EUR/USD fell for a third straight day and traded near 1.1860 in early European hours on Thursday. Traders are watching US weekly Initial Jobless Claims, followed by Friday’s US CPI inflation report. The US dollar strengthened after new US labour data lowered expectations of a March Federal Reserve rate cut. US Nonfarm Payrolls rose by 130,000 in January versus a forecast of 70,000. The Unemployment Rate edged down to 4.3% from 4.4% in December, compared with an expected 4.4%.

Fed Rate Cut Expectations Fade

The CME FedWatch tool shows markets pricing nearly a 94% chance the Fed will keep rates unchanged at its next meeting, up from 80% the previous day. In the euro area, expectations that the European Central Bank may keep rates steady through the year helped support the euro. ECB President Christine Lagarde repeated that policy decisions will be data-dependent and taken on a “meeting-by-meeting” basis. She also said the ECB will not “precommit to a particular rate path.” A Reuters poll in January found about 85% of economists expect the ECB to keep interest rates unchanged for the rest of 2026. The latest US jobs report has changed the near-term outlook. With job growth at 130,000 and unemployment at 4.3%, the market has largely dropped the idea of a March rate cut. This has helped keep the US dollar firm against the euro.

Key Eurozone Growth Signals

Focus now shifts to Friday’s US CPI report. If inflation prints above the 3.1% consensus—closer to 3.3%—it would strengthen the case for the Fed to keep rates steady. In that scenario, some traders may consider bearish positioning in EUR/USD, such as put options, to target a move below 1.1860. In the Eurozone, recent data points to softer growth. German industrial production unexpectedly fell 0.2%, supporting the view that the ECB will keep policy on hold through 2026. This policy gap—between a patient Fed and a steady ECB—remains a key driver for the pair. A similar setup played out through much of 2025, when delayed rate-cut expectations supported extended US dollar rallies. CFTC data also shows large speculators have started cutting net-long euro positions, suggesting the downside move could continue as sentiment shifts. This divergence is also pushing options markets to price larger swings in the weeks ahead. The 1.1800 level is important to watch. A clear break below this psychological support could open the door to a faster drop toward 1.1750. Another strategy some traders may consider is selling out-of-the-money call options to benefit from limited upside. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

USD/JPY fell for a fourth straight session and traded near 152.90 in Asian hours on Thursday. The pair weakened as the Japanese Yen strengthened after new verbal warnings from Tokyo. Vice Finance Minister for International Affairs Atsushi Mimura said officials are watching moves “with a high sense of urgency” and remain alert to fresh Yen swings. Finance Minister Satsuki Katayama said the government would respond to currency moves in line with the US–Japan joint statement. The Yen also got support from optimism about Prime Minister Sanae Takaichi’s expansionary fiscal plans and their impact on domestic growth. Expectations of fiscal support also lifted demand for Japanese equities. Losses in USD/JPY may be limited because the US Dollar firmed on growing expectations that the Federal Reserve will keep a cautious policy stance after stronger US labour data. The US Consumer Price Index report is due on Friday. US Nonfarm Payrolls rose by 130,000 in January after a revised 48,000 gain in December, beating forecasts of 70,000. The Unemployment Rate fell to 4.3% from 4.4%. With the drop to around 152.90, the market is showing a classic standoff: possible Japanese intervention versus a strong US dollar. Tokyo’s verbal warnings are getting louder, which is pushing the pair lower. At the same time, a cautious Fed, backed by solid economic data, is helping to support the dollar. Japan’s willingness to act should not be underestimated. The threat of intervention looks more credible this time. In spring and summer 2024, the Ministry of Finance spent more than ¥9 trillion on currency interventions to support the yen. Today’s official rhetoric suggests a similar line is being drawn, which makes short-term bets against the yen riskier. On the other hand, the US economy is still showing surprising strength, which may limit how far the pair can fall. The strong 130,000 NFP result for January 2026 continues the pattern of resilient labour-market data seen through the second half of 2025. This strength keeps pressure on the Fed to delay any rate cuts, which supports the dollar. Friday’s US CPI report is the key event that could break the deadlock. Core inflation has stayed stubborn, averaging about 3.4% in the last quarter of 2025, which has complicated the Fed’s outlook. Another strong inflation reading could easily outweigh intervention threats and send USD/JPY sharply higher. With strong forces pulling in both directions, implied volatility may rise in the coming weeks. That could make non-directional option strategies, such as buying a straddle or a strangle, a sensible choice. These strategies can profit from a large move either way, whether it comes from a surprise CPI figure or actual intervention by Japan.

here to set up a live account on VT Markets now

The Netherlands’ Consumer Price Index (CPI), not seasonally adjusted, fell to 2.4% year-on-year in January. It was 2.8% in the previous period. This means annual consumer price growth slowed in January. The change was a drop of 0.4 percentage points.

