The NASDAQ100 has moved sideways for the last three to four months and is trading near its early October 2025 level. That makes Elliott Wave (EW) analysis less reliable, so we also use other indicators in a “weight of the evidence” approach. In mid-term election years, the average seasonal pattern shows a bottom on 5 February, a peak around 15 February, a mild dip near 21 February, then a rise to an 18 March high. After that, the average path trends lower until October. The NASDAQ100 bottomed on 6 February and then started a rally.

Seasonal Pattern And Near Term Context

The updated EW count still points to 26608. This comes from a 161.8% extension of the 2020–2021 Wave-1, measured from the 2020 low (Wave-2). The prior peak on 29 October was about 500 points below that extension. Wave-1 rose from 6772 to 16765 (9993 points). Wave-2 bottomed on 13 October 2022 at 10440. The Wave-3 target is 10440 + 9992 × 1.618 = 26608. Bear warning levels are 24854, 25112, 25418, 25840, and 26182. Because the NASDAQ100 has been range-bound for months, it has made little progress. It is still near levels first seen in early October 2025. With no clear trend, forecasting is harder, so we rely on multiple tools to build a clearer view. This kind of “stuck” market often leads to a larger, more decisive move. So far, price action has tracked the typical mid-term election year seasonal pattern well. That template called for a bottom around February 5. We saw the year’s low on February 6. The same model suggests the current rally may peak around February 15. The rally has also been helped by recent economic data. Core inflation (PCE) eased to 2.7%, slightly below expectations. That gave the market support in the short term and fits the seasonal setup. In similar cases, like the market response to inflation data in late 2024, good news often helped drive a final push higher before a broader turn.

Positioning And Levels To Watch

For derivatives traders, this points to a very short-term bullish bias over the next few days. Traders could consider short-dated call options or bull call spreads to target a final move higher into the February 15–21 window. The key point is that this move likely marks the end of a rally phase, not the start of a lasting uptrend. The bigger opportunity may come next. The seasonal pattern points to a more meaningful decline after a final high around March 18. That also fits the broader Elliott Wave view, which expects a multi-month correction once this rally completes. This decline could run into October. Traders may want to get ready to shift to a bearish strategy in the coming weeks. That could include buying puts with April or May expirations to target the start of the expected downturn. Bear put spreads can also help position for a sustained move lower while limiting risk. On the upside, the key levels are the bear warning zones: 24854 up to 26182. As price moves into these areas, it may make sense to cut bullish exposure and begin building bearish positions. How the market behaves at these levels can offer important clues about when a reversal may begin. Create your live VT Markets account and start trading now.

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The US January Nonfarm Payrolls report showed a gain of 130K jobs. The Unemployment Rate fell to 4.3%. Average Hourly Earnings were unchanged at 3.7% over the past 12 months. The US Dollar Index (DXY) traded near 96.80 and was slightly lower on the day. USD/JPY was near 152.80 and slipped toward a two-week low after Prime Minister Sanae Takaichi won an election.

Key Moves Across Major Markets

AUD/USD traded near 0.7130 after hitting a three-year high, following China’s CPI release. EUR/USD was around 1.1880, down from a one-week high. GBP/USD was near 1.3640 ahead of the UK flash GDP report for Q4. Gold traded near $5,092 and edged higher. Next up: UK flash GDP (Q4) on Thursday 12. On Friday 13, markets will watch RBNZ Inflation Expectations (Q1), Swiss January CPI, Eurozone flash GDP (Q4), and US January CPI. Central banks were the biggest gold buyers in 2022, adding 1,136 tonnes worth about $70 billion, according to the World Gold Council. Gold often moves in the opposite direction to the US Dollar and US Treasury yields. Its price can also react to interest rates and geopolitical risk. A year ago (February 2025), the market would not buy the US Dollar even after a solid jobs report. Traders expected the Federal Reserve to turn dovish later in the year. Today the setup looks very different: the January 2026 jobs report showed a huge gain of 353,000 jobs and sticky wage growth of 4.5%. That forced traders to price out near-term rate cuts and pushed the Dollar Index up to around 104.00. Gold’s behavior has also changed. A year ago it was rising toward an unusual $5,092 level, ignoring economic data and trading mainly as a safe haven. Now, with the US Dollar and Treasury yields firm, gold is under pressure and trading in a more typical range near $2,030. Because of this, options strategies that bet against a big upside breakout—such as selling out-of-the-money calls—may work as long as the Fed stays credibly hawkish.

