USD/CAD was steady early Monday. It found support near 1.3645 but stayed below 1.3700 in the early European session. The pair paused after last week’s pullback from the monthly high, and price action remained quiet. The US Dollar eased after hitting its strongest level since January. It then came under pressure after President Donald Trump announced new US tariffs of 15%. At the same time, weaker crude oil prices supported USD/CAD because they weighed on the commodity-linked Canadian Dollar.

Usdcad Caught Between Softer Usd And Weaker Cad

Oil fell from a more-than-six-month high as markets worried that a trade war could hurt growth and fuel demand. As a result, USD/CAD was pulled in two directions: a softer USD on one side and a weaker CAD on the other. Technically, USD/CAD has failed several times above 1.3700. This has created a bearish double-top on the daily chart. On the 4-hour chart, the 200-period Simple Moving Average is sloping down at 1.3718 and has capped rebounds. Momentum indicators also lean bearish. The MACD line is below the Signal line and the histogram is negative. The RSI is 49, slightly below the midpoint. Looking back at our early-2025 analysis, this bearish setup played out as expected. The repeated failures near 1.3700, which we highlighted at the time, signaled weakness. The “sell America” trade triggered by the 15% global tariffs pressured the US Dollar through that year, and the pair later broke down sharply.

Central Bank Divergence And Strategy Implications

In early 2025, weaker oil offered some support to USD/CAD. Since then, that has flipped. With WTI crude now holding above $85 per barrel, the commodity-linked Loonie has strong support. This is reinforced by the Bank of Canada, which is keeping its policy rate at 3.0% to fight inflation, most recently reported at 3.2% in January. The gap in central bank policy is now a key issue for traders. After the 2025 tariff shock slowed the economy, the US Federal Reserve’s key rate stands at 2.5%, which is 50 basis points below Canada’s. This spread makes the Canadian Dollar more attractive to hold and should continue to weigh on USD/CAD. Over the next few weeks, we think derivatives strategies should favor more downside in USD/CAD. Traders could consider buying put options to benefit from a move below 1.3250. Another approach is selling call spreads with a cap near 1.3400 to earn income, based on the view that upside remains limited. Create your live VT Markets account and start trading now.

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BNY’s Head of Markets Macro Strategy, Bob Savage, expects rate cuts from the Bank of Israel and the Hungarian National Bank. Inflation is falling, while both currencies remain strong. He says the Israeli shekel (ILS) and Hungarian forint (HUF) are acting like a form of tightening. The key issue is whether any easing is a short-term precaution or the start of a longer cycle. In Israel, the Bank of Israel meets on Monday, February 23. Markets expect a cut to 3.75% after a surprise move in January. Inflation has been negative month over month for three straight months and is expected to stay below 2.0%.

Israel Rate Decision And Shekel Tightening

The report says domestic activity is strong, while USDILS is near multi-year lows. It also notes that the small rate gap versus the U.S. Federal Reserve may limit capital outflows. In Hungary, the Hungarian National Bank meets on Tuesday, February 24. A 25bp cut to 6.25% is expected. January inflation pushed the annual rate to its lowest level in almost eight years. The report also calls the forint a source of tightening. It says the currency’s performance has become less tied to rate gaps versus the euro, and adds that there is room for more cuts. The article says it was created using an AI tool and reviewed by an editor.

Trading Implications For Israel And Hungary

With the Bank of Israel deciding on rates today, the expected cut to 3.75% looks like a direct response to January’s low inflation reading of 1.8% and the shekel’s ongoing strength. USD/ILS has held near 3.25, a level it has not sustained since 2021. That strength tightens financial conditions more than the central bank likely wants. Markets have largely priced in this move. Because the outcome looks predictable, implied volatility in USD/ILS options seems high. That may create an opportunity to sell near-term volatility. The central bank’s move is more likely to steady the currency than to cause a fresh shock. The small rate differential versus the U.S. Federal Reserve also supports this view, since it limits the risk of large outflows that could weaken the shekel. Attention then shifts to the Hungarian National Bank tomorrow. Markets expect a 25bp cut after inflation fell to 2.9% in January, a near eight-year low. The forint has been a major part of the story, with EUR/HUF trading around 370. That is much stronger than the levels seen in early 2025. The main question is not whether the bank cuts, but how quickly it cuts after that. Unlike Israel, Hungary faces more uncertainty about the size and speed of the easing cycle. Because of that, buying volatility may make more sense. The MNB’s guidance could surprise markets and trigger a large move in the forint. The bank also has room to cut rates more aggressively if it chooses. As a result, traders could consider buying one-month EUR/HUF straddles or strangles ahead of the announcement. This trade should benefit if the MNB signals either a faster or a slower cutting cycle than the market expects, leading to a sharp move in the exchange rate. It is a direct way to trade uncertainty around the central bank’s next steps. In 2025, strong currencies in both countries were a defining theme. They outperformed expectations, helped push inflation down, and tightened financial conditions. Now the central banks are starting to unwind that currency-led tightening. The setup points to a controlled easing in Israel, and potentially a more volatile path in Hungary. Create your live VT Markets account and start trading now.

