Australia’s S&P Global Services PMI increased to 56 in January, up from 51.1 the previous month. This rise signals stronger growth in the services sector. The Japanese yen is under pressure due to fiscal worries ahead of the Bank of Japan’s upcoming rate decision. In December, Japan’s national CPI rose by 2.1% compared to last year, with core CPI also rising as expected.

USD Gains Against Yen

The USD/JPY pair saw slight gains, approaching 158.50 before the Bank of Japan’s rate announcement. The Bank of Japan is likely to keep its benchmark interest rate at 0.75%, following a rate increase in December. Gold prices continue to rise, now over $4,950 amid geopolitical uncertainties. The expectation of further policy easing by the Federal Reserve is fueling this rally. In the forex market, EUR/USD is steady around 1.1750, while GBP/USD is nearing 1.3500 due to selling pressure on the USD. Ripple (XRP) is holding strong above $1.90, showing positive technical signals for two days in a row.

Investment Caution Recommended

It’s important to do thorough research before making any investment decisions. The information provided here is for informational purposes only and should not be seen as a recommendation to buy or sell assets. The rise in Australia’s services PMI to 56 is a clear growth sign for the economy. This is the highest reading in nearly two years, reminiscent of the post-pandemic rebound in 2024. It suggests that the Reserve Bank of Australia may need to keep interest rates higher for longer. Considering this data, call options on the Australian dollar could be worthwhile, indicating its continued strength against other major currencies. The persistent selling of the US dollar is tied to expectations of the Federal Reserve easing monetary policy. After core inflation dipped below 3% in late 2025, the market now thinks there’s a 75% chance of at least one rate cut before July 2026. This scenario makes bearish dollar strategies, like buying puts on the dollar index (DXY), appear more appealing in the coming weeks. Gold’s impressive rally past $4,950 is driven by the ongoing trend of de-dollarization and ongoing geopolitical risks. However, the metal’s Relative Strength Index (RSI) has now gone above 80, suggesting a high chance of a short-term price correction. Using options strategies like bull call spreads could allow us to benefit from any further upside while managing risk in case of sudden changes in market sentiment. Meanwhile, the Bank of Japan is expected to maintain its interest rate at 0.75%, continuing a policy that differs from other central banks. After the notable rate hike in December 2025, the central bank appears to be in a wait-and-see phase, which puts pressure on the yen. This scenario supports long USD/JPY positions, and we believe call options are a sound choice for targeting a potential rise toward the 160 level. As tensions between the US and EU ease, both the Euro and the British Pound are gaining strength against the weaker dollar. Traders are eyeing 1.1800 for EUR/USD and 1.3500 for GBP/USD, riding the wave of anti-dollar sentiment. This perspective is supported by last week’s Eurozone PMI data, which surprisingly outperformed expectations. Create your live VT Markets account and start trading now.

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