The US switched from reciprocal IEEPA tariffs to a flat Section 122 surcharge after a Supreme Court ruling. President Donald Trump set the surcharge at 10%, then raised it to 15% on 22 February. This shift lowers effective tariff rates for several Asian exporters. Under the new 15% rate, China and India see tariff cuts of 7.1 points and 5.6 points, respectively.

Sector Tariff Relief Concentrated

The largest drops in tariff impact are in sectors that were hit hardest by the IEEPA measures. These include apparel, toys, games and sport, furniture, lighting, electrical machinery, and aircraft. These product groups also match areas where Asian producers control a large share of global supply. Because the gap between the old IEEPA tariffs and the new 15% surcharge is wider, the tariff burden on exports in these categories falls. Now that the move to a flat 15% Section 122 tariff is in place, the early uncertainty has faded. The focus should be on the clear winners of this policy, which delivered meaningful relief versus the prior IEEPA tariffs. Data from the past twelve months supports this, showing stronger export competitiveness for key Asian economies. For traders, this points to derivatives tied to Chinese and Indian equities that gained the most from the change. China’s Caixin Manufacturing PMI has held up, staying above 50 for much of the last year, which signals expansion. Tariff incidence for these countries has fallen, improving the outlook for export-focused companies.

Market and Derivatives Implications

This matters most in areas like apparel, toys, and electrical machinery, where Asian producers have high market share. During 2025, ETFs focused on Asian industrials and consumer discretionary sectors regularly beat broader indices. Implied volatility in these names has likely eased since the policy change, which can make options strategies such as selling puts on industry leaders more attractive. We are closely watching U.S. retail sales for signs of weaker demand, since a flat 15% tariff can still push up consumer prices. The latest U.S. jobs report also showed wage growth cooling slightly to 3.9% year over year, which may limit consumer spending. That is a key risk for the ongoing profitability of Asian exporters. The improved trade setup may also open opportunities in currency markets. A steadier export outlook can support currencies such as the Indian rupee and Vietnamese dong. Derivative positions on INR or VND versus the U.S. dollar may be used to hedge, or to express a view that this strength continues. Create your live VT Markets account and start trading now.

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Silver traded near $86.50 on Monday, up 2.35% on the day. Demand for safe-haven assets rose as US politics and trade policy became more uncertain. The US Supreme Court ruled that Donald Trump went beyond his authority when he used the International Emergency Economic Powers Act to impose “reciprocal” tariffs. The court found the tariffs illegal. Trump criticised the decision and announced a temporary 15% global tariff on imports, with the option to add more measures later. The US Dollar Index (DXY) fell 0.35% to around 97.45. A weaker US Dollar often supports Silver prices because Silver is priced in dollars. Markets also expect the Federal Reserve to cut rates in the coming months, even though inflation remains high. Rate-cut expectations can boost demand for non-yielding assets like Silver. Tensions in the Middle East also increased risk aversion. The Wall Street Journal reported that the US President is considering a limited military strike on Iran to influence talks over Iran’s nuclear programme. Given the uncertainty and Silver’s sharp move to $86.50, we expect higher volatility to create trading opportunities in the coming weeks. The CBOE Volatility Index (VIX) has already jumped above 28, showing broad market anxiety about the new 15% global tariff. This backdrop can suit options strategies, such as buying calls to target more upside or using spreads to limit risk. Expected Fed easing remains a major support for precious metals. The CME FedWatch Tool now shows a 75% chance of a rate cut at the March meeting. This is a major shift from the more hawkish tone seen through much of 2025. Lower interest rates reduce the cost of holding non-yielding assets like Silver, which can make Silver more attractive. A weaker US dollar near 97.45 also offers direct support for Silver. This move is being reinforced by geopolitical risk. Brent crude recently jumped more than 6% to $95 a barrel on reports of possible military action against Iran. We expect these forces to stay in place, making long Silver versus the Dollar an appealing trade. On relative value, the gold-to-silver ratio has dropped from the 2025 highs above 85. Even so, at about 70 it is still above the long-term average. That suggests Silver may have more room to catch up with Gold. If the rally in precious metals continues, Silver could outperform Gold. We also need to watch how tariffs affect Silver’s industrial demand, which accounts for more than half of total consumption. The latest global manufacturing PMI for February showed a slight contraction. That points to a possible trade slowdown, which could weigh on demand. If industrial activity weakens further, it could limit the rally that is currently being driven by safe-haven buying.