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Silver (XAG/USD) rose 2.13% to about $86.50 in Monday’s European session. The move was supported by uncertainty over US trade policy, after a US Supreme Court ruling against President Donald Trump’s tariff approach. The court said Trump went beyond his authority by using the International Emergency Economic Powers Act (IEEPA) to justify tariffs. It blocked the so-called reciprocal tariffs and called them “illegal”.

Dollar Weakness Supports Silver

After the ruling, the US Dollar weakened. The US Dollar Index (DXY) fell 0.35% to about 97.45, which tends to support dollar-priced metals. Geopolitical risks also helped as US-Iran tensions continued over Tehran’s nuclear programme. The Wall Street Journal reported that Trump is considering a limited military strike on Iran to pressure it into a nuclear deal. Technically, silver held above the 20-day EMA at $82.78 and pushed toward the February 4 high of $92.21. Support was seen near $70.00. Meanwhile, the 14-day RSI stayed in the 40.00–60.00 range, pointing to a broader sideways trend. In 2025, silver surged to near $86 as trade policy uncertainty spiked and the US Dollar weakened. Today, conditions are very different. As of late February 2026, silver is trading at a more subdued $23.80. Many of last year’s unique geopolitical drivers have faded, so traders need a new approach. The sharp drop in the US Dollar Index seen in 2025 is no longer supporting precious metals. The DXY is now holding firm around 104.5, backed by a Federal Reserve that is keeping interest rates steady. That creates a headwind for a non-yielding asset like silver, unlike the conditions that drove prices higher last year.

Geopolitics Industrial Demand And Strategy

In 2025, intense US-Iran tensions gave silver a strong safe-haven boost. In 2026, geopolitics is less of a direct driver. With diplomacy more active in current hotspots, much of the fear premium has faded. As a result, traders need other reasons to justify long positions. The main support for silver in 2026 is strong industrial demand, which mattered less last year. The Silver Institute recently forecast that photovoltaic demand will rise another 15% this year, building on record demand for solar panels and electric vehicle manufacturing in 2025. This helps create a fundamental floor under prices, even without safe-haven buying. For derivatives traders, this points to a range-bound market. Strong industrial demand is countered by a firm dollar and steady interest rates. Strategies such as selling covered calls against physical holdings or long futures may help generate income between support at $22.00 and resistance at $25.50. Buying straddles ahead of major China industrial production releases could also be a way to trade a potential breakout from that range. Create your live VT Markets account and start trading now.

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Brent crude fell after a sharp two-day jump tied to US–Iran tensions. Deutsche Bank said part of the “weekend risk premium” was fading, even though reports still pointed to possible US strikes on Iran. The report mentioned a recent build-up of US forces in the region. It also cited the New York Times, which said Donald Trump is considering an initial targeted strike on Iran in the coming days. A larger attack could follow if Iran does not meet US nuclear demands.

Market Reaction And Risk Premium

Brent was down -1.21% at $70.85 per barrel at the time of publication. Deutsche Bank also said this was Brent’s biggest two-day rise since October 2025. Over the week, Brent gained +5.92%, including a +0.14% rise on Friday. The article said it was created with help from an artificial intelligence tool and reviewed by an editor. Brent has eased back to around $70.85/bbl, but this looks like a small pullback as traders remove weekend risk premium—not a major shift in outlook. The risk of a US strike on Iran is still keeping the market on edge. Traders should expect fast, headline-driven moves in either direction. This tension is also showing up in options. Implied volatility has risen, and the CBOE Crude Oil Volatility Index (OVX) is near 45—well above its recent average. That makes options more expensive. Protecting long physical positions with puts, or using call spreads to position for a spike, may make sense, but the upfront cost is high.

Historical Parallels And Supply Shock Risk

October 2025’s sharp two-day jump was a reminder of how quickly oil can move on geopolitical news. A similar example was the 2019 attacks on Saudi Aramco facilities, which briefly pushed prices up nearly 20%. These events highlight how exposed supply is to conflict in the region. If military action occurs now, the price reaction could be much larger than what we saw last year. The main risk remains the Strait of Hormuz. It is a critical chokepoint, and nearly 20% of global oil consumption—about 21 million barrels per day—still passes through it. Even a small disruption could quickly push prices higher, potentially taking Brent well above $85. Because of this, holding unhedged short positions in the coming weeks carries unusually high risk. Create your live VT Markets account and start trading now.