Trading Implications And Event Risk

In early 2025, the Australian Dollar was near multi-year highs around 0.7130, supported by strong data from China. Today, AUD/USD is struggling near 0.6530, weighed down by a strong US Dollar and weaker conditions in China. This suggests that any near-term strength in the Aussie could be a chance to look for bearish entries. Last year’s gap between strong data and weak Dollar demand is a reminder that expectations matter. With US CPI due this Friday, volatility could rise sharply. Given how sensitive the market is to inflation, buying options such as straddles on major pairs like EUR/USD can be a practical way to trade the event, since it can profit from a large move in either direction. Create your live VT Markets account and start trading now.

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US Treasury yields rose across the curve on Wednesday. The 10-year note climbed nearly 1.5 basis points to 4.155%, after a stronger US jobs report lowered expectations for Fed rate cuts. The 10-year yield bounced back from around 4.125% after the BLS reported that January nonfarm payrolls increased by 130K, above the 70K forecast. The unemployment rate fell to 4.3% from 4.4%, below the Fed’s 4.5% full-year estimate.

Jobs Data Reshapes Rate Cut Outlook

Markets no longer expected a March rate cut. They priced in 27 basis points of easing through July 2026. For 2026, markets priced two cuts, with the first expected in July. Kansas City Fed President Jeffrey Schmid said rate cuts could allow inflation to stay higher for longer. He said policy should stay restrictive if inflation is near 3%. The US Dollar Index fell 0.14% to 96.75. Five-year breakeven inflation eased to 2.47% from 2.5%, and the 10-year measure slipped to 2.32% from 2.35%. Initial Jobless Claims and Fed speeches are due on Thursday. On Friday, January CPI is expected to cool. Headline and core inflation are forecast to fall year on year, from 2.7% and 2.6% to 2.5%.

Trading Setup Around CPI And Volatility

After the strong January jobs report, the Fed has a clear reason to delay rate cuts. The market now prices the first cut for July 2026. That is a big change from a few weeks ago, when a spring cut still looked possible. This “higher for longer” backdrop suggests ongoing stress in short-term rate markets. Attention now turns to the Consumer Price Index (CPI) report, which could drive sharp moves. Volatility trades may fit this setup. For example, options strategies like straddles on rate-sensitive ETFs such as TLT can benefit from a large move in either direction. With a strong labor market but falling inflation expectations, the market looks uncertain. This CPI print could force a clearer trend. Recent history also argues for caution. Inflation stayed sticky through much of 2025, even after earlier aggressive rate hikes. The Fed kept rates steady for most of last year, disappointing traders who expected an early pivot. That experience shows the risk of betting too early on rate cuts, since strong data can quickly change market pricing. Newer data supports a more hawkish Fed view. The CME FedWatch Tool now shows the probability of a July rate cut falling from above 70% last month to about 52% after the jobs report. In addition, last week’s ISM Services PMI came in strong at 53.8, showing continued expansion in the largest part of the economy. This backdrop may favor a flatter yield curve. Short-term rates may stay firm, while longer-term yields could drift lower on disinflation hopes. Traders could use SOFR futures to position for a narrower 2-year/10-year spread in the weeks ahead. With the VIX near 13.5, VIX calls are relatively cheap and can hedge against an equity decline if inflation prints hotter than expected. Create your live VT Markets account and start trading now.

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The U.S. 10-year Treasury note auction yield rose to 4.177%, up from 4.173% at the previous auction. That is an increase of 0.004 percentage points versus the prior auction.

