USD/JPY slid during Asian trading on Monday. It fell toward 154.00 before recovering slightly to around 154.35. The pair was still down more than 0.45% on the day and remained vulnerable to further losses. Sentiment weakened after US President Donald Trump announced a new 15% global levy. This followed a Supreme Court ruling on Friday that went against his broader tariff plan. The announcement raised concerns about retaliation and supply-chain disruption. That helped the Japanese Yen and pressured the US Dollar.

Policy And Data Driving The Move

US data on Friday showed the core PCE Price Index rose more than expected in December. This supported the view that the Federal Reserve will keep rates unchanged in March. Even so, markets still expect two 25-basis-point rate cuts this year after US GDP growth slowed to a 1.4% annualised pace in Q4. In Japan, weak Q4 growth increased calls for more stimulus. At the same time, an inflation gauge slowed to its weakest pace in two years. This reduced expectations of an early Bank of Japan rate hike and limited further Yen gains. Trading was also thin due to a bank holiday. At this time in 2025, markets shifted sharply into risk-off mode as trade-war fears returned. The Japanese Yen strengthened on safe-haven demand, pushing USD/JPY down toward 154.00. At the time, the market was also pricing in two potential rate cuts from the US Federal Reserve for that year. Now, on February 23, 2026, the picture is different and may offer new opportunities. The Fed delivered only one 25-basis-point cut in late 2025, as inflation stayed stubborn. The latest January 2026 CPI showed inflation running at 2.9% year over year. In Japan, core inflation has edged up to 2.3%, increasing pressure on the Bank of Japan to begin normalising policy. This gap in policy expectations is creating tension. It has also pushed one-month implied volatility for USD/JPY options close to 12%. That suggests the market is preparing for a meaningful move in the coming weeks. Traders may consider strategies designed to benefit from a large move in either direction, such as long straddles or strangles.

Options Strategies For High Volatility

If, instead, central banks stay cautious and USD/JPY remains range-bound, selling premium may be more attractive. For example, an iron condor lets traders define a price range and profit if USD/JPY stays within that range through expiration. With implied volatility elevated, this approach can collect a larger premium upfront. It also helps to review how other safe-haven assets behaved during the 2025 risk-off episode. US 10-year Treasury yields (which move inversely to bond prices) dipped below 3.8% during that period. Since then, they have risen to around 4.2% this week. This reflects a reassessment of the Fed’s path and a steadier outlook for global trade. Create your live VT Markets account and start trading now.

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The US Dollar Index (DXY) fell for a second day and traded near 97.50 during Asian hours on Monday. The drop followed uncertainty around US trade policy and weaker economic data. The US Supreme Court struck down most of President Donald Trump’s emergency tariff authority. Trump said he would still seek a 15% global import tariff, up from 10%, by using other trade laws.

Dollar Pressures From Data And Policy

US economic data also weighed on the dollar. The economy grew 1.4% in Q4 2025. Core PCE inflation rose 3.0% year on year in December. Geopolitical risks also kept markets cautious. The New York Times reported that Trump was considering limited airstrikes on Iran, with a wider attack possible if earlier steps fail. The US Dollar is the official currency of the United States and is also used in some other countries. It makes up more than 88% of global foreign exchange turnover, or about $6.6 trillion in daily transactions, based on 2022 data. Federal Reserve policy affects the dollar mainly through interest rates. The Fed targets 2% inflation. It can also use quantitative easing, which usually weakens the dollar, or quantitative tightening, which usually supports it.

