The US Dollar Influence

The USD is likely to stay stable, impacted by actions from the Federal Reserve. The GBP/JPY is holding close to weekly highs due to a weak yen despite lower inflation reports from Tokyo. The EUR/USD is continuing its decline, nearing the 1.1920–1.1910 range following US producer price index news and updates from the Fed. Meanwhile, the US dollar’s rebound has pushed GBP/USD down to three-day lows around 1.3720. Gold has fallen below $5,000 per ounce due to widespread profit-taking. Cryptocurrencies, like Stellar and Bitcoin, have also taken a hit, with Stellar hitting a three-month low, Bitcoin nearing its November lows, and Ethereum dropping below $2,800. Microsoft’s drop in market value after its earnings report wiped out $400 billion, a significant financial blow. Brokers’ 2026 rankings look at various trading tools and customer preferences, focusing on low spreads and high leverage options. FXStreet recommends doing personal research before making any investment moves, as trading carries considerable risks.

New Leadership At The Federal Reserve

Kevin Warsh’s appointment as the new Fed chair marks a notable change from the Powell era, suggesting a shift towards a more aggressive policy. We should prepare for a stronger US dollar and rising interest rate expectations in the coming weeks. This development is crucial and drives all major asset classes right now. With the US dollar rapidly increasing, we should consider strategies that take advantage of its strength. After a period of relative calm in the second half of 2025 when the US Dollar Index (DXY) varied slowly, this breakout indicates that momentum is just beginning. Options on the DXY or put options on currency pairs like EUR/USD and AUD/USD make sense. Gold’s drop below $5,000 is mainly due to the stronger dollar and expectations of higher real yields, which raise the opportunity cost of holding non-yielding gold. This profit-taking suggests that the record highs may be behind us. It might be wise to add to short positions or buy put options on gold futures, as this trend has room to grow. The significant decline in Microsoft is a clear sign that growth stocks are at risk from rising rates. We experienced a similar situation during the 2022 rate hikes, and we can expect more volatility in the tech sector. Buying puts on the Nasdaq 100 or call options on the VIX index could provide a good hedge against further declines. Cryptocurrencies are viewed as high-risk assets and are facing heavy selling in this risk-averse climate. Negative funding rates in the derivatives markets reflect a strongly bearish attitude among traders. We expect continued pressure on Bitcoin and Ethereum as investors move to the safety of the dollar. Mexico’s unexpected GDP growth might offer the peso some strength compared to other currencies. Although the dollar’s strength will dominate, the USD/MXN pair may not rise as quickly as pairs like AUD/USD. We should focus on shorting currencies with weaker domestic fundamentals against the dollar. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now