Inflation Fears Persist

We see this small rise in the 10-year auction yield as a sign that inflation concerns remain. The January 2026 CPI reading of 3.1% has clearly made markets more cautious about the Federal Reserve’s next steps. This auction result suggests bond investors want a higher premium to compensate for that uncertainty. This backdrop argues for preparing for higher volatility in the coming weeks. Implied volatility for interest rate swaptions has already moved higher, and we expect the VIX to rise from its current level of 18.5. We are considering VIX call spreads, or straddles on major bond ETFs, to take advantage of the expected increase in market swings. For traders who use interest rate derivatives directly, it may be time to consider paying fixed on swaps. This positions for a scenario where short-term rates stay higher for longer, or move higher. Shorting Treasury futures—especially in the 2- to 5-year part of the curve—also looks appealing as a hedge if the Fed turns more hawkish. In equity options, higher yields can pressure growth stocks. We are increasing protective put positions on technology and consumer discretionary benchmarks such as the Nasdaq 100. At the same time, we are looking at call options on financials, since banks may benefit if the yield curve steepens. In context, this marks a shift away from the disinflation trend that helped push yields lower through much of 2025. That calmer period now appears to be ending as markets price in a more complex economic outlook. We believe the straightforward trades from last year are largely gone, and a more defensive, tactical approach is now needed.

Defensive Positioning Ahead

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USD/JPY fell for a third straight day as the Yen stayed supported after Japan’s election result. The pair traded near 152.84, close to a two-week low, and is down more than 2.5% this week. The Yen gained support after Prime Minister Sanae Takaichi’s election win, which eased political uncertainty. The US Dollar also struggled to hold gains even after a strong US jobs report. The Dollar Index hovered near 96.75 after a brief jump to 97.27.

Bearish Technical Setup

The technical picture has turned bearish after USD/JPY dropped below key daily moving averages. RSI is near 35, and Average True Range (14) is about 1.38. A break below 152.00 could put the 200-day SMA near 150.50 in focus. A move under 150.00 could open the door to 148.00, the 1.618 Fibonacci level. On a bounce, 153.69 (78.6% retracement) and 154.84 (61.8% retracement) are key levels. The 100-day SMA is around 154.60. A daily close above 154.84 could shift attention to the 50-day SMA at 156.27. The Yen is influenced by Japan’s economy, Bank of Japan policy, Japan–US yield spreads, and overall risk sentiment. The BoJ ran an ultra-loose policy from 2013 to 2024, then started moving away from it in 2024.

USDJPY Downside Strategy

With the Yen stronger after the election, the focus should be on strategies that benefit if USD/JPY falls. The new government looks stable, which points to a clearer and more predictable policy outlook. Markets appear to welcome this, and it marks a clear change from the uncertainty seen through much of 2025. The US Dollar’s failure to rally on strong jobs data supports the view that the Federal Reserve’s dovish stance is still the main driver. Last week’s January US CPI came in at 2.8%, below expectations. This raised the odds of a mid-year rate cut, with futures now pricing the probability at over 70%. This differs from the Bank of Japan, which is expected to keep slowly unwinding the loose policy of the past decade. For derivatives, this setup favors buying USD/JPY put options. With the pair now below key moving averages, there is room for a move toward the 200-day SMA near 150.50 in the coming weeks. Puts with a 152.00 strike look like a primary way to position for the downtrend. In late 2024, Ministry of Finance intervention helped push the Yen stronger. This move looks different because it is supported by a shift in fundamentals, with policy paths starting to converge. Wider daily swings also suggest put spreads may be a better choice. They can reduce the cost of higher option premiums while still keeping downside exposure. Discipline is key, and the resistance levels above should be watched closely. A daily close back above 154.84 would suggest bearish momentum is weakening and would require a reassessment of short positions. Until then, the simplest path still appears lower for the pair. Create your live VT Markets account and start trading now.

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US January nonfarm payrolls came in at 130K versus a 70K consensus, nearly double expectations. After an early gain, the Nasdaq Composite was down 0.25% by lunchtime, while the Dow Jones and S&P 500 were mostly flat. Payroll growth improved from December’s revised 48K, and the unemployment rate fell 0.1 percentage point to 4.3%. Markets pushed expectations for the next US rate cut from June to July. A Federal Reserve official also suggested keeping policy restrictive as inflation moves closer to 3%.