Trading Implications For Currency Markets

With the US Dollar Index down to 97.50, markets appear to be reacting to a tough mix of slower growth and high inflation. Q4 2025 GDP of 1.4% alongside a 3.0% core PCE reading puts the Federal Reserve in a difficult position. This can make future policy moves hard to predict. Because of that, simply shorting the dollar may be risky, since demand for safe-haven assets could still support it. Trade-policy confusion plus geopolitical risk often leads to higher volatility. A useful comparison is the 2019 trade disputes, when currency-volatility gauges jumped more than 20% in short periods. As a result, traders may consider options strategies such as straddles or strangles on major pairs like EUR/USD, which can benefit from large moves in either direction. For traders already holding long-dollar positions, the risk of a new 15% global tariff creates meaningful downside. One way to hedge is to buy put options on the US Dollar Index or related currency futures. This can act as insurance against further policy-driven dollar weakness in the weeks ahead. We are also watching USD/JPY closely. The yen often acts as a key safe-haven currency when uncertainty centers on the US. If risk rises, the yen could strengthen more than the dollar, which could push USD/JPY lower. Options positioned for a decline in this pair could help protect against escalating global tensions. Reports about possible US airstrikes on Iran add another risk layer, especially for energy markets. In the past, similar Middle East tensions have pushed WTI crude more than 10% higher in just a few days. Traders may want to watch oil-options volatility, since higher energy prices would further complicate the inflation and growth outlook. Create your live VT Markets account and start trading now.

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Gold rose for a fourth straight day after posting its highest-ever weekly close above $5,100 on Friday. In early Monday trading in Asia, it pushed above $5,150. The move was supported by trade uncertainty, Middle East tensions, expectations of Fed rate cuts, and a weaker US dollar. Donald Trump announced a new tariff framework after a Supreme Court ruling limited broad duties. A 15% global levy (the legal maximum) was placed on goods imported into the US. This raised concerns about retaliation and supply-chain disruption.

Inflation Fed Cuts And Dollar Backdrop

US inflation data showed the PCE Price Index rose 2.9% year on year in December, while core PCE came in at 3.0%. Markets still expect two 25-basis-point Fed rate cuts this year, although a March cut is seen as unlikely. US GDP grew at a 1.4% annualised rate in Q4, slowing from 4.4% in Q3, during the longest-ever US government shutdown. The dollar slipped from its highest level since 23 January, which helped support gold. Talks between US and Iran negotiators are scheduled in Geneva on Thursday after Iran submitted a detailed nuclear proposal. Reports say Trump is considering a strike in the coming days, with a larger option later if diplomacy fails. Technically, gold is trading above the 200-period EMA at $4,864.04. RSI is 73.23, and MACD remains above zero.

Strategy Positioning And Risk Management

With gold in a strong uptrend, we should keep a bullish bias in our derivatives positioning. The break above $5,100 is an important technical signal. It is also backed by fundamentals such as global trade levies and geopolitical tension. Together, these factors suggest the easier path remains higher over the next few weeks. Central bank buying adds support to this view. In 2025, official reserves rose by close to 1,050 tonnes, with emerging markets leading the purchases. Also, the latest January CPI report printed at 3.1%, suggesting inflation remains sticky above the Fed’s target and supporting gold’s role as a hedge. To take advantage of the momentum, call options with strikes at $5,200 and $5,250 offer leveraged upside with defined risk. For traders with a higher risk tolerance, long gold futures positions provide more direct exposure to price gains. Overall, the current backdrop still favors holding and adding to long-focused strategies. That said, the RSI is above 73, which signals overbought conditions. A short-term pullback or consolidation is possible before the next move higher. To manage this risk, consider protective put options below the key $5,000 psychological level to hedge long exposure against a sharp reversal. Looking ahead, watch the US-Iran nuclear talks in Geneva this week, as a negative outcome could trigger another rush into safe-haven assets. The March FOMC meeting will also be important. If the Fed hints at fewer than the two cuts currently priced in, gold could pull back sharply and create a better entry point for new long positions. Create your live VT Markets account and start trading now.

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EUR/JPY fell 0.15% to around 182.40 in Asian trade on Monday. The Japanese Yen rose as a safe-haven currency during a public holiday in Japan, while uncertainty over US trade policy continued. Japan’s markets are closed on Monday for The Emperor’s Birthday. Markets stayed cautious after a Supreme Court ruling against tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act (IEEPA).

Trade Policy Uncertainty Drives Safe Haven Flows

Trump criticised the Supreme Court decision. He also announced a 15% rise in import duties worldwide. In Japan, January inflation data reduced expectations of a near-term Bank of Japan rate hike. Headline CPI rose 1.5% year on year, down from 2.1% in December. CPI excluding fresh food was 2.0%, down from 2.4% previously. In Europe, the European Parliament’s trade chief said the EU will propose freezing ratification of a trade deal with the US. According to Bloomberg, the freeze would stay in place until the EU receives details on US trade policy. In the euro area, preliminary February HCOB PMI data improved. The Composite PMI rose to 51.9, above forecasts of 51.5 and January’s 51.3.

