Eur Usd Pair and the Federal Reserve

The EUR/USD pair went up by 0.36%, nearing four-year highs because the US Dollar weakened. Traders are keeping an eye on this pair as the Federal Reserve prepares to announce its policies. The GBP/USD pair has risen above 1.3650, showing positive movement thanks to strong UK economic data. Investors are now looking at the US Durable Goods Orders report for further guidance. Bitcoin, Ethereum, and Ripple are recovering slightly, staying close to important support levels after recent drops. Their price actions suggest possible stabilization or further recovery soon. In other updates, Cardano’s price is at $0.34, but ongoing corrections may lead to more declines. A drop in Open Interest indicates that fewer market players are involved.

Weakness in the US Dollar Continues

The move towards safety in the market is speeding up, making long positions in gold an easy choice. Central banks have consistently bought over 1,000 tonnes of gold in 2025, providing strong support. Traders might consider call options on gold futures or gold-backed ETFs to benefit from rising prices while managing their risk. It looks like the US Dollar will continue to weaken, especially with the Federal Reserve meeting this week. The US Consumer Price Index has missed expectations for two months straight, dropping to an annualized rate of 2.1% in December 2025, which gives the Fed room to be more cautious. A direct way to take advantage of this trend is to short the US Dollar Index (DXY) using futures contracts. On the other hand, the British Pound is gaining strength, supported by strong domestic economic data. The latest S&P Global UK Composite PMI for January was 54.1, the highest in over a year, indicating that the UK economy is doing well. We believe that buying call spreads on GBP/USD is attractive for trading this divergence. Disappointing industrial production numbers from Singapore suggest potential challenges for the wider Asian export market. This data follows last week’s Caixin Manufacturing PMI from China, which dropped back to 49.8, indicating contraction and affecting regional sentiment. Buying put options on equity ETFs focused on Asia could be a useful hedge in the weeks ahead. Volatility is increasing across different asset classes, and the Japanese Yen is gaining from both safe-haven demand and a strict central bank. With the Bank of Japan signaling a possible exit from its negative interest rate policy by March, a stronger yen seems likely. We see value in buying put options on the USD/JPY pair, aiming for a drop below 140.00. Create your live VT Markets account and start trading now.

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