Major currency pairs are holding familiar ranges as traders wait for key events and data this week. US stock and bond markets are closed for Presidents Day. In Europe, December industrial production data is due on Monday.
The USD Index ended last week lower after US inflation came in softer than expected. US CPI rose 2.4% year on year in January, down from 2.7% in December and below the 2.5% forecast. The USD Index is now near 97.00.
Markets Watching Data And Event Risk
CBS News reported that Donald Trump told Benjamin Netanyahu he would support Israeli strikes on Iran’s ballistic missile programme. Markets barely reacted, with WTI near $62.80.
EUR/USD is trading in a narrow range above 1.1850 after a small weekly gain. An ECB speech from Joachim Nagel is due. Japan’s GDP grew at a 0.2% annual rate in Q4 after a 2.6% contraction in Q3, below the 1.6% forecast.
USD/JPY is rebounding after nearly 3% losses last week. It is up 0.4% near 153.30. AUD/USD remains below 0.7100 ahead of RBA minutes, after a 25-basis-point rate rise to 3.85%.
Gold ended last week higher but is trading below $5,000. UK jobs data and Canada’s January CPI are due Tuesday. GBP/USD is near 1.3650 and USD/CAD is around 1.3600.
Options Volatility And Tactical Positioning
With US markets closed today, trading is thin. That can create chances to position for the week’s data releases. Implied volatility on major pairs has fallen to its lowest level since Q3 2025. EUR/USD implied volatility is below 6.5%. That makes options relatively cheap ahead of key inflation and employment data later this week.
Last week’s softer US inflation print, down to 2.4%, matters. After the Federal Reserve raised rates aggressively through most of 2025, continued disinflation increases the chance that policy moves toward neutral. Consider put options on the US Dollar Index to position for further downside, as traders price out future rate hikes.
The Iran headline is being ignored for now, but it is a classic tail risk. The 2024 supply chain disruptions showed how fast markets can reprice geopolitical shocks. Out-of-the-money call options on oil futures are a low-cost way to hedge against a sudden escalation.
Japan’s weak GDP report would normally support yen strength, yet USD/JPY is higher this morning. That suggests last week’s drop may have been too sharp, but this rebound still looks questionable. Selling call options with strikes above 154.50 could be a sensible way to fade sustained upside.
The Reserve Bank of Australia is one of the few central banks still raising rates, yet the AUD is not gaining momentum. The RBA minutes will be important. If they hint that a pause is coming, the market could move sharply. A strangle strategy—buying both a call and a put—can capture a breakout in either direction after the release.
Gold has not been able to break above $5,000 even with a softer US dollar. That points to underlying weakness and limited demand for safety. For traders holding gold futures, selling covered calls can help generate income while prices consolidate.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
