The S&P Global Services PMI in the United States was 52.5 in December, down from 52.9 the month before. This shows a slight slowdown in the service sector’s growth. In the foreign exchange market, the EUR/USD pair has dipped below 1.1700, nearing its weekly low of 1.1660, thanks to a stronger US Dollar. Meanwhile, GBP/USD is just under 1.3500 after falling from a recent three-month high.

Gold And Cryptocurrency Movements

Gold holds steady above $4,450, despite pressure from a stronger US Dollar and ongoing geopolitical tensions. Bitcoin has dropped to $93,000 after peaking at $94,789, while Ethereum and Ripple may be facing profit-taking. Market watchers are paying close attention to Venezuela due to its potential impact on global market stability. Cardano is on the rise, showing signs of a possible 20% breakout as it surpasses the 50-day EMA resistance, indicating a positive trend in the crypto market. The latest Services PMI data, which slipped to 52.5 from 52.9 in December 2025, suggests that the US economy is still growing, but the rate of growth is slowing down. This signals that we should be cautious about being overly optimistic about the market. The strong momentum we experienced toward the end of last year might be starting to face some challenges. This slowdown in the service sector contrasts with the robust labor market, which added over 215,000 jobs in last week’s employment report. Together, these factors create a mixed outlook for the Federal Reserve. While the job market remains strong, the service sector may be peaking, leading to uncertainty about future interest rates.

Economic Outlook And Market Strategies

The 10-year Treasury yield is stable around 4.1%, keeping borrowing costs high and supporting the strength of the US Dollar that characterized much of 2025. With core inflation resting around 3.2%, we do not expect the Fed to announce any rate cuts soon. This situation calls for caution, as easy monetary policy is not on the near horizon. Looking back, we experienced significant rallies in 2025, with gold nearing $4,500 and Bitcoin briefly exceeding $94,000. Given the current economic uncertainty, these assets may face profit-taking. We should prepare for a possible consolidation or pullback from those historic highs. In the coming weeks, consider buying protective puts on major market indices like the S&P 500 to safeguard against a potential downturn. For those with large equity positions, selling out-of-the-money call options might be a smart way to generate income in a market that could become more range-bound. This approach allows us to benefit from increased volatility while managing our risk. For currency traders, the strong dollar trend continues, especially against currencies with weaker economic prospects like the Euro, which struggled below 1.1700 last year. In the crypto market, the cooling pattern may persist, suggesting that volatility-based strategies, such as strangles on Bitcoin options, might be more effective than trying to predict a clear upward or downward movement. We will be looking for signs of breaking support or new catalysts for another upward move. Create your live VT Markets account and start trading now.

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