South Korea’s central bank has chosen to keep the interest rate steady at 2.5%. This decision was expected and indicates a stable approach to monetary policy. The US Dollar Index has risen, moving above 99.00 after strong retail sales in the US. Meanwhile, gold prices have fallen in both India and Malaysia.

Foreign Exchange Market

The EUR/USD exchange rate has dropped below 1.1650 as strong US economic data hints that the Federal Reserve may keep interest rates unchanged. The GBP/USD rate remains stable, trading near the nine-day EMA level around 1.3450. Gold is now priced around $4,600 after a decline from its record high of $4,643 in the previous session. This drop is due to the strong US economic data suggesting the Federal Reserve will maintain its interest rate policy. In the cryptocurrency sector, Dash, Internet Computer, and Pump.fun are on the rise. These assets have seen double-digit growth recently, showing a positive trend. Hyperliquid is gaining strength, trading above $26.00, backed by increased activity on the blockchain. The derivatives market is also boosting this momentum.

US Economic Outlook

The US Federal Reserve is likely to keep interest rates steady for a while longer, given the robust economic data from late 2025. The December jobs report showed stronger-than-expected payrolls, and core inflation remains higher than the Fed’s target at about 3.5%. This environment supports the US Dollar’s strength against other currencies. The difference in policy between the solid Fed and other central banks, like the European Central Bank which started easing last year, pressures currency pairs like EUR/USD. Currently, the Euro is trading below 1.1650, which may lead traders to consider buying put options on the Euro in anticipation of further declines. Gold is under pressure from a strong dollar and high interest rates, retreating from recent record highs. With the Fed Funds rate steady at 5.25%, holding non-yielding assets like gold is costly. Selling covered calls or using bearish option strategies could be sensible if we expect gold to stabilize around the $4,600 mark. We also need to prepare for potential market changes, as Federal Reserve Chairman Jerome Powell’s term ends this year, creating some uncertainty in leadership. This situation is reminiscent of mid-2023, when markets reacted strongly to any data that contradicted the central bank’s narrative. Using options to hedge against possible volatility spikes, such as buying VIX calls, could be a wise approach in the coming weeks. Create your live VT Markets account and start trading now.

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