Germany’s real GDP growth rate increased from -0.2% to 0.1%, indicating a possible economic recovery for the country. At the same time, the Pound Sterling is losing value even as the UK sees GDP growth. The EUR/JPY is lower, reflecting concerns about intervention and the awareness of Eurozone data.

The Euro and Pound Dynamics

The EUR/USD pair remains under 1.1650 because of a strong US Dollar, bolstered by strong US data such as the Producer Price Index and Retail Sales. GBP/USD stays above 1.3400 after positive UK data, but the strong dollar is likely to dominate. Gold is around $4,600, affected by expectations that the Federal Reserve will pause rate changes. Additionally, the cryptocurrency market is down after the US Senate delays discussions on market structure following Coinbase’s exit. Jerome Powell’s time as Chair of the Federal Reserve is nearing its end, with various opinions on monetary policy emerging. Recommendations for brokers in 2026 include a variety of financial instruments, regions, and trading conditions. The information provided by FXStreet carries risks and uncertainties. Readers are urged to conduct personal research, and FXStreet and its author stress that the content is not investment advice or a solicitation.

Market Speculation and Strategies

The strong trend of the US dollar is likely to continue. Recent Producer Price Index and Retail Sales data from late 2025 exceeded expectations, which pushes back hopes for an early rate cut. The CME FedWatch tool indicates a more than 90% chance that the Fed will maintain rates through the first quarter, suggesting that call options on the U.S. Dollar Index (DXY) could be a good trading strategy. Germany’s GDP has turned slightly positive, a good sign but not enough to change the overall outlook for the Euro. With Eurozone inflation, measured by the HICP staying at 2.5% in December 2025, the European Central Bank may consider rate cuts ahead of the Fed. This difference suggests that selling EUR/USD futures on any strength or purchasing puts on the currency remains a good strategy. For the Pound Sterling, there is a balance between improving local data and the strong US dollar. While recent UK growth numbers were encouraging, inflation in services continues to be a challenge for the Bank of England, as noted in reports from late 2025. This scenario could limit GBP/USD movement, making strategies like selling straddles or strangles appealing for traders predicting a decrease in volatility. Gold is under pressure from the strong dollar and expectations that the Fed will keep rates steady. The precious metal has retreated from its record high near $4,643 as US 10-year Treasury yields rise back toward 4.3% this month. With ongoing outflows from major gold ETFs in January, traders might explore bearish positions through put options or selling futures if the price falls below critical support levels. The uncertainty regarding the conclusion of Jerome Powell’s term as Fed Chair could lead to volatility in the upcoming weeks. As the market speculates about his replacement, we may see significant movements in rate-sensitive assets. Traders should consider buying volatility through options on key currency pairs or equity indices to prepare for potential surprises. Create your live VT Markets account and start trading now.

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