The Euro and Pound have both strengthened against the US Dollar, thanks to the Federal Reserve’s possible shift towards a softer monetary policy. Meanwhile, gold prices have held steady, bouncing back to a significant level as the Dollar weakens.

Cryptocurrency Market Changes

Bitcoin is trading just under $93,000, and Ripple has reached around $2.17, suggesting changes in the cryptocurrency market. Japan’s ‘Sanaenomics’ strategy aims to boost growth and inflation by 2026, but too much stimulus could lead to unexpected results. FXStreet warns that this information comes with risks and uncertainties and should not be treated as direct financial advice. Readers are encouraged to do detailed research before making any investment choices. FXStreet and its authors are not liable for any potential losses. The latest S&P PMI reading was slightly lower than expected, hinting that economic growth might be slowing. Although growth remains strong, this report raises concerns that the Federal Reserve may soon consider easing its policies. We should brace for more market volatility in the coming weeks, as seen in the VIX index, which has increased from 14 to 17.5 recently. The US Dollar continues to decline, with the Dollar Index (DXY) dropping below the important 102 support level for the first time since early 2024. This decline stems from expectations of a more dovish Fed, and recent CFTC data shows speculators are holding short positions on the Dollar at an 18-month high. Traders might want to buy call options on currencies like the Euro or British Pound to take advantage of this dollar weakness.

Gold Market Confidence

Gold is gaining from the weak Dollar and lower interest rate expectations, rising above $4,200 an ounce. Bullish bets are increasing, with open interest in call options for January 2026 at the $4,300 and $4,400 strike prices more than doubling in the last week. This suggests strong market confidence that the rally has further to go. All eyes are now on the upcoming US employment data, which is expected to show a slowdown to 160,000 new jobs, down from last month’s 195,000. Looking back to late 2023, a series of weak job reports preceded a change in the Fed’s messaging. Using options to hedge existing positions or speculate on this report is a smart plan, given the potential for a sharp market response. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now