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The Pound Sterling fell against major peers in European trading on Monday after dovish comments on interest rates from Bank of England MPC member Alan Taylor at a Deutsche Bank event in London. Taylor voted for a 25 basis point rate cut at the policy meeting earlier this month. Taylor pointed to worries about UK growth and said inflation pressures are moving back toward the Bank’s 2% target. He said this is consistent with expectations that service-price inflation will cool this year as wage growth slows.

BoE Signals Further Easing

He said risks are shifting toward lower inflation and higher unemployment. He added that the BoE could make “two-three” more rate cuts before reaching a theoretical neutral level. Against the US Dollar, Sterling gave up most of its early gains and was nearly flat near 1.3485. Earlier, GBP/USD rose as the US Dollar slipped after a US Supreme Court ruling against President Donald Trump’s tariff policy. Later in European trading, the US Dollar Index (DXY) erased its early losses. Markets expect Trump may have other options to keep trade deals in place. When we heard similar dovish remarks from Alan Taylor around this time last year in 2025, it was a clear signal of where the Bank of England was headed. Those comments were an early hint of the two rate cuts that followed in the second half of that year. The shift was a direct response to the slowing growth Taylor warned about.

Trading Positioning For GBPUSD

Those concerns now look well-founded. The latest Office for National Statistics (ONS) data shows UK inflation at 1.8%, slightly below the BoE’s target. GDP growth in the final quarter of 2025 was just 0.1%, reinforcing the weakness that drove the earlier rate cuts. Since then, GBP/USD has moved down from around 1.3485 to a trading range near 1.3150. Against this backdrop, the forward market is pricing in better than a 60% chance of at least one more rate cut by mid-year. That points to continued downside pressure on Sterling in the weeks ahead. Derivatives traders may want to consider strategies that can benefit from either a steady slide or a sharper drop in the currency. For traders expecting further weakness, buying GBP/USD put options with second-quarter expiries offers a straightforward, risk-defined way to position for another rate cut. Implied volatility in Sterling options is currently below its 12-month average, which makes these positions relatively cheaper. That creates an opportunity to gain downside exposure before the market fully prices in more aggressive BoE action. Meanwhile, the US Dollar continues to look resilient. The latest January non-farm payrolls report showed the US economy added 210,000 jobs, keeping the Federal Reserve on hold. This divergence—a dovish BoE versus a steady Fed—supports a bearish outlook for GBP/USD. Create your live VT Markets account and start trading now.

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Alan Taylor said UK services inflation has eased, but not as fast or as fully as expected. He added that recent services CPI readings have been mildly worrying. He pointed to weaker forecasts for the output gap and unemployment. He also warned that weaker-than-expected productivity growth could be a risk. He said job forecasts are becoming more pessimistic, with risks shifting toward lower inflation and higher unemployment.

Services Inflation And Rate Cut Outlook

Taylor said he expects services price inflation to return to normal this year, in line with wage growth. He added that he is more confident inflation is moving back to normal at a reasonable pace. He said there may be 2–3 interest rate cuts left before the base rate reaches a theoretical neutral level. After the comments, GBP/USD rose 0.17% to near 1.3500, after giving back earlier gains. The Bank of England sets monetary policy with a 2% inflation target. It mainly does this by changing its base rate, which affects borrowing costs and the Pound. Higher rates usually support Sterling, while lower rates can weaken it. Quantitative easing (QE) means creating money to buy assets such as government bonds or AAA-rated corporate bonds, which often weakens Sterling. Quantitative tightening (QT) does the opposite by stopping purchases and reinvestment of maturing bonds, which tends to support Sterling.

