Currency Market Overview

The EUR/USD currency pair rose slightly to 1.1650, boosted by selling of the US Dollar and expectations for ongoing interest rate cuts by the Federal Reserve. Meanwhile, GBP/USD held steady around 1.3450, benefiting from a slight decline in the Greenback. Gold prices bounced back, reaching a record high of $4,640 per troy ounce. This increase was driven by lower US Treasury yields and the likelihood of further rate cuts from the Fed. In the cryptocurrency market, Bitcoin stayed above $95,000, with ETF inflows hitting $753 million. Ethereum also showed signs of recovery, staying strong above the 100-day EMA. Hyperliquid gained traction as well, trading above $26.00, thanks to better on-chain performance and activity in derivatives.

Market Implications of Federal Reserve Decisions

Traders should now prepare for a weaker US Dollar. The recent jobs report for December 2025 revealed a slowdown, adding only 155,000 new jobs, while core inflation dropped to 2.9%. This supports the expectation that the Federal Reserve will start cutting rates soon, with Fed funds futures indicating a greater than 70% chance of a cut by March. With the Greenback under pressure, call options on GBP/USD appear appealing, especially as the pair remains steady at 1.3450. Additionally, Gold’s rise above $4,600 presents a buying opportunity for derivative traders anticipating a further decline of the dollar. This trend has been building since late 2025, as markets expected the Fed to change its strategy. However, uncertainty looms with Jerome Powell’s term ending and officials like Kashkari highlighting that inflation remains too high. This division within the Fed differs from the united approach seen in 2023 and could lead to volatile shifts in interest rate expectations. Traders might consider using options to take advantage of potential swings in US Treasury futures, as unexpected hawkish or dovish news could quickly influence the market. In the crypto space, solid institutional demand is crucial, with Bitcoin ETF inflows exceeding $1.2 billion in the first week of this month. This strong interest indicates that using futures or call options for long exposure to Bitcoin above $95,000 is still a smart strategy. Optimistic sentiment seems centered on adoption metrics instead of broader economic worries. Create your live VT Markets account and start trading now.

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