The Australian Dollar rose to almost a two-week high after January inflation came in above forecasts. AUD/USD gained more than 0.85% to around 0.7120 after CPI rose 3.8% year on year and trimmed mean CPI edged up from 3.3% to 3.4%.
The US Dollar Index fell toward 97.70 as uncertainty over US trade policy weighed on the currency. EUR/USD traded near 1.1800 and was up more than 0.20%, after softer Eurozone inflation reinforced expectations that the ECB will keep policy steady.
Key G10 Moves And Inflation Signals
GBP/USD traded near 1.3550, a one-week high, after a period of consolidation. Bank of England Governor Andrew Bailey said a March rate cut is possible, while noting that services inflation remains high.
USD/JPY traded around 156.40, close to an almost three-week high, as markets weighed uncertainty around the Bank of Japan’s rate path. Gold traded near $5,205, up 0.75% on the day, after falling earlier in the week.
Upcoming data includes Tokyo February CPI and US initial jobless claims on Thursday. On Friday, releases include Swiss Q4 GDP, Germany’s February flash CPI and HICP, Canadian Q4 GDP, and the US Producer Price Index. In 2022, central banks bought 1,136 tonnes of gold worth about $70 billion, the largest annual purchase on record.
The sharp rise in Australian inflation suggests the Reserve Bank of Australia may need to tighten policy more than markets expected. The 3.8% CPI print is the third straight month above the RBA’s target band. A similar pattern appeared in 2023, ahead of a run of rate hikes. Traders may consider buying Australian Dollar call options, especially versus currencies backed by dovish central banks, such as the Japanese Yen.
US Dollar weakness may continue as uncertainty around US trade policy persists. Markets are reacting to renewed trade friction. Recent Census Bureau data showed US exports fell 5% in January 2026, adding to concerns. One way to position for further declines is to buy put options on the US Dollar Index (DXY) ahead of the Producer Price Index report.
Options Strategies To Watch
The Japanese Yen remains under pressure as the Bank of Japan stays cautious on raising interest rates. This widening policy gap has not been this pronounced since 2022–2024, when other central banks were hiking aggressively. One strategy to consider is buying AUD/JPY call options, which could benefit from potential RBA tightening and Japan’s continued easy policy.
Gold’s rally above $5,200 is being supported by a mix of geopolitical risk and a weaker US Dollar. It is also backed by strong institutional demand. Central bank buying hit record levels in 2022, and reports suggest it accelerated again in late 2025, led by major emerging economies. Buying gold call options, or using call spreads to reduce upfront cost, can still be a practical way to hedge ongoing uncertainty.
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