The Personal Consumption Expenditures Price Index in the United States rose by 0.2% in November, matching forecasts. The core inflation rate reached 2.8%, also in line with expectations, indicating steady price levels.

Global Market Movements

Different markets reacted to global trade and geopolitical developments. The EUR/USD pair rose, boosted by a weaker US Dollar and reduced EU-US trade tensions, reaching highs of 1.1750. At the same time, the GBP/USD approached two-week highs under pressure from the US Dollar. Gold is nearing record levels, approaching $4,900 per troy ounce, thanks to easing geopolitical tensions. Bitcoin slightly surpassed $90,000, while Ethereum stayed around $3,000 amid strong ETF selling. Meanwhile, Ripple (XRP) maintained a position above $1.90, despite cautious retail sentiment. In geopolitical news, a proposed NATO tariff increase faced pushback, easing previous escalation concerns. The financial services sector provided insights for future brokers, detailing various trading platforms and opportunities for currencies, CFDs, and gold in 2026 across different regions. These insights aim to assist traders in making cost-effective and strategically sound investments.

Evolution of Economic Conditions

As we review the markets on January 22, 2026, we reflect on last November’s Personal Consumption Expenditures data. The report indicated core inflation at 2.8%, which weakened the dollar as it met expectations, removing fears about the Fed becoming more aggressive. The reduced trade tensions with the EU also boosted interest in riskier assets, pushing currencies like the Euro and Pound higher against the dollar. However, recent developments have changed the landscape. December’s final inflation figures, released this month, showed Core PCE unexpectedly rise to 2.9%. This suggests that inflation is stubbornly above the Federal Reserve’s target, complicating the idea that the Fed might start easing policy soon. Additionally, the latest jobs report for December revealed the economy added a strong 216,000 jobs, far exceeding predictions, keeping unemployment at a historically low rate of 3.7%. A strong job market paired with persistent inflation provides little reason for the Federal Reserve to lower interest rates in the near future. The market’s expectations for a March rate cut have dropped from over 70% last month to below 50% now. In light of these changes, we see potential in derivatives that bet against the trends from late 2025. Call options on the US Dollar Index (DXY) seem appealing, as the dollar may strengthen if the Fed takes a more hawkish stance. Consequently, put options on EUR/USD and GBP/USD could hedge against or profit from a decline from the highs we observed late last year. The rally in precious metals looks at risk. Gold’s climb toward $4,900 per ounce was driven by a weaker dollar and hopes for rate cuts, but that support now seems uncertain. Traders should consider put options on major gold ETFs to protect themselves against a possible downturn, as prolonged higher interest rates make non-yielding assets like gold less appealing. The gap between market expectations last November and the current economic reality is likely to increase market volatility. We believe buying options on volatility indexes could be a wise approach, allowing traders to benefit from the larger price fluctuations that are expected as the market adjusts to the idea that interest rates may stay higher for longer than previously anticipated. Create your live VT Markets account and start trading now.

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