Eurozone Disinflation Outlook

The fall in Dutch inflation to 2.4% supports the wider disinflation trend across the Eurozone. Along with last week’s weaker-than-expected German industrial production data, it gives the European Central Bank (ECB) more room to consider easing monetary policy. Markets are now pricing in a more than 60% chance of a first rate cut at the June ECB meeting. To track and trade these expectations, we should watch interest rate futures. Demand for June and September 2026 Euribor futures has already increased, which suggests markets are starting to price in lower rates sooner. This looks similar to what we saw in the second half of 2025, when expectations of an end to the hiking cycle began to build. These easing expectations could weigh on the euro, especially against the US dollar, because the Federal Reserve may cut rates more slowly. EUR/USD has already slipped below 1.08 this morning on the news, which is an important technical level. We see value in buying near-term EUR/USD put options to position for a possible move toward the 1.06 area seen late last year. For equities, a more dovish ECB is generally positive, especially for growth stocks and other rate-sensitive sectors.

AEX Positioning Implications

We should consider call options on the AEX index, as Dutch multinationals often benefit from a weaker euro and lower borrowing costs. The index is already up nearly 1% in early trading, led by tech and consumer discretionary stocks. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The US Dollar Index (DXY) slipped to around 96.80 in Asian trading on Thursday, against a basket of six major currencies. US weekly Initial Jobless Claims are due later on Thursday, and the CPI inflation report is due on Friday. December Retail Sales missed forecasts on Tuesday. The index also came under pressure after comments on Monday from White House economic adviser Kevin Hassett. He said job gains could slow in the coming months because the labour force is growing more slowly and productivity is rising.

Labor Data And Fed Tone

US labour data on Wednesday supported the dollar. The Bureau of Labor Statistics reported that 130,000 jobs were added in January, above the 70,000 consensus. The Unemployment Rate fell to 4.3% from 4.4%, beating the 4.4% forecast. Cleveland Fed President Beth Hammack said the Unemployment Rate is stabilising after the January nonfarm payrolls report. Kansas City Fed President Jeff Schmid said rates should stay restrictive to keep inflation moving down. He also said there are few signs of slowing in the data. Markets now price in about a 94% chance of no Fed rate change at the next meeting, up from 80% the day before, according to CME FedWatch. This time last year, the US Dollar Index was also near 96.80, and the signals were mixed. Retail sales were weaker, but the January 2025 jobs report surprised markets with 130,000 new positions. At the time, the key question was whether the Federal Reserve would keep rates high to fight inflation.

Shifting Outlook For Rates

Today, the story looks very different. Headline inflation cooled to 2.1% in the latest January 2026 report, suggesting the inflation fight is mostly over. Now the bigger worry is slower growth, after restrictive policy was kept in place through 2025. The January 2026 jobs report was much weaker, with just 85,000 jobs added and the unemployment rate rising to 4.5%. That is a sharp shift from the stronger labour market seen a year earlier. This slowdown gives the Fed a clear reason to consider easing policy sooner. Last year, markets were about 94% certain the Fed would hold rates. Now, the CME FedWatch Tool shows a 65% chance of a rate cut by the June 2026 meeting. This shift suggests derivative traders should expect more volatility in interest rate futures and in currency pairs such as EUR/USD. Buying straddles or strangles on dollar-linked assets may be a sensible way to trade the uncertainty around when the first cut happens. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

USD/JPY has fallen for four straight days and is trading just below 153.00 in the Asian session, near a two-week low. The weekly slide came after Japanese Prime Minister Sanae Takaichi won a landslide election victory. Markets now expect the Bank of Japan to keep moving toward more rate hikes, which supports the yen. The US dollar is also under pressure as traders price in more Federal Reserve rate cuts in 2026 and worry about the Fed’s independence.

