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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EUR/USD extended its rebound from Friday’s one-month low in the 1.1750–1.1740 area. It climbed to around 1.1835 in the Asian session as the US Dollar weakened broadly. On Friday, the US Supreme Court ruled that Donald Trump did not have the authority to impose broad reciprocal tariffs under the IEEEPA. After the ruling, a new 15% tariff framework was announced, adding to worries about the economic impact of rising trade tensions.

Us Data And Dollar Reaction

US data signalled slower growth. This outweighed stronger inflation figures and pushed the Dollar down from a four-week high. The first estimate of fourth-quarter GDP showed annualised growth of 1.4%, down from 4.4% in the third quarter and below forecasts. Inflation data showed the core PCE Price Index rose 0.4% month-on-month in January. The yearly rate rose to 3.0%, the highest since November 2023. This supports the case for keeping rates unchanged in March. Even so, markets still expect a cut in June and at least two 25-basis-point cuts in 2026. In Europe, the euro was pressured by uncertainty around ECB President Christine Lagarde’s tenure and by trade-war concerns. The European Parliament’s trade chief said the EU may pause ratifying a US trade deal until the US provides more clarity on its trade policy. Overall, a softer US dollar is lifting EUR/USD away from last month’s lows. The move is being driven by weaker US growth data from late 2025 and ongoing trade disputes. However, high inflation still complicates the outlook for Federal Reserve policy.

Volatility And Rate Cut Expectations

The tension between slowing growth and rising prices has pushed up implied volatility in EUR/USD options. One-month volatility is now at its highest level since the fourth quarter of 2025, showing how uncertain the outlook is. A weaker-than-expected January jobs report also added to these concerns, with payrolls rising by only 95,000. Markets are becoming more confident the Federal Reserve will cut rates. Fed Funds futures now suggest a better than 70% chance of a 25-basis-point cut by the June meeting. Expectations of lower US yields make holding dollars less attractive. Derivatives traders should watch this closely, as any surprisingly strong data could trigger a sharp reversal. In Europe, recent data offers a modestly more positive picture. Germany’s IFO Business Climate survey improved unexpectedly, and flash Eurozone CPI for February held steady at 2.4%. This eased some near-term pressure on the ECB. Compared with a slowing US, this relative stability supports the euro’s recent strength. For traders looking for a continued rise in EUR/USD towards 1.1900, buying call options may be a sensible approach. It allows participation in further dollar weakness while limiting the maximum loss if trade talks improve suddenly or if US data surprises to the upside. The higher cost of options, driven by rising volatility, reflects the event risk ahead. Create your live VT Markets account and start trading now.

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AUD/USD rose for a third straight session, trading near 0.7100 during Asian hours on Monday. The move followed a weaker US Dollar, which fell against major peers as tariff uncertainty continued. Trade policy uncertainty remained high after President Donald Trump criticised the Supreme Court for blocking his use of emergency powers for reciprocal tariffs. CNBC reported that Trump said on Saturday he plans to raise global tariffs to 15% from 10%, “effective immediately”, and warned that more levies could follow.

Us Iran Tensions Cap Risk Appetite

AUD/USD’s gains may be capped as risk appetite weakens due to US-Iran tensions. The New York Times reported on Sunday that Trump is considering limited airstrikes on Iran. It added that broader action could follow in the coming months if diplomacy—or an initial strike—does not change Iran’s nuclear stance. The next round of US-Iran talks is scheduled for Thursday in Geneva. The US is also reviewing other options if talks fail. The Australian Dollar has also been supported by expectations that the Reserve Bank of Australia (RBA) may keep a tightening bias to tackle inflation. Key drivers for AUD include RBA interest rates, iron ore prices, China’s economic health, inflation, growth, the trade balance, and overall market sentiment. Iron ore is Australia’s largest export, worth about $118 billion a year (2021 data). The RBA targets inflation at 2–3%. Back in 2025, AUD/USD was largely driven by US tariff uncertainty and a hawkish RBA. Geopolitical risks from US-Iran tensions were seen as a possible limit on gains, while strong Australian data offered support. This helped push the pair towards 0.7100.

