The US Dollar rose on Tuesday, bouncing back from Monday’s losses. The move followed a US Supreme Court ruling against President Donald Trump’s tariffs and new levies announced last weekend. The four-week average for the ADP Employment Change ticked up to 12.8K from 11.5K. The US Dollar Index traded near 97.80, up more than 0.10% after two straight sessions of losses. Chicago Fed President Austan Goolsbee said any rate cuts will depend on inflation moving back to the Fed’s target.

Dollar Moves And Major Pairs

EUR/USD traded near 1.1790. The European Central Bank is broadly holding policy steady, and inflation is close to 2%. GBP/USD was near 1.3510 and still up on the day, after Bank of England Governor Andrew Bailey spoke about possible easing. USD/JPY climbed to 155.70 after reports that Japan’s Prime Minister Sanae Takaichi urged caution on further Bank of Japan rate hikes. AUD/USD was near 0.7060 and little changed, as a firmer USD offset support from the Reserve Bank of Australia’s stance. USD/CAD hovered near 1.3700 after hitting a three-week high. Canada’s Q4 GDP is due Friday. Gold traded at $5,155, down more than 1%, snapping a four-day run higher. Upcoming data: Australian January CPI (25 Feb); Tokyo February CPI (26 Feb); Swiss Q4 GDP, Germany February flash CPI and HICP, Canadian Q4 GDP, and US PPI (27 Feb).

Year Ago Versus Now

A year ago, markets were dealing with a hawkish Federal Reserve. Officials signaled rates would stay high until inflation fell. Now, in February 2026, the Fed has started a cautious easing cycle. The Fed Funds rate is 4.75% after two small cuts. This change suggests traders may want to focus on options strategies that benefit from volatility around future Fed meetings, instead of the one-way hawkish trades that worked in 2025. The US Dollar Index was near 97.80 at this time last year. It now sits higher, around 101.50, showing that earlier rate hikes still matter. But with the European Central Bank and the Bank of England also hinting at cuts, the dollar’s path is less clear. Derivatives traders may want to look at relative-value trades between pairs, such as short EUR/GBP, to position for different speeds of central bank easing. Last year, the yen was very weak, with USD/JPY near 155.70 as the Bank of Japan held back on rate hikes. That has now shifted. The BoJ delivered two rate hikes in late 2025, and the pair has moved back toward a more stable 145.00 area. Traders should be careful about staying short the yen. Any signal of more tightening from Tokyo could trigger another sharp drop in USD/JPY. Gold was a major story last year, trading near $5,155 per ounce as a hedge against sticky inflation and geopolitical risk. Since then, prices have fallen to around $3,800. Even so, support remains solid because lower interest rates make non-yielding assets more attractive. Demand from central banks also continues. They added more than 950 tonnes to reserves in 2025, extending the diversification trend seen in recent years. Create your live VT Markets account and start trading now.

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