Key Levels And Trend

Price is holding just above the 200-day EMA near 152.50. The next support is the 38.2% Fibonacci retracement of the 140.02–159.35 move, around 152.00–151.95. A daily close below that area could open the door to the 50% retracement at 149.68. MACD remains bearish, with the MACD line below the signal line and below zero. The negative histogram is also widening. RSI is near 36 and still falling, which suggests downside momentum is still strong. If the pair holds above the 38.2% retracement and moves back above the 200-day EMA, selling pressure may ease. But if USD/JPY breaks and holds below the 200-day EMA, the risk of a deeper drop increases. USD/JPY remains under pressure and has struggled to get back above 153.00 for several sessions. The fundamental backdrop still points to a firmer yen, mainly because traders expect more BOJ rate hikes. That view strengthened after Prime Minister Takaichi’s landslide win in 2025. For traders, the key level is the 200-day moving average around 152.50. A clear break and close below it could trigger a sharper selloff. If you are bearish, one way to express that view is to buy put options with a strike near 152.00. This could position you for a move toward the 149.70 area while keeping risk defined.

Options Strategy And Volatility

If the 152.00–152.50 support zone holds, the selloff could pause. In that case, selling out-of-the-money puts or using a bull put spread could be a way to earn premium, based on the idea that the floor will hold. Still, with MACD and other signals leaning bearish, any rebound may be brief and could attract fresh selling. It is also worth remembering the sharp moves seen in late 2022, when USD/JPY dropped hard after policy shifts. The current setup looks similar, which means a break of long-term support could bring higher volatility. That is why defined-risk options trades may be more appealing than trading spot or futures outright. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

WTI slipped on Thursday after gaining more than 1% in the prior session. It traded near $64.80 during Asian hours. Prices came under pressure after EIA data showed US crude inventories rose by 8.53 million barrels last week. Total crude stockpiles climbed to 428.8 million barrels, about 3% below the five-year average for this time of year. Prices found some support from rising US–Iran tensions and plans for more talks, although the time and location have not been confirmed. The US President said a second aircraft carrier could be sent to the Middle East if no agreement with Iran is reached. The comments came as Washington and Tehran prepare to resume discussions. US labour data showed Nonfarm Payrolls increased by 130,000 in January, following a revised 48,000 gain in December. This beat the 70,000 forecast. The Unemployment Rate edged down to 4.3% from 4.4%. OPEC kept its demand growth forecasts unchanged: 1.38 million bpd for 2026 and 1.34 million bpd for 2027. It also left its view on non-OPEC supply unchanged. The IEA will publish its monthly report later today, which may indicate a global surplus. WTI is hovering around $85 a barrel, as the market weighs mixed supply and demand signals. This looks a lot like early 2025, when prices were stuck near $65. The latest EIA report added pressure after it showed an unexpected 4.2 million barrel rise in US crude inventories last week. In 2025, a much larger 8.53 million barrel build triggered a similar pullback, pointing to strong short-term supply. When inventories rise like this, traders may look at short-dated put options to benefit from near-term weakness. A comparable run of inventory builds also came before the price correction in Q4 2023. Even so, we think major downside may be limited by today’s geopolitical risk premium. That was also true in 2025, when US–Iran tensions helped support prices. New reports of friction in the Strait of Hormuz are a reminder that any disruption could quickly push prices higher. Because of this risk, holding some long call options can be a sensible hedge against a sudden spike. Demand also appears steady, which should help put a floor under prices, similar to what we saw a year ago. The January 2026 jobs report showed Nonfarm Payrolls rose by 195,000, while the unemployment rate held at a low 3.9%. A strong labour market supports demand for transport fuels and suggests consumption is holding up. We are also watching the major agency reports for clearer direction, as we did last year. OPEC’s latest monthly report kept its 2026 demand growth forecast at 1.2 million bpd, pointing to solid economic activity in Asia. The IEA is set to release its outlook tomorrow, and markets expect it to again warn of a possible global surplus due to rising non-OPEC supply.

