The Manufacturing Purchasing Managers’ Index (PMI) for Sweden increased to 56 in January, up from 55.3 the month before. This points to growth in Sweden’s manufacturing sector. Various reports highlight economic trends. China’s economy is struggling, and the Euro is under pressure against the US Dollar, even with good manufacturing data from the Eurozone.

US Dollar Shows Signs of Recovery

The US Dollar is showing signs of recovery, impacting many markets. Silver prices have dropped as demand for this safe-haven asset declines. Additionally, some currency pairs are fluctuating. The EUR/JPY is around 183.50, even with positive Eurozone PMI data. Meanwhile, EUR/USD and GBP/USD are at low levels because of the US Dollar’s strength. Market analysis looks into potential influences and movements while considering the best brokers in 2026. This includes recommendations for top forex platforms, brokers with low spreads, and options for trading major currency pairs like EUR/USD and Gold. Investors should think carefully about their decisions. The information provided is not a recommendation and is meant for informational purposes only. Any associated risks fall on the investor.

Market’s Attention on US Dollar Strength

The market is now focused on the US dollar’s strength, largely due to speculation about a more aggressive Federal Reserve. This “Warsh effect” indicates a quicker pace of interest rate hikes than we expected a few weeks ago. As a result, we see significant pressure on currencies trading against the dollar, including the Euro. Though Sweden’s manufacturing PMI increased to 56, signaling good industrial health, it isn’t enough to offset the dollar’s momentum. Even positive data from the Eurozone isn’t lifting the EUR/USD pair, showing that the market is centered on US monetary policy. Recent data supports this perspective, with the US Dollar Index (DXY) exceeding 105 for the first time since late 2024. All attention is on the upcoming US ISM Manufacturing PMI, expected to show solid expansion around 57.8, emphasizing the gap with other economies. This is a shift from the sentiment we saw in late 2025, where a softer dollar was prevalent. For currency traders, this suggests positioning for further EUR/USD weakness, possibly using put options to aim for a break below the 1.1800 level soon. The Swedish Krona’s strength against the dollar will likely be limited, but it may perform better against the Euro. This makes shorting the EUR/SEK pair an appealing trade to separate Sweden’s positive data from the dollar’s dominance. The current situation is also challenging for commodities, with both gold and silver continuing their recent declines. A strong dollar and the possibility of higher US interest rates lessen the appeal of non-yielding assets, similar to what we observed during the Fed’s aggressive rate hikes in 2022. Derivative strategies could include shorting gold futures or buying puts as long as the dollar rally persists. In interest rate markets, futures now anticipate over 100 basis points of Federal Reserve hikes for the rest of 2026. This is a significant shift from the balanced outlook we had at the end of last year. This change suggests that volatility will stay high, and traders should consider positions that benefit from rising short-term US rates. Create your live VT Markets account and start trading now.

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