Rates Cut Outlook Shifts

Several non-AI technology stocks and related names fell after earnings updates. Stocks mentioned included Robinhood (HOOD), Shopify (SHOP), Lyft (LYFT), Astera Labs (ALAB), and Unity Software (U). Astera Labs fell 20%, as investors focused on future gross margins and its partnership with Amazon (AMZN). Unity dropped 30% after issuing weak revenue guidance, while Robinhood slid 13% after missing quarterly revenue. Centrus Energy (LEU) fell 19% after missing quarterly expectations. Shopify dropped 13% after forecasting Q1 free cash flow margins in the “low to mid-teens,” versus the 17% margin Wall Street expected. Because the January jobs report was strong, expectations for a Federal Reserve rate cut shifted from June to July. The market reacted right away: the 2-year Treasury yield jumped 15 basis points to 4.55% as traders priced in higher rates for longer. This suggests traders may want strategies that benefit from the delay, such as buying puts on interest rate-sensitive bond ETFs.

Tech Sector Rotation Deepens

The technology sector is showing a clear and “violent” split. Non-AI companies are being hit hard, while AI-focused firms are holding up better. This rotation looks similar to the valuation reset seen in 2022 and may create opportunities for pairs trades. One approach is to buy calls on a basket of AI leaders while also buying puts on ETFs that track traditional software, such as the iShares Expanded Tech-Software Sector ETF (IGV). The sharp one-day drops—Unity Software (U) down 30% and Astera Labs (ALAB) down 20%—show the market’s stronger focus on profitability and the threat from AI-driven competition. For traders, buying put options on non-AI tech companies that have not yet reported earnings may be a useful strategy. These moves suggest that implied volatility, even when elevated, may still not fully reflect the downside risk for companies that deliver weak guidance. Even though broad indexes like the S&P 500 look calm, there is significant volatility beneath the surface. The CBOE Volatility Index (VIX) is around 15, which may underprice the risk from this sector rotation. In this environment, it may be more effective to buy protection in specific vulnerable sectors rather than in broad market indexes. Create your live VT Markets account and start trading now.

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Gold stayed above $5,000 on Wednesday after the latest US jobs report beat forecasts. XAU/USD traded at $5,054, up 0.61%, after dipping to $5,018 and then rebounding toward $5,050. US Nonfarm Payrolls rose by 130K in January. That was up from 48K in December and above the 70K estimate. The report was delayed by a three-day government shutdown. The Unemployment Rate fell to 4.3% from 4.4%. Markets now price the first Fed rate cut in July 2026. US Treasury yields rose. The 10-year yield climbed nearly three basis points to 4.168%. The US Dollar Index edged up 0.07% to 96.95. Prime Market Terminal data shows money markets pricing a 100% chance of a July 2026 rate cut. Kansas City Fed President Jeffrey Schmid said rate cuts could keep inflation higher for longer. He also said policy is not restraining the economy. He added that policy should stay restrictive while inflation is near 3%. A Bloomberg report said the USMCA covers about $2 trillion in goods and services, as discussions continue about a possible US exit. Ukraine President Volodymyr Zelenskyy said territorial terms will be central to the next talks with the US. Upcoming US data includes Initial Jobless Claims and January CPI. CPI is expected to ease from 2.7% to 2.5% year over year. Core CPI is seen at 2.5% versus 2.6%. Key technical levels include the 20-day SMA at $4,935. Resistance sits at $5,100, $5,451, and $5,598. Support levels are $4,655 and the 50-day SMA at $4,588. Gold has shown strong resilience. It stayed above $5,000 even after a strong jobs report pushed expected Fed cuts out to July 2026. Holding up while yields rise and the dollar strengthens suggests solid underlying demand. Traders should expect higher volatility, as the market is split between hawkish policy and safe-haven buying. Focus now turns to Friday’s CPI report. It is likely to drive gold’s next big move. A softer inflation print, as forecast, would support the disinflation story and could push gold above the $5,100 resistance. With this kind of two-way risk, options can help limit downside. If you expect a bullish CPI outcome, call options with strikes above $5,100 could offer leveraged upside. This approach also fits with technical momentum and continued geopolitical uncertainty around the USMCA and Ukraine. Central banks also stayed heavy buyers in 2025, adding more than 1,050 tonnes to reserves, which points to strong long-term demand. If CPI comes in hotter than expected, it would support the Fed’s hawkish stance and could pressure gold lower. In that case, put options with strikes below the 20-day average near $4,935 could benefit from a drop toward the $4,600 area. The move in the 10-year yield back above 4.15% also shows the bond market can react quickly to sticky inflation. With mixed signals, a volatility-focused approach may make the most sense. A long straddle—buying a call and a put at the same strike—can profit from a large move in either direction after the CPI release. In 2025, markets often made sharp moves after major data, which is the type of action that can favor this strategy.