Implications For Sterling And Markets

The Bank of England is signalling that rate cuts are likely, with talk of two or three cuts this year. Services inflation is still a concern, most recently reported at 4.9% in January, but the broader outlook is changing. The Monetary Policy Committee looks increasingly focused on the risk of higher unemployment and weaker growth. This may limit further gains in Pound Sterling. From its current level near 1.3500 against the dollar, it becomes harder to make the case for a sustained rally. In 2025, the Pound was supported by the Bank holding rates steady, but the possibility of cuts in 2026 could add downward pressure. Derivatives traders may look for strategies that benefit from, or hedge against, a weaker Pound in the months ahead. The Bank’s mixed message—sticky inflation alongside a softer labour market—could also raise short-term volatility. The UK unemployment rate has already ticked up to 4.5% in the latest report, which supports the more pessimistic forecasts. This kind of backdrop can suit options traders who use straddles to trade expected swings around key data releases. We may also see changes in the UK government bond market, as these comments reinforce expectations for a steeper yield curve. If rate cuts look more likely, short-term yields will likely fall. Traders can express this view through interest rate futures. This would differ from the flatter curve seen through much of last year, when markets expected rates to stay higher for longer. Create your live VT Markets account and start trading now.

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NZD/USD traded just below 0.6000 after New Zealand’s Q4 retail sales volumes beat forecasts. Retail sales volume rose 0.9% quarter-on-quarter, versus a 0.6% consensus, after 1.9% growth in Q3. The rise was driven by spending on discretionary items. Even so, the economy is still seen as having spare capacity and a negative output gap.

Market Pricing Versus Central Bank Guidance

Markets are pricing in a 25 basis point rate increase to 2.50% by year-end. The Reserve Bank of New Zealand (RBNZ) expects the policy rate to stay at 2.25% through late 2026. The report said there is limited room for markets to reprice toward a near-term rate hike. It also said the article was produced using an AI tool and reviewed by an editor. Last year, stronger retail sales did not persuade the RBNZ to signal rate hikes. NZD/USD did firm, but it stayed capped below 0.6000. The RBNZ pointed to clear spare capacity in the economy, which kept it on hold. That cautious 2025 stance has proven right. The Official Cash Rate has remained at 2.25% into the new year. Data from the December 2025 quarter also showed inflation cooling a bit faster than expected, with annualized inflation at 3.8%. This supports the view that the RBNZ has no urgent need to tighten policy.

Options Strategy In A Range Bound Market

This ongoing gap between market expectations and central bank guidance suggests implied volatility in NZD/USD options should remain low. The pair has traded in a tight range for months. That has frustrated trend-followers, but it can benefit option sellers. In a range-bound market, options are less likely to finish in-the-money, which supports strategies that profit from time decay. If upside in NZD/USD remains limited, traders may consider selling out-of-the-money call options with strike prices above 0.6050. This collects premium and works as long as the pair does not rally sharply in the coming weeks. With no clear catalyst for a rate hike, a sustained break higher looks less likely. Create your live VT Markets account and start trading now.

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Roundhill Magnificent Seven ETF (MAGS) offers equal‑weight exposure to seven US technology companies: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. It launched in April 2023. On the weekly Elliott Wave chart, the rally from the all‑time low ended as wave (I) at $58.69 in December 2024. The advance unfolded as a five‑wave impulse.

Weekly Elliott Wave Roadmap

A wave (II) drop followed and reached $39 in April 2025. From that low, price rallied in wave (III) as a nested sequence and completed wave I at $69.14. The analysis says MAGS is now in a pullback that should correct the move from the April 2025 low. It describes the correction as a 3‑, 7‑, or 11‑swing pattern, followed by another push higher. On the daily chart, the rally from April 2025 also ended at $69.14 as wave I. Wave II is labelled as a double‑three correction, with wave ((W)) ending at $60.13. Wave ((X)) is now developing after the October 29, 2025 high. The $39 level is the key pivot. The pullback is expected to look for support through a 7‑swing sequence.

