increase in the latter half of 2025, driven by geopolitical risks, gold is now struggling as strong economic data makes it less attractive. Traders should watch for a potential break below $4,450, which could lead to further selling. The oil market presents a complex situation for traders. The reported decline in crude oil stocks by 3.831 million barrels is bullish and suggests strong demand. However, this demand is being countered by rising supply from Venezuela following eased sanctions in late 2025, which is keeping WTI prices steady. This scenario suggests traders might favor range-bound strategies like iron condors. For currency specialists, key technical levels are critical. EUR/USD finding support at 1.1670 and GBP/USD testing lows at 1.3470 are crucial points. With a risk-off sentiment and strong US data, a clear break below these levels could lead to bearish positions. The overall economic outlook is cautiously optimistic, suggesting that volatility is likely to continue. The blend of strong US performance and a broader risk-off sentiment indicates that traders should be ready for sudden market changes. This environment may be perfect for volatility-based strategies, such as straddles on major indices, to take advantage of sharp price movements. Create your live VT Markets account and start trading now.

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