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Switzerland’s producer and import prices fell 2.2% year on year in January, down from -1.8% in the previous period. This reading shows prices are falling faster than before. It compares the index level with the same month one year earlier.

Implications For The Swiss Economy

The move to -2.2% is a clear deflationary signal for Switzerland. It supports the disinflation trend seen through 2025 and increases pressure on the Swiss National Bank (SNB). In the coming weeks, we should expect a more dovish tone from the SNB. This producer-price deflation comes after a weak growth period. In the second half of 2025, GDP growth struggled to rise above 0.4% on an annualized basis. Consumer inflation also remains low, with January 2026 at just 1.1%, well below the central bank’s target. Taken together, the case for easier policy is hard to ignore. The SNB has shown it is willing to move early, as it did with the surprise rate cut in spring 2024. Markets are now pricing in more than an 80% chance of a 25-basis-point cut at the March SNB meeting. This latest data is likely to reinforce that view. For forex traders, this strengthens the bearish case for the Swiss franc. A potential trade is to go long EUR/CHF options as policy divergence widens against a more cautious European Central Bank. EUR/CHF has been hovering near 0.9900, and it now has a plausible path back to 1.0150, a level last seen in early 2025. For equities, a weaker franc and lower borrowing costs tend to support the export-heavy Swiss Market Index (SMI). Large constituents such as Nestlé, Roche, and Novartis earn most of their revenue abroad, which boosts reported earnings in franc terms. One way to express this view is to buy SMI call options that expire after the March SNB meeting.

Rates Markets And Trade Positioning

Rate markets also suggest a straightforward setup. To position for lower rates, consider buying futures linked to the Swiss Average Rate Overnight (SARON). Current pricing for mid-2026 contracts may not fully reflect the chance of a second cut later this year if deflation persists. Create your live VT Markets account and start trading now.

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Switzerland’s producer and import prices fell by 0.2% month on month in January. This was below the forecast of a 0.1% increase. The report combines two measures: prices charged by Swiss producers and prices paid for imports. It offers a monthly snapshot of cost pressure in the supply chain.

Implications For Inflation And Policy

The unexpected drop in Swiss producer and import prices suggests inflation is cooling faster than expected. This increases pressure on the Swiss National Bank (SNB) to cut interest rates sooner. In our view, this also raises the risk of a weaker Swiss franc (CHF) in the weeks ahead. The SNB kept its policy rate at 1.50% through the final two quarters of 2025, as inflation pressures remained persistent. But this new data, together with a recent online search pointing to January 2026 CPI slowing to 1.2%, changes the outlook. The central bank now has a stronger case to loosen monetary policy. Based on this view, we think derivative traders should consider positioning for a weaker franc. One possible strategy is to buy call options on EUR/CHF, targeting a move toward 0.9800, a level last seen in late 2024. This approach limits downside risk while keeping upside exposure if the SNB shifts policy. Another option is to trade Swiss interest rate futures, especially SARON-based contracts. The market may not fully price in a rate cut at the coming March meeting. Buying these futures is a direct way to bet that short-term interest rates will fall more than investors currently expect.

Equity Market Opportunities

This backdrop may also support Swiss equities, since lower borrowing costs can help businesses. We see a potential opportunity in buying call options on the Swiss Market Index (SMI). Past easing cycles, such as the one that began in 2015, show that rate-sensitive sectors like financials and consumer discretionary often perform well. Create your live VT Markets account and start trading now.

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Market sentiment toward the Magnificent 7 and software stocks has been weak. Much of this is tied to AI concerns. For the Mag 7, investors are focused on rising capital spending. For software firms, the worry is that AI could replace parts of their products. Amazon plans to spend $200 billion on capital expenditures in 2026. That is up from $132 billion in 2025 and $83 billion in 2024. In 2025, Amazon’s operating cash flow was slightly higher than its $132 billion capex. In 2026, capex is expected to be higher than operating cash flow.