Rate Differentials Remain The Main Driver

This time last year, EUR/JPY came under pressure after sudden uncertainty around US trade policy. The announcement of a global 15% import duty triggered a classic flight to safety. That briefly lifted the Japanese Yen, even with thin trading due to Japan’s holiday. But the Yen’s safe-haven boost did not last. After the initial move, the key driver returned to interest rate differences. The Bank of Japan has stayed cautious. Tokyo’s January core CPI came in at 1.8%, still below the level needed to justify aggressive tightening. This keeps the Yen structurally weak against higher-yielding currencies. On the Euro side, optimism from last year’s stronger PMI readings has faded. Trade tensions weighed on sentiment through 2025. The latest flash HCOB Composite PMI is at 50.2, which signals only slight growth and a clear cooling from 51.9 a year ago. This points to the European Central Bank being nearer to rate cuts than rate hikes. For traders, this means the main driver of EUR/JPY is still the wide interest rate gap, not short-term risk headlines. Strategies may focus on carry trades, such as staying long the pair through futures or CFDs. Volatility has eased from last year’s highs, which can make options approaches like selling out-of-the-money JPY calls attractive for premium income. Create your live VT Markets account and start trading now.

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USD/CAD slipped to around 1.3665 in Asian trading on Monday, keeping the Canadian Dollar stronger than 1.3650. Trading was driven by uncertainty over US tariffs and moves in crude oil. Markets are also watching the US Producer Price Index (PPI) for January, due on Friday. The US Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA). In response, President Donald Trump announced a broad 15% tariff on imports, which pressured the US Dollar.

Tariff Policy Uncertainty

Most Canadian exports were already exempt from the IEEPA tariffs. The court ruling did not change product-specific tariffs that affect Canada. Crude oil swings also mattered, because they often move the commodity-linked Canadian Dollar. The New York Times reported on Sunday that Trump is considering limited airstrikes on Iran. Trump said a larger attack could follow in the coming months if diplomacy—or any initial targeted US action—does not meet his demand that Iran abandon its nuclear programme. The next round of US-Iran talks is scheduled for Thursday in Geneva. Rising uncertainty could push USD/CAD lower and create opportunities for derivative trades. Unpredictable US tariff policy and higher Middle East tensions point to more volatility in the coming weeks. Traders should be ready for sharp moves, especially around Thursday’s US-Iran talks.

Strategy Implications For Usd Cad

The new 15% blanket US import tariff is a major headwind for the US Dollar. The targeted tariffs of 2018–2019 already unsettled markets, and a broader, more aggressive policy could further weaken confidence in the dollar. This kind of self-inflicted pressure can make it attractive to sell USD against commodity-linked currencies. At the same time, the risk of conflict with Iran could lift crude oil prices, which tends to support the loonie. A recent example is early 2022, when geopolitical tensions in Europe pushed Brent crude up more than 25% in two weeks. With energy products making up about 27% of Canada’s total exports in 2025, a sustained rise in oil would likely be a strong tailwind for the Canadian dollar. Given these factors, traders may consider buying USD/CAD put options with expiries over the next several weeks. This provides defined risk while positioning for a potential drop in the pair. Higher oil prices or more erratic US trade policy could support the trade, while the option premium limits losses if tensions ease unexpectedly. Create your live VT Markets account and start trading now.

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China’s Commerce Ministry called on the US to remove unilateral tariffs on its trading partners. It said China will protect its interests and is reviewing what a recent ruling could mean. The ministry said US actions—such as reciprocal tariffs and fentanyl-related tariffs—break international trade rules and US law. At the time of writing, AUD/USD was down 0.14% at 0.7075.