Strategy And Risk Considerations

This review follows the Elliott Wave roadmap projected late last year. That roadmap suggested MAGS was due for a correction after topping at $69.14. It called for a pullback to correct the strong rally from the April 2025 low at $39. The expected setup was a complex, multi‑swing correction before the main uptrend resumed. Since then, the correction has developed as expected. MAGS fell through Q4 2025 and found a temporary base near $56 in January 2026. The decline intensified after the Federal Reserve struck a more hawkish tone in December 2025, signaling fewer rate cuts for 2026 than markets had expected—similar to the volatility seen during 2023. As of February 23, 2026, the ETF is trading near $59 after a weak rebound. Over the next few weeks, this supports a defensive (or mildly bearish) stance. The corrective wave ((X)) bounce may be finished, which could set up another leg lower. Traders could consider April 2026 puts around the $57 strike, aiming for a retest of the January lows. This trade benefits if MAGS falls before the longer‑term uptrend resumes. Volatility has also increased. The VIX is near 19, up from an average near 14 in the second half of 2025. Higher volatility makes options more expensive, but it also reflects uncertainty—often seen late in a correction. If you expect a sharp move but are unsure of direction, an at‑the‑money long straddle could benefit from a breakout out of the current range. Even so, the long‑term view stays bullish as long as the April 2025 pivot at $39 holds. Traders who share that view could consider selling cash‑secured puts well below the market, such as the May 2026 $52.50 puts. This collects premium now, with the goal of buying shares at a large discount if the correction deepens. It may also make sense to hedge long‑term big‑tech exposure given the current setup. Recent reports point to increased regulatory scrutiny on two of the ETF’s largest holdings, adding headline risk. Buying protective puts that expire in late spring can offer relatively low‑cost protection against a sudden market drop driven by news. Create your live VT Markets account and start trading now.

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US Q4 GDP growth slowed to 1.4% (quarter-on-quarter, annualised) and 2.2% (year-on-year). The slowdown was mainly due to weaker government spending after the October/November shutdown. Government spending fell 5.1% (quarter-on-quarter, annualised), which shaved 0.9 percentage points off headline GDP. Core GDP (PDFP)—which excludes government, net exports, and inventories—rose 2.4% in Q4, down from 2.9% in both Q2 and Q3.

Consumer Spending And Inflation Signals

Consumer spending rose 2.4% (quarter-on-quarter, annualised) in Q4, down from 3.5% in Q3. Spending on goods edged lower, while spending on services rose 3.4%. In December, core PCE inflation increased 0.36% month-on-month, and headline PCE also rose 0.36%. The cited forecasts were 0.25% for core and 0.27% for headline, with a 0.3% consensus for both. TD Securities expects the data to normalise after November’s softer readings. Based on CPI data, it forecasts January core PCE at 0.19% and headline PCE at 0.12%. The note also points to slower spending early in the year, ahead of tax refunds. In hindsight, the early-2025 view that the Q4 2024 slowdown was temporary was mostly right. Government spending did rebound in Q1 2025, which helped avoid a deeper downturn. Over the past year, the economy has shown underlying strength, even with some weak spots. That report also flagged a cooling US consumer, and that trend has become more persistent. The unemployment rate has climbed gradually to 4.1%, and the latest Q4 2025 GDP report shows growth at a modest 2.5%. This slower consumer backdrop is a key reason markets are now leaning toward a shift in monetary policy. The earlier warning not to overreact to the upside surprise in core PCE also proved sensible. Inflation cooled through 2025, but it has stayed sticky. With January 2026 core PCE still at 2.8% year-on-year, the Fed remains cautious. Even so, slower growth has led derivatives markets to price a 75% chance of a rate cut by the June 2026 meeting.