Market Performance And Upcoming Catalysts

Over the last three months, Microsoft is down 15.5%. That compares with the Mag 7 at -2.7%, the Zacks Tech sector at +1.8%, and the S&P 500 at +3.9%. Nvidia reports Q4 results after the market closes on Wednesday, February 25th. Nvidia revenue was $16.67 billion in 2021 and is expected to reach $312 billion next year (fiscal year ending January 2027). For Q4, estimates call for EPS of $1.52 on $65.56 billion in revenue. That would be up 70.8% for EPS and 66.7% for revenue year over year. For Mag 7 Q4, earnings are expected to rise 24.2% on 18.9% higher revenue. This follows 2025 Q3 growth of 28.3% in earnings and 18.1% in revenue. The group is forecast to produce 25.5% of S&P 500 earnings in 2025, up from 23.2% in 2024 and 18.3% in 2023. The group makes up 32.7% of the index by weight; Technology is 41.8% and Finance is 12.6%. By Friday, February 20th, 427 S&P 500 firms (85.4%) had reported results. Earnings were up 12.8% on 8.8% higher revenue. Of those companies, 75.2% beat EPS estimates and 72.4% beat revenue estimates. More than 700 companies report this week, including 53 index members.

Volatility And Investor Positioning

With Nvidia reporting in two days, markets are tense. There is also a clear split inside the Magnificent 7. Heavy AI spending at companies like Microsoft and Amazon is worrying investors, and that has driven their recent underperformance. In this setting, Nvidia’s results on February 25th are a key event for the whole tech sector. Implied volatility for Nvidia options expiring this week has jumped above 120%. This suggests traders expect a very large move up or down. Strategies like straddles or strangles may benefit from big moves, but premiums are high, so these trades are expensive. The VIX, a common measure of market fear, has risen from 14 to above 18 over the last two weeks, showing broader anxiety. The main issue is still the size of AI infrastructure spending. Investors are worried about how long it will take to earn a return on these projects. Last week’s hotter-than-expected Producer Price Index (PPI) added pressure, because higher financing costs make multi-billion dollar projects even harder to justify. This echoes the late 1990s, when companies spent heavily on infrastructure well before profits showed up. Because option premiums are expensive, some traders may prefer vertical spreads to limit risk and reduce upfront cost. If you are bearish on the biggest spenders, put spreads on an index like QQQ could help hedge against a negative move that spreads from the Magnificent 7. The put-to-call ratio on the tech-heavy index has risen to 1.15, which points to a more defensive stance among traders. Even if Nvidia reports strong results, it may not ease deeper worries about profits at its biggest customers. Recent downward revisions to Q1 2026 earnings estimates suggest concerns are already moving past last quarter’s results. As a result, any rally after a positive Nvidia surprise may be seen as a chance to add hedges against ongoing capex risks. Create your live VT Markets account and start trading now.

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GBP/JPY slipped 0.11% to around 208.80 in European trading on Monday. The Japanese Yen strengthened after the US Supreme Court ruled against President Donald Trump’s tariff policy. That decision increased demand for safe-haven assets. The Yen also rose as markets priced in a possible Bank of Japan rate hike in the near term. The Pound stayed mostly firm after strong UK data.

February 2025 Market Backdrop

UK Retail Sales for January rose 1.8% month-on-month, up from 0.4% in December. The flash S&P Global UK Composite PMI for February climbed to 53.9 from 53.7, beating forecasts of 53.4. Traders are watching comments from Bank of England MPC member Alan Taylor, who is speaking in a fireside chat at Deutsche Bank. Taylor was one of four members who voted for a 25-basis-point rate cut. On the chart, price is below the falling 20-day EMA at 210.18. The 14-day RSI moved back above 40.00 after trading in the 20.00–40.00 range. If the pair breaks below the 17 February low of 207.24, it could test the 5 December low of 206.20. The analysis note says an AI tool helped write the technical section.

Options Strategies Considered

Looking back to February 2025, GBP/JPY was pulled in two directions. The Yen strengthened on safe-haven demand after the US Supreme Court’s tariff ruling, while strong UK data supported the Pound. The UK Composite PMI reading of 53.9 stood out, as it extended a late-2024 pattern of resilience in the services sector. The main support for the Yen was the growing belief that the Bank of Japan (BoJ) would shift policy. Markets were pricing in a high chance the BoJ would end its negative interest rate policy by April 2025. This view was reinforced by Tokyo core inflation staying above the 2% target for more than a year. These expectations helped push GBP/JPY lower. At the same time, solid UK retail sales and PMI data helped limit the downside and reduced the risk of a sharper drop. Even so, caution was warranted ahead of comments from the dovish Alan Taylor. Any signal of more rate cuts could have weakened the Pound and matched the bearish technical setup. With the falling 20-day moving average acting as resistance, selling rallies toward 210.00 looked attractive. For derivatives traders, a simple approach was to buy put options with a strike near 207.00, expiring in late March 2025. This positioned traders for a move toward 206.20 while keeping the maximum risk clear. Another approach was a bear put spread to reduce upfront cost, which made sense given the Pound’s underlying support. This meant buying a put around 208.00 and selling a lower-strike put, such as 206.50. The goal was to profit from a moderate decline in the pair over the following weeks. Create your live VT Markets account and start trading now.

