Indonesia’s core inflation rate rose to 2.38% year-on-year in December, up from 2.36%. This indicates a slight increase in inflation pressures in the region. In global markets, gold remains strong, staying above $4,400 as more investors seek safe-haven assets and anticipate possible rate cuts from the Federal Reserve. At the same time, the USD/INR hit a two-week high due to the US considering higher tariffs on India.

Currency Movements

Different currencies showed varied movements, with the Japanese yen recovering slightly from a two-week low against the USD. The Australian dollar fell as the US dollar gained strength ahead of the ISM PMI report. Cryptocurrencies are also on the rise, with Bitcoin crossing the $93,000 mark. Ethereum and Ripple performed well this week as market sentiment remains positive. Economic forecasts for 2026-2027 in developed countries suggest steady growth, following resilience in the past years. This positive outlook relies on ongoing support from various economic factors in 2025. In trading for 2026, we focus on the best forex brokers—those with low spreads and those specializing in niche markets. We analyze different brokers and platforms based on their features and regional advantages.

Geopolitical Tensions

Recent US military actions in Venezuela have created considerable uncertainty in the markets, leading to a flight towards safety. This situation is reflected in the strength of the US Dollar, which is rising against many currencies. Geopolitical tensions are currently driving short-term trading decisions. We expect continued pressure on currency pairs like EUR/USD, which risks breaching key technical support levels. The Dollar Index (DXY) has surged past 108, a level last seen during market volatility in the third quarter of 2025. This trend suggests that shorting the Euro and Pound against the Dollar could be a smart strategy. Gold’s situation is more complex, as it climbed above $4,400 even with a strong dollar. This indicates that demand for safe havens is currently outweighing typical currency correlations. Speculation about Federal Reserve rate cuts is also boosting support, with derivatives now pricing an 85% chance of a cut by March. Given the high uncertainty, we find long volatility strategies appealing. Buying options, such as puts on equity indices or calls on gold, allows for defined risk while capturing potential large moves. The VIX index, which measures expected market volatility, rose 15% last week, highlighting market anxiety. The small rise in Indonesia’s core inflation to 2.38% might seem minor, but it comes at a challenging time for emerging markets. A stronger US dollar often pressures economies with foreign-denominated debt, making their assets less appealing. This suggests caution for long positions in emerging market currencies, like the Indonesian Rupiah. The crypto market is currently seeing a speculative boom, with Bitcoin surpassing $93,000 due to news from Venezuela. This rally has reportedly closed over $500 million in short positions, but it is highly influenced by news and remains unpredictable. Traders should treat this as a high-risk momentum play, distinct from broader macroeconomic trends. Create your live VT Markets account and start trading now.

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