How Tariffs Work

Tariffs are fees charged on imported goods, either on specific products or entire categories. Governments use them to support local producers by making imports more expensive. Tariffs are often used alongside other trade limits, such as barriers and import quotas. Tariffs and taxes both raise money for public services, but they are collected in different ways. Tariffs are paid by importers at the port of entry. Taxes are paid by individuals and companies at the point of purchase. Ahead of the November 2024 US presidential election, Donald Trump said he would use tariffs to support the US economy and domestic producers. In 2024, Mexico, China, and Canada accounted for 42% of total US imports. Mexico exported $466.6 billion to the US, according to the US Census Bureau. We take the latest warnings from China’s Commerce Ministry seriously. They align with the rising trade tension we expected after the new administration began in 2025. This is more than messaging. It suggests a new stage of potential retaliation that could increase market volatility. Today’s backdrop also reflects the tariff approach promoted during the 2024 election campaign.

Positioning For Volatility

Derivatives traders should be ready for sharp moves in the coming weeks. Policy headlines—not economic data—are likely to be the main driver. In 2025, the VIX (a key “fear” gauge) jumped above 25 three times, each time after new tariff announcements. Buying volatility with options on major indices like the S&P 500 may be a sensible way to prepare for expected turbulence. Currency markets—especially commodity-linked currencies—are likely to feel the impact first. AUD/USD is often treated as a proxy for China-related trade sentiment. It fell from around 0.72 in early 2025 to test support below 0.68 this month. Traders may want to consider options strategies that prepare for further weakness, as any direct response from China could pressure the Australian dollar. Commodity markets also need close attention, because they are often early targets in tariff disputes. For example, Chinese retaliatory duties on agricultural products in mid-2025 pushed soybean futures down 15% over a single quarter. Hedging risk in agricultural and industrial metals markets is now especially important for traders with exposure in these areas. These measures are also adding to domestic inflation pressures, which complicates the Federal Reserve’s path. January 2026 CPI data showed core inflation holding at 3.2%, with higher import costs cited as a key driver. Persistent price pressure adds uncertainty for interest-rate derivatives and bond futures. So far, the tariff push to rebalance trade has produced mixed outcomes and ongoing uncertainty. US Census Bureau data from late 2025 showed the trade deficit with China narrowed by 8%, but the overall US trade deficit rose by 3% as imports shifted to other routes. This makes it more likely the administration will continue its approach rather than reverse it. Create your live VT Markets account and start trading now.

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Silver (XAG/USD) rose for a fourth straight day. It traded near $87.10 per troy ounce in Asian hours on Monday and moved closer to $87.50. Demand increased as tariff uncertainty drove safe-haven buying in precious metals. After a US Supreme Court ruling that limited broad tariff powers, President Donald Trump said he would raise global import tariffs to 15% from 10%. He said the new tariffs would take effect immediately and signalled that more levies could follow.

Trade Authority In Focus

The court said his use of emergency powers to impose reciprocal tariffs was unlawful. This narrowed his ability to act on trade policy without Congress. As a result, markets remain focused on trade risks. India has postponed planned trade talks with the United States. This delays progress on an interim trade pact. European officials are also reviewing future trade commitments and want clarity on how current agreements could be affected. Tensions in the Middle East also increased risk aversion. Trump said limited military strikes on Iran are still being considered if talks fail to address Tehran’s nuclear programme. This supported demand for safe-haven assets. We remember how the sudden 15% global tariff announcement in 2025 pushed silver toward $87.50. Combined with US-Iran tensions, it showed how fast geopolitical risk can move the precious metals market. Silver is now trading at a much lower level, but that past volatility should still guide our strategy.

Positioning For The Next Shock

Markets are calmer now. Silver is trading around $34.50 this week, and implied volatility has dropped sharply. For example, the Cboe Silver ETF Volatility Index (VXSLV) is near 28. That is far below the levels above 60 seen during the peak of last year’s tariff crisis. This may indicate growing complacency, which can create opportunity for traders who expect future shocks. In this setup, buying long-dated call options on silver can be a sensible strategy. It offers a relatively low-cost way to position for a repeat of last year’s price spike, whether driven by trade disputes or other unexpected global events. The maximum loss is limited to the premium paid, which keeps risk clearly defined while preserving upside. It may also help to use strategies that benefit from rising volatility, not just rising prices. Buying straddles or strangles on silver ETFs can work well, because they can profit from a large move in either direction. The lesson from 2025 is that the first market reaction to political headlines can be extreme and hard to predict. Historically, silver has often rallied sharply during periods of high uncertainty. One example is the 2010–2011 sovereign debt crisis, when prices more than doubled in under a year. Recent data also shows open interest in silver futures has been rising steadily since the start of 2026. This may suggest institutional traders are quietly building positions ahead of renewed turbulence. Create your live VT Markets account and start trading now.

