The Richmond Fed Manufacturing Index for January in the United States was reported at -6, which is better than the expected -8. This suggests a slight improvement in manufacturing conditions. In Australia, the Consumer Price Index (CPI) is expected to rise by 3.6% year over year for December, up from 3.4% previously. The monthly CPI is projected to increase by 0.7% after remaining steady at 0% in November.

Forex Market Trends and Analysis

The EUR/USD pair is nearing the 1.2000 level, its highest since June 2021, as the US dollar faces continued selling pressure. The GBP/USD pair is also climbing, approaching 1.3800, largely due to the weakness of the US dollar ahead of an upcoming FOMC event. Gold is trading steadily around $5,100 per troy ounce, showing an upward trend due to a weak US dollar and uncertainties in trade policy. Ripple (XRP) is valued at about $1.88 but is under pressure from technical weaknesses, even though demand for ETFs remains steady. The primary trend is a weak US dollar, fueled by threats of tariffs from the White House. This has led to a “sell America” flow, pushing investments into foreign currencies and hard assets. We should consider options trading on major currency pairs to take advantage of continued dollar weakness. While the Richmond Fed’s manufacturing index exceeded expectations slightly at -6, it still indicates a contraction in activity. Looking back, negative readings have persisted throughout 2024 and 2025. Therefore, this small improvement is not likely to change the negative outlook for US assets.

Opportunities in Precious Metals and Currency Options

The Euro is benefiting, pushing towards the 1.2000 level not seen since mid-2021. Call options on the EUR/USD pair with strike prices at or above 1.2000 could be a leveraged way to capitalize on this momentum. Additionally, GBP/USD is showing strength as it nears 1.3800, making it another target for bullish strategies against the dollar. Gold’s climb to $5,100 an ounce is a clear sign of safe-haven buying amid trade uncertainties. Given that US inflation surged over 9% back in 2022, the current conditions indicate similar pressures are returning. Holding long positions in gold futures appears to be a wise choice. This week’s Federal Reserve meeting is not expected to cause major market changes, as its policy seems set by the current political landscape. Thus, we anticipate that implied volatility in short-term options on equity indices may be overestimated, presenting potential selling opportunities for those looking to collect premiums. Create your live VT Markets account and start trading now.

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