here to set up a live account on VT Markets now

Silver (XAG/USD) fell in Thursday’s Asian session, easing back from Wednesday’s weekly high near $86.30. It is trading in the mid-$82.00s, down more than 2.5% on the day, and is still moving within the range seen since the start of the week. The price recently failed near the 38.2% Fibonacci retracement of the decline from the all-time high and then turned lower. The MACD remains above the Signal line and above zero, but the gap is narrowing as the histogram shrinks. The RSI is at 50.89, which also points to a neutral, range-bound market. On the 4-hour chart, the 200-period SMA is rising near $87.42, but price is still trading below it. The 38.2% retracement at $85.87 is the first key resistance level. If price breaks above it, the next upside target is the 50% retracement at $92.59. If resistance holds, price could drift down toward the 23.6% retracement at $77.56. A sustained move above the 200-period SMA would strengthen the technical outlook. Based on silver’s recent price action, the market appears to be consolidating around $82.00. The failure to push through $85.87 shows hesitation and leaves a clear trading range that options traders can use over the next few weeks. For traders looking for an upside move, the key signal is a clean, sustained break above $85.87. One possible approach is to buy call options with strikes just above this level (for example, $86 or $87) to benefit from a potential move toward $92.59. This provides upside exposure while keeping risk limited to the premium paid. At the same time, weakening upside momentum in the indicators may support bearish setups. If price stays capped below the 200-period moving average, traders could consider buying put options or using bear put spreads. These positions would gain if price drops back toward the $77.56 support area. Looking back from today’s viewpoint in February 2026, the hesitation seen in 2025 makes sense given the economic data at the time. The backdrop is different now. Recent government data shows manufacturing output rose 4.2% last quarter, which supports silver’s industrial demand. That strength suggests that similar pullbacks today may attract buyers sooner than they did then. History also shows that when industrial demand for silver is strong, technical support levels tend to hold more reliably. For example, during the 2022–2023 manufacturing expansion, silver rarely stayed below its 200-day moving average for long. This supports the case for selling cash-secured puts during deeper pullbacks in the current environment. In addition, the latest Commitment of Traders report shows large speculators increased net-long silver futures positions by 12% over the past month. That is a clear shift from the mostly neutral positioning seen through much of 2025. This improvement in institutional sentiment could help silver break through resistance levels that previously held.

here to set up a live account on VT Markets now

USD/CAD edged up to around 1.3580 in Asian trading on Thursday. The US Dollar strengthened against the Canadian Dollar after US jobs data beat expectations. Markets now turn to Friday’s US CPI inflation report. In January, the US economy added 130,000 jobs versus a 70,000 forecast. The unemployment rate dipped to 4.3% from 4.4%. These results lowered expectations for another Federal Reserve rate cut by mid-year, which supported the US Dollar.

Us Cpi In Focus

Friday’s CPI report is expected to show headline and core inflation at 2.5% year on year in January. Both are also forecast to rise 0.3% month on month. A softer print could pressure the US Dollar. Geopolitical risk could push oil prices higher. That often supports the Canadian Dollar because Canada is a major oil exporter. The Canadian Dollar is also sensitive to Bank of Canada policy, inflation, domestic growth data, and the trade balance. The Bank of Canada targets inflation within 1–3% and adjusts interest rates to manage prices. It can also use quantitative easing or tightening. Oil price changes can shift the trade balance, while data like GDP, PMIs, jobs, and sentiment can change expectations for growth and policy. With USD/CAD holding near 1.3580, the key near-term catalyst is tomorrow’s US CPI report. The strong January jobs report has already pushed markets toward a more hawkish Fed outlook. Still, October 2025 CPI surprised to the downside and triggered a sharp reversal. With consensus calling for 2.5% annual inflation, strategies that benefit from a large move either way—such as a long straddle—may be worth considering ahead of the release.

Policy Divergence And Positioning

Policy divergence between the US and Canada remains a central trading theme. The gap between US and Canadian 2-year yields has widened to more than 50 basis points. This favors the US Dollar as investors chase higher returns. Using futures to keep a core long USD/CAD position may make sense, since the Fed appears firmer than the Bank of Canada, which is still dealing with softer Canadian growth data from late 2025. Oil prices also need close monitoring because crude is a major driver of the Canadian Dollar. WTI has been trying to break above $85 per barrel on renewed Middle East supply concerns. That could limit further USD/CAD gains. Traders who are long USD/CAD may want to hedge by buying out-of-the-money put options, in case a sudden jump in oil strengthens the loonie. Volatility spikes in 2025 show how data surprises can drive large intraday swings. Implied volatility for USD/CAD weekly options has risen ahead of Friday’s CPI, suggesting the market expects a move. This can make selling far out-of-the-money options appealing for premium income, but it is best suited to traders with a high risk tolerance. Over the longer term, the stronger US economy relative to Canada points to a structurally higher USD/CAD. US GDP growth for Q4 2025 was a solid 2.9%, well above Canada’s 1.1%. Longer-dated call options can express this bullish view while limiting upfront capital. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The People’s Bank of China (PBOC) set the USD/CNY central rate for Thursday at 6.9457. This compares with the previous day’s fix of 6.9438 and a Reuters estimate of 6.9153.

