The Japanese Yen and Rate Hike Speculation Japan’s Jibun Bank Services Purchasing Managers Index (PMI) fell to 51.6 in December, down from 52.5 last month. While still above 50, which indicates growth, it’s showing a slower pace. Meanwhile, the Australian dollar hit a 14-month high, even with easing inflation. The EUR/JPY gained slightly above 183.00 before the Eurozone’s consumer price index report, and EUR/USD is around 1.1700 after a bounce back. The Japanese yen is weak due to concerns over fiscal policies and uncertainty about a possible rate hike by the Bank of Japan. Silver prices dropped to about $80.00 as traders took profits, while USD/CAD remains over 1.3800 amid declining oil prices. In the cryptocurrency world, JasmyCoin saw significant gains, and both Cosmos and Bittensor continued their recovery. Cardano rose above its 50-day EMA, showing potential for a 20% breakout. The situation in Venezuela is unlikely to alter market or economic predictions. Gold prices fell due to profit-taking but are supported by geopolitical tensions and expectations for a Fed rate cut. Japanese Services Sector and Yen Strategies The drop in Japan’s services sector PMI to 51.6 shows a cooling trend that began in late 2025. The Bank of Japan held its main policy rate at -0.1% throughout last year, offering little chance for Yen strength. We recommend options strategies that could benefit from further Yen weakness, like buying puts on JPY futures. This week, the US dollar faces mixed signals, with jobs data being a significant test. Core inflation for November 2025 fell to 2.8%, raising market expectations for rate cuts, although the economy remains strong. This uncertainty makes a long volatility strategy, such as a straddle on the EUR/USD pair, appealing to capture significant movements either way. The British Pound’s stability around the 1.3500 mark against the dollar is encouraging. An upward revision to the UK’s Q3 2025 GDP growth provides solid support for Sterling as we head into the new year. Traders might consider buying call options on GBP/USD to prepare for a potential breakout above this range. Profit-taking in precious metals like Gold, after it couldn’t hold $4,500, could be seen as a good buying opportunity. Previously, Gold reached record highs over $4,400 in the last quarter of 2025, driven by geopolitical risks and hopes for central bank easing. Any major dips in the coming weeks could be a chance to build long positions for the next increase. Create your live VT Markets account and start trading now.

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