Market Backdrop In Early 2026

The picture looks very different today (February 23, 2026). Australian quarterly inflation eased to 3.1% last month, and the RBA has become less hawkish. Markets are no longer pricing in rate hikes. The RBA cash rate has held at 3.85% for two straight meetings, shifting away from the tightening bias seen last year. Support for the Aussie has also weakened. China’s latest manufacturing PMI came in at 49.8, which signals contraction and points to ongoing softness in Australia’s biggest trading partner. Iron ore prices have fallen to around $95 per tonne, well below the stronger levels seen at times in 2025. On the US side, the Dollar is no longer mainly driven by tariff headlines. Attention has shifted to the Federal Reserve’s policy pivot. The fed funds rate is now 3.75% after a cut in December. This suggests the US Dollar is not strengthening aggressively, but the Aussie’s weaker fundamentals are standing out more. For derivatives traders, this backdrop may favour strategies that benefit from a range-bound market or a modest downside move in AUD/USD. Buying AUD/USD put options with a strike near 0.6400 could help hedge against a deeper decline, especially if the RBA turns more dovish or Chinese data weakens further. With spot around 0.6550, these puts may be relatively affordable. Another approach is to sell out-of-the-money call options, or use call spreads with a cap near 0.6750, to generate income. This fits the view that rallies may be limited by lower commodity prices and a less supportive central bank than last year. These strategies tend to perform best if the pair stays flat or drifts lower in the weeks ahead. Create your live VT Markets account and start trading now.

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The European Parliament’s trade chief said the EU plans to pause ratifying a trade deal with the US. The deal would stay on hold until the Trump administration outlines its trade policy, Bloomberg reported. ECB President Christine Lagarde warned that changes in US trade policy could disrupt business again. She also pointed to a recent Supreme Court ruling and said any new tariffs should be announced in a way that allows firms to plan ahead.

Euro Dollar Reaction In Markets

In markets, the euro rose against the dollar. At the time of publication, EUR/USD was up 0.37% at 1.1830. Markets have faced uncertainty since early 2025, when the European Union considered freezing ratification of the US trade deal over tariff threats. At the time, EUR/USD reacted by trading around 1.1830. That early rhetoric helped set the stage for the volatility that followed. Now, the friction is no longer just a threat. It has helped push EUR/USD down to around 1.1150 today. Data from late last year showed German industrial production fell 0.5% in the fourth quarter, reflecting weaker exports. This softness is one of the key factors weighing on the single currency. Against this backdrop, currency volatility has risen sharply. Implied volatility on one-month EUR/USD options has climbed from about 7% late last year to above 9.5% in recent sessions. This suggests traders may look at strategies that benefit from large price moves—such as buying straddles or strangles—rather than relying only on directional trades.

Challenges For ECB Policy Path

This situation also creates a policy challenge. January Eurozone inflation remains elevated at 2.4%, which complicates the European Central Bank’s next steps. The ECB is reluctant to cut rates to support growth while inflation is still above target. In interest rate swaps, traders may want to position for the ECB to stay on hold longer than previously expected. Create your live VT Markets account and start trading now.

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USD/JPY slipped to around 154.35 in early Asian trading on Monday. The US Dollar weakened against the Japanese Yen as uncertainty grew over US tariffs. Markets are now focused on the US Producer Price Index (PPI) for January, due on Friday. Uncertainty increased after a US Supreme Court ruling struck down President Donald Trump’s use of emergency powers to impose reciprocal tariffs. On Saturday, Trump said he would raise the global tariff from 10% to 15% and launch additional investigations.

Japan Inflation And Boj Expectations

In Japan, the National Consumer Price Index (CPI) rose 1.5% year on year in January, down from 2.1% in December. This was the lowest level since March 2022. Core inflation came in at 2% in January, a two-year low and in line with the Bank of Japan’s target. The softer inflation data lowered expectations for a near-term Bank of Japan rate hike, which can limit Yen gains. After Prime Minister Sanae Takaichi’s snap election win, markets are also watching for possible fiscal spending plans. Takaichi said any necessary spending would be funded as much as possible through the initial budget. She also said she wants to lower the debt-to-GDP ratio and restore fiscal sustainability. In early 2025, USD/JPY faced mixed forces. US tariff uncertainty pushed traders toward the safe-haven Yen. At the same time, weaker Japanese inflation reduced expectations for a BoJ rate hike.