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WTI crude started the week lower. It opened with a bearish gap after topping near $68.00 last Friday, its highest level since 4 August. In the Asian session, it traded above the mid-$65.00s, down more than 1.0% on the day. Trade-war fears weighed on sentiment, raising doubts about global growth and fuel demand. On Friday, the US Supreme Court ruled that President Donald Trump did not have the authority to impose reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA). Trump then announced a new 15% tariff framework, which added to concerns about weaker fuel demand.

Us Iran Tensions Support Prices

Prices found some support from US-Iran tensions ahead of talks in Geneva on Thursday, after Iran submitted a detailed nuclear proposal. Officials said the meeting could be the last diplomatic chance before the Trump administration considers military action. Iran also warned that regional bases and assets could be targeted if it is attacked. A weaker US Dollar also helped limit oil’s decline, since crude is priced in dollars. Markets expected the Federal Reserve to hold rates at the next meeting in March. That view was reinforced by hot US inflation data on Friday. At the same time, an advance GDP report showed the US economy slowed sharply in the fourth quarter. In 2025, markets reacted strongly to similar risks. Trade-war concerns and the chance of a US-Iran conflict drove heavy volatility and pushed WTI back to the mid-$65 range. At the time, the main driver of weakness was fear of a tariff-led slowdown, while Iran-related risk was seen more as a price support. This created a tight push-and-pull for traders. Today, on February 23, 2026, the focus has shifted. Demand worries have eased, and supply has become the main story. WTI is trading much higher, near $82.50 a barrel, as the physical market stays tight. OPEC+ has kept to its plan and extended voluntary production cuts of 2.2 million barrels per day through the first half of this year to support prices.

Inventory Draws Confirm Tight Supply

Recent inventory data backs up this tight-supply view. Last week’s Energy Information Administration (EIA) report showed a larger-than-expected draw of 3.1 million barrels, the fourth weekly decline in a row. This suggests that even with slower growth concerns, fuel use remains strong enough to keep inventories low. The broader backdrop has also changed from the 2025 trade-war story. The main issue now is sticky inflation. January 2026 CPI is still high at 3.3%, which makes the Federal Reserve’s rate path harder to manage. Still, a weaker US Dollar continues to help support crude prices, much as it did before. The US-Iran tensions mentioned earlier never turned into a full-scale conflict, but they have continued at a low level. This has created a lasting geopolitical risk premium in oil. Any flare-up in the Middle East is now more likely to trigger a sharp spike, not just provide mild support in the background. That risk makes short positions more dangerous. For derivatives traders, this points to a “buy-the-dip” approach in the weeks ahead. Selling out-of-the-money puts to collect premium may also appeal, because tight supply and geopolitical risks could limit the chance of a major price collapse. Volatility should remain elevated, creating opportunities for traders positioned for upward price pressure. Create your live VT Markets account and start trading now.

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NZD/USD traded around 0.5990 during Asian hours on Monday. It extended gains for a third straight session and stayed close to 0.6000. The move was supported by New Zealand’s Q4 2025 retail sales figures. Retail Sales rose 0.9% quarter-on-quarter. This beat the 0.6% forecast and followed a 1.9% increase in the prior quarter. Retail Sales excluding Autos climbed 1.5%, up from 1.2% previously.

RBNZ Policy Outlook

Last week, the Reserve Bank of New Zealand kept the cash rate at 2.25%. It said policy will remain accommodative. The Bank also expects inflation to return to the midpoint of its target range over the next year. The pair also strengthened as the US Dollar softened on tariff uncertainty. This followed comments after a US Supreme Court decision that blocked the use of emergency powers for reciprocal tariffs. CNBC reported that President Donald Trump said on Saturday he plans to lift global tariffs to 15% from 10%. He said the tariffs would be “effective immediately” and warned that additional levies could follow. The RBNZ targets inflation between 1% and 3% over the medium term, with a focus near 2%. NZD moves can also track Chinese economic conditions and dairy export prices.