Market Positioning And Rate Cut Timeline

In this setup, options activity in SOFR futures has picked up, especially trades that benefit if a rate cut happens between June and September. Traders should also watch for higher volatility around upcoming inflation and jobs data. Surprises versus expectations could quickly shift the Fed’s timing. The yield-curve flattening last fall is a reminder of how fast markets can reprice when policy expectations change. Create your live VT Markets account and start trading now.

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USD/JPY erased most of its early losses and traded slightly lower near 154.85 during the European session on Monday. The move followed a rebound in the US Dollar after an early drop tied to a US Supreme Court ruling on President Donald Trump’s tariff policy. The US Dollar Index (DXY) was down 0.13% at about 97.66 at the time, after recovering from around 97.40. The Supreme Court called Trump’s tariff policy “illegal,” saying he exceeded his authority by using the International Emergency Economic Powers Act (IEEPA) to impose reciprocal duties.

Markets Reprice Policy Commitment

After the ruling, President Trump announced 15% global tariffs to keep trade deals in place. Markets later stabilized as attention moved to other ways the White House could keep its trade strategy on track. The Japanese Yen gave back its early gains after weaker National CPI data for January. Headline CPI rose 1.5% year over year versus 2.1% in December. CPI excluding fresh food eased to 2.0% from 2.4%, in line with expectations. The date today is 2026-02-23T16:11:08.287Z. In hindsight, the market reaction to the US Supreme Court ruling in early 2025 was a textbook head fake. USD/JPY dipped at first, then reversed once traders saw the White House was still committed to tariffs. The key lesson was to focus on the administration’s policy direction, not short-term legal or political headlines.

Positioning For Volatility Regimes

That lesson still matters today, because the 15% global tariffs introduced in 2025 are still shaping markets. US CPI for January 2026 came in hotter than expected at 3.5%. This supports the view that the Federal Reserve is not in a hurry to cut rates. That backdrop supports the US Dollar, which means politically driven dips may offer chances to buy dollar call options. On the other side of the pair, Japan’s economic outlook has not changed much since last year. The latest national CPI came in at just 1.8%, extending the soft-inflation trend and keeping the Bank of Japan on hold. This ongoing policy gap versus the US makes selling Yen futures or buying puts on the currency an attractive idea. The main takeaway from 2025 is that headline risk creates volatility, and volatility creates opportunity for derivatives traders. With geopolitical tensions still elevated, implied volatility in USD/JPY options has been rising and recently reached 12-month highs near 14%. This setup favors strategies that benefit from big moves, such as buying straddles ahead of major trade announcements. As a result, the key forces that pushed USD/JPY higher after the brief 2025 dip look even stronger today. The interest-rate gap continues to widen, and the fundamental case for a strong dollar against a weak yen remains solid. With USD/JPY now trading near 162.50, it still makes sense to use call option spreads to target more upside while keeping costs under control. Create your live VT Markets account and start trading now.

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AUD/USD trades near 0.7080 on Monday, down 0.05%, after briefly rising above 0.7100 during the Asian session. The pair has turned lower as the Australian Dollar weakens against most major currencies due to renewed trade uncertainty and position adjustments. The US Dollar Index (DXY) is near 97.60 and is slightly lower on the day. The US Dollar remains under pressure after a Supreme Court ruling limited the scope of some tariff measures. This has raised new questions about the direction of US trade policy.

Global Tariffs And Risk Sentiment

US President Donald Trump announced a 15% global tariff on imports. This move has increased risk aversion, lifted foreign exchange volatility, and boosted demand for defensive assets. It offers some support to the US Dollar, but it weighs on cyclical currencies such as the Australian Dollar. US rate expectations are also shaping the Dollar. Markets are pricing in at least two more 25-basis-point Federal Reserve cuts by year-end. Weaker-than-expected GDP and softer PMI data support that view. In Australia, the Reserve Bank of Australia is still seen as hawkish, backed by stronger-than-expected data. This policy gap versus the Fed helps limit AUD/USD losses. Even so, the pair remains highly sensitive to sentiment and trade headlines. Many traders remember the volatility in mid-2025, when uncertainty over US trade policy pushed AUD/USD around the 0.7080 area. The market was split between expectations for Fed rate cuts and a still-hawkish RBA. That period showed how quickly currencies can move after surprise policy announcements.