How The Backdrop Changed In 2026

Over the past year, that mix has changed a lot. The US tariffs that were threatened were partially put in place in late 2025. This added ongoing volatility to global trade and kept the Yen attractive as a safe haven. As of February 2026, continued trade tension, especially involving Asia, is still supporting this defensive demand for the Yen. Japan’s inflation trend has also improved from the low point in January 2025. The latest January 2026 data showed national CPI holding at 2.2%. That keeps inflation above the BoJ’s target for several months in a row. This steady pressure led the BoJ to raise its key policy rate to 0.1% in November 2025. That shift remains an important support for the Yen. This change is also clear in bond yields, which strongly influence the currency pair. The gap between the 10-year US Treasury yield (now about 3.9%) and the 10-year Japanese government bond yield (about 0.9%) has narrowed a lot from its peak. That makes holding Yen more attractive versus the US dollar than it has been in years. With this backdrop, it may make sense to use strategies that assume limited upside in USD/JPY, which is trading near 148.50. One approach is to sell out-of-the-money USD/JPY call options to collect premium, based on the view that a stronger Yen is more likely. Another approach is to buy JPY call options versus the USD to position directly for further Yen gains, driven by policy differences and risk sentiment. Create your live VT Markets account and start trading now.

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Gold traded near $5,095 in early Asian trading on Monday. Prices rose as tariff uncertainty increased demand for safe-haven assets. On Friday, the US Supreme Court ruled Donald Trump’s tariffs illegal. Soon after, Trump used Section 122 of the Trade Act of 1974 to set a 10% global import tariff, then raised it to 15%.

Trade Tensions Lift Safe Haven Demand

He also said national security tariffs under Section 232 and existing Section 301 tariffs will stay in place. Continued trade risks have supported gold prices. Investors are also watching US-Iran diplomacy. Oman’s foreign minister said the next round of talks will be held on Thursday in Geneva. On Friday, Trump said limited strikes against Iran are possible. Iranian officials said Tehran expects a possible agreement to be ready in the coming days. Markets will also watch US Producer Price Index data due on Friday. The figures could affect expectations for US Federal Reserve interest rate decisions.

Central Bank Buying Underpins The Market

Central banks are the biggest gold holders. The World Gold Council said they added 1,136 tonnes worth about $70 billion in 2022, the highest yearly purchase on record. With both trade-war fears and hopes for a US-Iran deal, gold’s implied volatility has jumped. This suggests options strategies that benefit from big swings may be more suitable than direct futures positions right now. The market is pricing in a large move, so traders should be ready for either a breakout or a sharp reversal this week. The new global tariffs are a strong driver for gold. They echo the uncertainty seen during the 2018–2019 trade disputes, which supported precious metals. This price support also sits on top of a multi-year trend of central bank buying. Central banks added a record 1,037 tonnes in 2023 and continued heavy purchases through 2025. This steady demand can help put a floor under prices, which may make dips attractive for long-term bulls. However, the US-Iran talks on Thursday are a major risk for long positions. In the past, gold has fallen quickly when successful talks removed geopolitical risk from prices. A surprise agreement could trigger profit-taking and push gold back below the $5,000 psychological level. Friday’s Producer Price Index report is the next key test. Inflation stayed stubborn in 2024 and 2025, and any sign of renewed price pressure could keep the Fed hawkish. Because gold does not pay interest, it often struggles when rates are expected to stay high. With a major “either-or” event on Thursday, traders may consider strategies that can profit from a large move in either direction, such as a long straddle. This means buying both a call and a put option. The position can gain if talks fail and gold jumps, or if talks succeed and gold drops. The main question is whether the move will be big enough to cover the higher cost of these options. Create your live VT Markets account and start trading now.

