Colombian retail sales grew by 7.5% in November compared to last year, but this was lower than the expected 8.6%. The EUR/USD exchange rate went over 1.1800 after rumors about yen intervention influenced the US dollar. Gold prices soared to $4,988 as the dollar weakened due to these speculations.

US Dollar Trends

The US dollar fell to its lowest point in four months as traders awaited the Federal Reserve’s decision. The USD/JPY pair dropped to multi-week lows following possible intervention by the Ministry of Finance, while the GBP/USD rose to 1.3600 due to increased selling of the dollar. Gold prices approached $5,000 due to rising demand for safe-haven assets. UBS Group AG is set to offer Bitcoin and Ethereum investment services to select clients in Switzerland. In the upcoming meetings, the Federal Reserve is expected to hold off on further cuts after three reductions, while the Bank of Canada is likely to keep its rates steady. Geopolitical issues could affect these decisions, along with potential Federal Reserve chair nominations by Trump. Bitcoin’s value fell below $90,000, declining by 5% as changes in tariff policy and ETF outflows created market volatility. The market remains alert for updates about the best broker options for 2026.

Gold and Currency Markets

After a major sell-off of the US dollar in the last quarter of 2025, the key question for the coming weeks is whether this trend has run its course. The dollar’s decline, driven by suspected Japanese intervention and a stable Federal Reserve, pushed gold prices close to $5,000. Volatility is now the main focus for trading, as the market decides if the momentum from late 2025 will continue or reverse sharply. For gold traders, the rise to near $5,000 directly resulted from the dollar’s fall. Historically, gold tends to move opposite to the U.S. Dollar Index (DXY), a pattern that intensified in late 2025. With high implied volatility, using options to manage risk, like buying call spreads, is a smart way to stay exposed to potential gains while limiting losses if the dollar stabilizes. The significant movements in EUR/USD past 1.1800 and GBP/USD toward 1.3600 created crowded trades by year-end. Speculative net-long positions in euro futures reached levels not seen since 2023, indicating the risk of a sudden reversal. Traders should think about using collars to safeguard their long positions from unexpected changes in dollar sentiment. Looking back at the end of 2025, the CBOE Volatility Index (VIX) and its currency counterparts rose sharply, reflecting market uncertainty. High premiums in the options market offer opportunities for those anticipating either ongoing volatility or a return to calm. Selling volatility through strategies like iron condors might be profitable if we enter a consolidation phase. We should not overlook signs of weakness, such as the lower-than-expected Colombian retail sales figures from November. While key currencies surged, this data reminds us that the “risk-on” mood fueled by a weak dollar hasn’t helped all markets equally, suggesting that traders should exercise caution with emerging market currency pairs versus the dollar. All eyes are now on future guidance from the Federal Reserve, especially after it paused rate cuts late last year. The U.S. inflation data from December, which stood at a stubborn 3.4%, indicates that the Fed might not have much leeway to be as accommodating as the market hoped. Any suggestion that they are not planning further cuts could trigger a sharp correction in the anti-dollar trades that characterized the end of 2025. Create your live VT Markets account and start trading now.

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