Shifting Central Bank Outlook

The backdrop has changed. AUD/USD now trades much lower, near 0.6750. The aggressive global tariffs seen in 2025 have been replaced by a more targeted trade approach, which has reduced that specific source of volatility. The bigger change is in central bank expectations: US CPI has strengthened to 3.1%, while Australian inflation has cooled to 2.8%. Because of the sharp swings in 2025, implied volatility in AUD/USD options remains an important area to watch. With the Fed now hinting at a possible hike and the RBA sounding more cautious, surprise data could still trigger large moves. Traders may consider options strategies such as straddles to position for a volatility jump, regardless of direction. The policy divergence that helped support the Aussie in 2025 has now flipped, creating a headwind for the currency. Current pricing from the CME FedWatch Tool shows nearly a 40% chance of a Fed rate hike by July. That is a clear shift from the earlier easing bias. This change suggests that selling into strong AUD/USD rallies could be a workable strategy in the coming weeks. Commodity prices also matter. Iron ore has recently slipped below $120 per tonne, which pressures a key source of Australian export revenue. This adds risk for the Aussie and supports a more cautious outlook. Using tight stop-losses on long AUD positions remains important, especially to avoid being caught in a sudden sentiment swing like those seen during the 2025 trade disputes. Create your live VT Markets account and start trading now.

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The US Dollar Index recovered some of its earlier losses and traded near 97.40 during European hours on Monday. At the time of reporting, it was down 0.2% at around 97.60 against a basket of six major currencies. The earlier sell-off followed a US Supreme Court ruling against President Donald Trump’s tariff policy. The court said the tariffs were illegal because they were based on the International Emergency Economic Powers Act (IEEPA).

Dollar Volatility Outlook

After the ruling, Trump announced a 15% increase in import duties worldwide. He presented the move as a response to the court’s decision on his tariff plan. US data also pressured the dollar, with slower growth and weaker business surveys. Q4 GDP grew 1.4% year-on-year, below forecasts of 3% and down from the prior 4.4%. The S&P Global Composite PMI for February came in at 52.3, down from 53.0 in January. Both manufacturing and services still showed moderate growth. Focus now shifts to speeches from several Federal Reserve officials this week. Their comments may offer clues about the outlook for US interest rates.

Options Hedging Strategies

Looking back at the policy whiplash in 2025, the main lesson was the jump in volatility after the Supreme Court’s tariff ruling and the market reaction that followed. This suggests that, in the coming weeks, buying options to protect against sharp moves in the dollar is a sensible approach. With the CBOE Volatility Index (VIX) still relatively low at around 14, options remain fairly priced, making hedges cheaper against unexpected political or economic headlines. Policy uncertainty and the risk of a global trade slowdown pull the dollar in opposite directions. That makes a simple directional bet risky. Last year showed how fast the dollar can flip—from weakness after the court ruling to strength after the tariff threat. Because of this, traders may want to use straddles or strangles on major currency pairs like EUR/USD. These strategies can profit from a large move in either direction without needing to predict the outcome. The weak 2025 data—such as 1.4% GDP growth—was an important warning sign that the economy was slowing. Today’s data should be viewed with that history in mind, especially since the latest January 2026 inflation report showed Core PCE still stuck at 2.8%. Persistent inflation limits the Fed’s ability to cut rates, even if growth weakens. Given this backdrop, the Fed may sound cautious in upcoming speeches, which could keep rate expectations uncertain. This uncertainty is also visible in interest-rate markets, including the volatility skew in SOFR futures. Traders should be careful about taking large, unhedged positions that depend on the Fed’s rate path until the outlook becomes clearer. Create your live VT Markets account and start trading now.

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