In December, the U.S. Consumer Price Index (CPI) without food and energy rose by 0.2%. This was lower than the expected 0.3%. This small increase has sparked discussions about how inflation data is affecting various financial markets. Gold prices are skyrocketing, reaching over $4,630 per troy ounce, even as the U.S. dollar strengthens after the CPI report. Other currency pairs, like EUR/USD and GBP/USD, are also showing fluctuations in reaction to this economic data.

Cryptocurrency Market Trends

Privacy coins in the cryptocurrency market are growing significantly, with predictions of continued rise by 2025, in part due to new regulations like the GENIUS Act. At the same time, XRP is stabilizing above $2.00 as on-chain and derivatives activity remains steady. The Federal Reserve is facing increasing scrutiny. Reports reveal that the Department of Justice has issued subpoenas to the Federal Reserve, adding to ongoing challenges. Forex traders are actively seeking brokers that offer the best conditions. The industry expects brokers to adapt and provide improved tools and conditions by 2026. The softer December core inflation figure of 0.2% shifts the outlook for the coming weeks. After experiencing higher inflation rates in 2025, this slowdown suggests the Federal Reserve might not need to raise interest rates aggressively. Traders should consider derivatives linked to interest rates, such as options on SOFR futures, to prepare for a less aggressive central bank approach.

Impact of Institutional Risk

The political pressure from the Department of Justice’s subpoenas creates uncertainty for the Federal Reserve. This institutional risk often leads to increased market volatility, reflected in the VIX, which measures market fear and recently rose above 20 for the first time since October 2025. Such an environment benefits traders who use options to profit from rising price swings rather than a specific direction. The current activity in the gold market is a key signal for traders. With gold reaching a new record high of $4,630 an ounce despite a strong U.S. dollar, there is a clear move towards safety. Using call options on gold futures or ETFs can provide leveraged exposure to this upward trend, which seems fueled by concerns beyond inflation. In the currency markets, the Japanese yen has dropped to its lowest level since mid-2024 amid election discussions, highlighting the influence of specific political factors. For major pairs like EUR/USD and GBP/USD, the mixed signals from soft inflation but a strong dollar create confusion. This suggests that buying volatility through options strategies, such as straddles, might be wiser than trying to predict a clear direction in the short term. Create your live VT Markets account and start trading now.

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