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WTI, the US crude oil benchmark, traded near $65.70 in early European trading on Monday, slipping below $66.00. Prices fell as US-Iran talks are set to resume later this week, and as markets await the American Petroleum Institute (API) report due on Tuesday. The next round of negotiations is expected in Geneva on Thursday. Iran’s Foreign Minister Abbas Araghchi said on Sunday that a diplomatic solution is likely and that a deal is within reach.

Geopolitical Risk And Supply Disruption

Traders also pointed to rising tensions between the two countries and the risk of supply disruptions. US President Donald Trump said last week that “bad things” would happen to Iran if there is no deal on Iran’s nuclear program. Tariffs also added to concerns about weaker oil demand. The US Supreme Court ruled Trump’s broad tariffs illegal. Trump then introduced a new 15% tariff on Saturday, saying on Truth Social that it would take effect immediately and that more tariffs would follow. As of February 23, 2026, the market shows a familiar pattern in West Texas Intermediate, now trading around $78 a barrel. The same dynamic seen in 2025—geopolitical supply risks clashing with economic demand worries—is playing out again. This mix is driving sharp swings in price and creating opportunities in derivatives markets. On the supply side, traders are watching renewed tensions in the Strait of Hormuz, especially after last month’s drone incident. Nearly one-fifth of the world’s oil supply moves through this chokepoint, so any disruption could push prices sharply higher. This risk can make call options appealing, either as a hedge or as a way to position for escalation.

Demand Headwinds And Volatility Strategy

At the same time, fears of slower global demand remain a major headwind. Recent data showed Eurozone GDP growth of just 0.1% in Q4 2025. In the US, the Federal Reserve’s preferred inflation measure for January 2026 came in a bit higher than expected at 2.8%, suggesting interest rates may stay higher for longer. Weaker consumption could limit upside in oil and can support strategies such as buying put options. With these forces pulling in opposite directions, implied volatility has been rising. That makes strategies that benefit from large moves—such as long straddles—worth considering. Prices could break strongly in either direction in the coming weeks. Weekly API and EIA inventory reports remain key short-term catalysts and may trigger sharp, tradable moves. Create your live VT Markets account and start trading now.

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Global equity markets were mostly steady in a holiday-shortened week. In Europe, the Euro Stoxx 50 and the UK FTSE 100 both hit record highs. The S&P 500 was on track to finish the week slightly higher. HSBC Asset Management said sector rotation is still underway. Money is moving out of expensive technology shares and into more cyclical areas such as Industrials and Materials. The update also noted mixed signals across sectors, with parts of the market behaving as if they are in different stages of the economic cycle.

Sector Performance So Far In 2026

So far in 2026, Energy is up 19% and Materials are up 16%, with Industrials also performing well. Defensive sectors have risen too, with Consumer Staples up 11% and Utilities up 9%. Small-cap stocks are up 9% year to date. The article highlights that cyclical strength, defensive gains, and rising small caps are happening at the same time. With the broader market calm, the main story is the rotation between sectors. We are seeing strength in cyclical areas like Energy and in defensive areas like Consumer Staples. This suggests the market does not have a clear view of where the economic cycle is headed. The latest CPI reading was 3.2%, slightly above forecasts. This supports the idea that inflation is still sticky, as seen in late 2025. That helps explain the move into Materials, which can act as an inflation hedge. At the same time, January’s job report was solid at 210,000. However, the manufacturing PMI fell to 49.8, just below the level that signals expansion, which helps explain some of the defensive positioning.

Positioning For Rotation

In this environment, a classic pairs trade may make sense in the coming weeks. Consider going long futures or call options on industrial or materials ETFs. At the same time, consider shorting the expensive technology sector or buying puts on it to hedge and to benefit from the rotation. The VIX, which tracks S&P 500 volatility, has stayed low around 14. But that can hide the choppiness under the surface. This suggests broad market protection may be less efficient. Instead, options tied to individual sectors may do a better job capturing the sharper moves within the market. From a 2026 viewpoint, this feels similar to the slowdown fears we saw in mid-2025. It also resembles the sharper rotation out of high-multiple tech in 2022, when the Fed started tightening. The key lesson is that rotations like this can last longer than many expect. Create your live VT Markets account and start trading now.

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