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US President Donald Trump said global tariffs would rise to 15% from 10%, CNBC reported on Saturday. The comments came a day after the Supreme Court struck down a major part of the president’s trade agenda. In a Truth Social post, Trump said the new tariffs would take effect immediately. He also said more levies would follow.

Market Volatility Spikes

At the time of publication, the US Dollar Index (DXY) was down 0.08% on the day at 97.68. A sudden jump in global tariffs to 15% adds major uncertainty to the markets. Volatility reacted right away, with the VIX up more than 40% to 21.5 in overnight trading. Traders should expect higher option premiums and may consider strategies that benefit from bigger moves, such as long straddles on major indices. This policy could hurt corporate earnings, especially for multinationals that depend on global supply chains. During the 2018–2019 trade disputes, sectors like technology and industrials were hit harder than others, and we expect a similar pattern now. Protective puts on the SPX and NDX may help manage downside risk, particularly because S&P 500 companies generated an estimated 42% of their revenue overseas in 2025. In currency markets, the early dip in the US Dollar Index suggests traders may be focusing on the longer-term impact on the US economy, rather than the dollar’s usual safe-haven role. We expect export-focused currencies to weaken, especially the Chinese Yuan, since US-China trade topped $700 billion last year. By contrast, the Japanese Yen may strengthen as a preferred safe haven, which could make long JPY positions appealing versus the dollar.

Commodities And Bonds React

The risk of slower global growth is a negative for industrial commodities. Crude oil futures have already fallen below $75 a barrel on fears of weaker demand, and copper is testing new lows for the year. In this setting, money often moves into traditional safe havens, which could help gold break above the $2,500-an-ounce resistance level. This move toward safety is also showing up in bonds, with investors buying US Treasuries. The 10-year yield has already dropped 15 basis points to 3.65%, and we expect it to fall further if uncertainty continues. Long positions in Treasury futures may benefit if yields keep moving lower in the coming weeks. Create your live VT Markets account and start trading now.

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New Zealand’s retail sales rose 0.9% quarter-on-quarter in the fourth quarter of 2025, according to Statistics New Zealand. The previous quarter rose 1.9%. The result beat the market forecast of 0.6%. At the time of reporting, NZD/USD was up 0.01% on the day at 0.5977.

Consumer Resilience And Market Read Through

The stronger-than-expected retail sales print suggests New Zealand consumers are holding up better than expected. However, the slowdown from the prior quarter is clear. The NZD/USD barely moved, which shows traders are weighing both the upside surprise and the softer trend. This mixed message means the currency is unlikely to make a decisive breakout on this report alone. This data also gives the Reserve Bank of New Zealand (RBNZ) more room to keep rates high at its February 28 meeting. With the Official Cash Rate at 5.50%, firmer consumer spending weakens the case for a near-term rate cut. The RBNZ is likely to keep a hawkish tone and stress that inflation risks remain. Annual inflation in Q4 2025 was still a sticky 4.5%, well above the bank’s target range. The labor market also remains tight, with unemployment at 4.1%. Together, these conditions give the RBNZ scope to stay restrictive. In this setting, a meaningful dip in the NZD could attract buyers if rate-cut expectations get pushed later into the year. For options traders, this sets up a potential volatility trade around next week’s RBNZ decision. With slower growth colliding with a hawkish central bank, implied volatility may be too low. Buying NZD/USD straddles could make sense if you expect a larger-than-usual move, in either direction. In interest rate swaps and futures, the report supports the “higher for longer” story. Markets may price fewer cuts for mid-2026, which could push up the short end of the yield curve. One way to express this view is to sell 90-day bank bill futures to position for delayed easing from the RBNZ.

Historical Parallel And Trading Implications

A similar pattern appeared in 2023, when stubborn inflation kept the RBNZ on hold even as other parts of the economy cooled. That mix often produced choppy, range-bound NZD trading rather than a sustained trend. Traders should watch for a repeat: positive domestic data may support the currency, while weaker global growth may cap gains. Create your live VT Markets account and start trading now.

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