In December, Germany’s Consumer Price Index held steady at 1.8% year-on-year. This matches the European Central Bank’s inflation target, affecting the EUR/GBP rate, which slipped lower while waiting for UK data. A recent report indicates that USD/INR rose sharply due to a stalled trade situation in the U.S., impacting Foreign Institutional Investors (FIIs). At the same time, USD/CNH weakened after the People’s Bank of China suggested it might strengthen the renminbi.

The Commodities Market

In the commodities market, silver bounced back after some profit-taking. The AUD/USD pair faces strong resistance at 0.6745, which is unlikely to be broken anytime soon. Bitcoin, Ethereum, and Ripple hit pause after a price rally. Gold remained stable around $4,600 as markets showed risk-taking behavior, while the Federal Reserve stayed cautious. A detailed report on the best brokers of 2026 has been published. Brokers are evaluated on criteria like spreads, leverage, and trading platforms such as MT4. FXStreet shares information that carries potential risks. It highlights the need for personal research since the information may not be considered investment advice and could be outdated or contain errors.

Investment Insights

With German inflation steady at 1.8%, the European Central Bank is unlikely to tighten its policies soon. This data further confirms the Euro’s ongoing weakness, struggling even against a softer U.S. dollar. We should consider buying put options on the EUR/USD, aiming for a drop below the current support level of 1.1600 in the upcoming weeks. The gap between the Eurozone and the UK looks set to continue, putting downward pressure on the EUR/GBP rate. We remember how persistent UK inflation was throughout 2024 and 2025. Recent wage growth in the UK remains above 4%, restricting the Bank of England more than the ECB. Selling EUR/GBP futures or call spreads could take advantage of this difference in policy. The weakness of the U.S. dollar is largely due to the large government deficit, which the Congressional Budget Office projected to be around $2 trillion. However, the ongoing trade stalemate might stir sudden safe-haven demand for the dollar, causing sharp, unpredictable movements. This creates an opportunity for volatility strategies, like buying straddles on the U.S. Dollar Index (DXY), to profit from significant price movements in either direction. It’s important to note that gold is hovering around $4,600, indicating market anxiety. This price suggests a continued search for safety that began during the inflationary years of 2024 and 2025. Given this heightened risk awareness, using part of our portfolio to buy call options on gold or put options on the S&P 500 can serve as a vital hedge against unexpected events. Create your live VT Markets account and start trading now.

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