Policy Signal From The Fix

The People’s Bank of China sent a clear signal with this much weaker-than-expected fixing. It suggests officials are willing—perhaps even eager—to allow a weaker yuan to support the economy. The key point today is the large gap versus the market estimate. This move also fits with recent weak data. The Caixin Manufacturing PMI for January slipped to 49.8, which points to a mild contraction. Export growth data from late 2025 also surprised to the downside, falling 1.2% year over year. A weaker currency can help by making exports cheaper and more competitive globally. The wide interest rate gap between the US and China is adding more pressure. US 10-year Treasury yields are holding near 4.2%, while China’s 10-year government bond yields are around 2.5%. That difference encourages money to flow toward the higher-yielding dollar. This backdrop supports further upside in USD/CNY. For derivatives traders, this unexpected guidance likely means higher implied volatility in the weeks ahead. Option premiums may rise as uncertainty grows around how fast the yuan could weaken. Volatility strategies like long straddles may benefit, although the market bias remains toward a weaker yuan. It is also worth remembering the turbulence after the surprise devaluation in 2015, which was followed by a long period of yuan weakness. Today’s move is more controlled, but it may still mark a policy shift that could lead to a similar trend at a slower pace. Because of that history, it is hard to treat this as a one-off.

Trade Positioning And Options Skew

As a result, positioning should lean toward further yuan weakness versus the dollar. One approach is to buy USD/CNY call options or call spreads to target a move toward 7.00. Risk reversals will be important to watch, as they may show strong demand for USD calls and confirm the market’s bearish view on CNY. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

EUR/USD could not extend its overnight rebound from 1.1835–1.1830. It traded in a tight range in Asia on Thursday. The pair was near 1.1875, little changed on the day, and close to the one-week high set on Tuesday. After Wednesday’s strong US Nonfarm Payrolls report, markets scaled back expectations for faster Federal Reserve easing. Comments from Kansas City Fed President Jeffrey Schmid also supported the dollar. He warned that more rate cuts could keep inflation higher for longer. This helped the US dollar hold above a nearly two-week low and kept pressure on EUR/USD.

Fed Cuts And Dollar Support

Markets still expect at least two 25 bps Fed cuts in 2026. However, worries about the Fed’s independence and a broadly positive risk mood reduced demand for the safe-haven dollar. The euro is supported by expectations that the European Central Bank will keep rates unchanged for the rest of the year. There is no major Eurozone data due on Thursday. US Weekly Initial Jobless Claims are due later. Focus then shifts to Friday’s US consumer inflation data. These figures are likely to shape expectations for the Fed’s rate path and drive the next move in EUR/USD. EUR/USD remains stuck in a range, and we see little reason to take a strong directional view before tomorrow’s US inflation report. Yesterday’s strong jobs report, which showed 280,000 new jobs in January, gives the Fed room to stay cautious. That is why the dollar is finding support and keeping the pair below 1.1900.

Trading Plans Around CPI

The key tension is that markets are pricing in two Fed cuts this year, while Fed officials still sound reluctant. This caution is understandable. Inflation stayed stubborn through much of 2025, with the annual rate averaging about 3.7%. That makes tomorrow’s inflation report critical to confirm whether disinflation is continuing. On the other side, the ECB appears firmly on hold, which supports the euro. Eurozone inflation was 2.9% in January, still too high to justify rate cuts. This policy gap is helping prevent a sharp drop in EUR/USD. With the pair range-bound, we should consider options strategies that can benefit from a large post-data move. Buying a strangle, for example, positions us to benefit from a volatility spike in either direction. This is a sensible approach ahead of a major data release. If tomorrow’s inflation is hotter than expected, we should be ready to buy EUR/USD puts. That would likely push back rate-cut expectations and strengthen the dollar. If inflation is softer, it would support the case for cuts, making EUR/USD calls more attractive. The market will likely react quickly to any surprise versus the expected 0.3% monthly rise. Over the next few weeks, we should be prepared for the 1.1830–1.1900 range to break. Inflation data will likely set the tone by confirming or challenging the market’s view on two cuts. We will use the market’s reaction to set a new directional bias for the rest of the quarter. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now