Balancing Domestic Strength And External Risks

Strong New Zealand retail sales in Q4 2025 have helped NZD/USD test the 0.6000 level. However, the RBNZ’s message last week—that policy will stay accommodative—is limiting further upside for now. As a result, solid local data is being balanced by a cautious central bank. External factors also matter, especially China’s growth outlook. In late 2025, China’s Manufacturing PMI stayed only slightly above 50.0, the level that signals expansion. This suggests growth is steady, but not speeding up. That may limit support from New Zealand’s largest trading partner. A more supportive factor has been dairy prices, which are important for New Zealand’s export income. The first Global Dairy Trade auctions of 2026 showed average prices rising by more than 3%, adding to gains from late last year. This has helped the NZD hold firm. The biggest uncertainty in the weeks ahead is US tariff policy. A sudden move to 15% tariffs could raise volatility sharply. Similar uncertainty drove fast, hard-to-predict swings during the 2018–2019 trade disputes. In this backdrop, options may be safer than a simple directional trade. Strategies like long straddles or strangles can benefit from a large move in either direction, without needing to predict how the tariff situation ends. Implied volatility for NZD/USD options still looks relatively low, which may make these strategies cheaper. For traders with a clear directional view, option spreads can help cap risk. If you think tariff fears will fade, a bull call spread could target a move toward 0.6100. If you expect tensions to rise and trigger a flight to safety, a bear put spread offers a controlled way to position for a decline. Create your live VT Markets account and start trading now.

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GBP/USD climbed to around 1.3520 in early Asian trading on Monday. The US Dollar slipped as tariff uncertainty stayed in focus. Markets are now watching the US Producer Price Index (PPI) for January, due on Friday. Both headline and core PPI are expected to rise 0.3% month on month. On Friday, the US Supreme Court ruled that Trump’s tariffs were illegal and beyond his authority. Trump then announced a 15% levy on imports. Reuters reported that the replacement tariffs would last for 150 days. It is still unclear whether importers will get refunds for duties already paid.

Uk Retail Sales Boost Sterling

UK data helped the pound after Retail Sales rose 1.8% month on month in January. That was up from 0.4% previously and above the 0.2% forecast. Retail Sales also rose 4.5% year on year, compared with 1.9% previously (revised from 2.5%) and above the 2.8% estimate. Sterling is the UK currency. It was first issued in 886 AD. It is the fourth most traded currency and accounts for about 12% of FX transactions, or roughly $630 billion a day in 2022. Key pairs include GBP/USD at 11%, GBP/JPY at 3%, and EUR/GBP at 2%. The pound is gaining momentum above 1.3500. This move is supported by two factors: political uncertainty in the US and strong UK data. Together, they argue for near-term sterling strength. Dollar weakness remains the main driver, and it is closely tied to confusion around the new 15% import levy. The pound is also supported by solid fundamentals. The Office for National Statistics recently reported a strong rise in January retail sales that beat expectations. Strong consumer demand can reduce pressure on the Bank of England to cut rates, which can make the pound more attractive to hold. UK consumer spending also held up well in 2025, and that resilience appears to be continuing.

Tariff Uncertainty Lifts Volatility

For traders, the key development is the jump in uncertainty from the new 15% blanket levy, which is keeping the dollar under pressure. This is showing up in the options market. One-month implied volatility for GBP/USD is rising toward 7.5%, a level not seen since the market turbulence in late 2025. This kind of backdrop can favor strategies that aim to benefit from larger price swings, not just direction. Focus now shifts to Friday’s US PPI release. The market expects a 0.3% monthly gain, in line with readings from the last quarter of 2025. In the past, hotter-than-expected inflation data has often supported the dollar, so traders may prepare for a similar reaction. An upside surprise could quickly reverse the pound’s recent gains against the greenback. With mixed signals, one approach is to use options to keep a bullish pound view while limiting the risk around Friday’s data. Buying GBP/USD call options can allow traders to benefit if sterling continues to rise, while the premium paid is the maximum loss if US inflation data surprises to the upside. This defined-risk setup offers exposure to the uptrend without taking full risk of a sharp reversal. Create your live VT Markets account and start trading now.

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