The Japanese trade balance showed a surplus of ¥3,137.8 billion in November, an increase from ¥2,476.4 billion. The Australian dollar has lost some of its recent gains, while the NZD/USD climbed close to 0.5800 after good news in business confidence.

The Japanese Yen and Bank of Japan

The AUD/JPY continued its rise to the mid-106s, while the Japanese yen reached a one-year low against the USD due to uncertainty about the Bank of Japan. The USD/CAD remains under 1.3900 as higher oil prices help the Canadian dollar. Gold stays around $4,600, with eyes now on the US CPI data. Cryptocurrencies like Story, MYX Finance, and Dash have bounced back, approaching key resistance levels with impressive gains. The forex market remains stable with major currency pairs. EUR/USD is above 1.1650, and GBP/USD is around 1.3475.

Geopolitical Risks and Commodity Prices

Geopolitical tensions are driving WTI oil prices higher. Meanwhile, Monero has reached nearly $600, boosted by interest in privacy coins. FXStreet reminds readers that their content carries risks. It’s important to do your research before making any financial choices. Errors and omissions are not the responsibility of the provider. Political pressure on the Federal Reserve is creating market uncertainty, which is ideal for derivative plays. Recently, the VIX, a measure of expected volatility, surged over 25% last week, reaching a six-month high of 28.5. This situation resembles the choppy conditions seen before the 2024 elections, indicating elevated options premiums. With gold testing record highs above $4,600, traders are purchasing call options ahead of the US CPI report. Last quarter’s core CPI reading surprised many at 5.8%, and a similar high could push gold towards $4,700. We are preparing for potential volatility spikes using long straddles to benefit from significant movements in either direction. The ongoing investigation into the Fed is putting pressure on the US Dollar. Fed funds futures now show only a 15% chance of a rate hike in the first quarter, down from over 60% a month ago. This makes long call positions on pairs like EUR/USD and GBP/USD appealing, especially with strike prices above 1.1700 and 1.3550. The weakness of the Japanese Yen is clear, as political uncertainty overshadows strong economic data like November’s considerable trade surplus. Recent CFTC data reveals a 22% increase in speculative net short positions on the Yen since December 2025. This momentum suggests that buying calls on USD/JPY or AUD/JPY could be a solid strategy for the upcoming weeks. Rising geopolitical tensions are keeping WTI crude futures above $60, which supports the Canadian dollar. This connection has tightened significantly over the past year, as a similar oil price increase in mid-2025 pushed USD/CAD below 1.3700. Traders might want to consider buying put options on USD/CAD to benefit from the ongoing strength in the energy sector. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now