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WTI climbed above $65.00 on Wednesday, rising more than 1%, as tensions between the US and Iran added a risk premium. Price moved above the 50 EMA at $60.85 and the 200 EMA at $62.39 after hitting a January low of $55.68. The rally reached about $65.64 and approached resistance at $66.25. The chart has shown higher highs and higher lows since early January.

Geopolitical Risks And Trade Uncertainty

Markets are focused on the risk that US-Iran nuclear talks could collapse, which could disrupt oil flows through the Strait of Hormuz. Bloomberg also reported that President Trump is considering a USMCA exit ahead of the mandatory 1 July review. That move could raise tariffs on Canadian crude. US data showed January NFP at 130K versus a 70K forecast. The unemployment rate slipped to 4.3%. The EIA reported a crude inventory build of +8.53 million barrels, compared with expectations for a -0.2 million barrel draw. The Stochastic Oscillator (14,5,5) was near 80, and resistance remains around $66.25. A close above $66.25 would open the way to $68.00 to $69.00. If price fails at resistance, it could fall back toward $62.39. Traders are also watching the IEA natural gas storage report and OPEC’s outlook, which calls for weaker demand in Q2.

Current Market Structure And Key Levels

The current setup looks similar to early 2025: strong geopolitical support is clashing with bearish inventory data. WTI is getting lifted by tensions overseas, but the US physical market looks well supplied. This mix adds uncertainty for price action in the weeks ahead. Price is holding above the 50-day Exponential Moving Average at $79.50, keeping the tone bullish since the start of the year. This strength echoes last year’s rebound from the January lows. However, the move is now testing a major resistance area near $85.00, which has stopped rallies twice in the last quarter. The main driver behind recent strength is renewed naval friction in the South China Sea, which is raising fears of disruption to key shipping routes. Recent energy security reports suggest more than 30% of global seaborne crude moves through this region. Any escalation could threaten supply chains, keeping sellers cautious for now. Even so, the fundamentals remain weak, as shown by the latest EIA report. Inventories rose by 7.2 million barrels, far above expectations for a small draw, which weighed on sentiment. At the same time, US crude production is still near record highs around 13.3 million barrels per day. For derivatives traders, this sets a clear range. A sustained break above $85.00 could drive a sharper move higher, making long-dated call options a potential way to target that upside. If price gets rejected at $85.00, it would suggest inventories are taking control, with risk of a move back toward 50-day EMA support near $79.50. Adding another layer, the latest OPEC+ meeting ended with the group keeping current production quotas. That may help put a floor under prices, but it does little to address the supply builds in North America. Demand signals from Asia also matter, especially after softer-than-expected industrial production data from China. How these supply-and-demand forces interact will be key, alongside the technical levels. Create your live VT Markets account and start trading now.

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US stocks fell in afternoon trading after a stronger-than-expected US payrolls report. Early gains in US futures faded as investors considered whether interest-rate cuts could be pushed back. As the day progressed, markets shifted into a “risk-off” mood. The FTSE 100 held up better than most, supported by higher commodity prices.

Market Breadth And Volatility

US market breadth hit a record high. This can point to upside over the medium term, but it can also come with higher volatility. Cryptocurrencies resumed their slide after last week’s bounce. Bitcoin fell again after posting fresh multi-month lows last week. We saw a similar move last year, when a strong payrolls report initially rattled markets. The January 2026 jobs report is having the same effect, with 280,000 jobs added versus 190,000 expected. As a result, expectations for rate cuts this year have dropped from three to just one, which is weighing on equities. That uncertainty shows up in the VIX, which has stayed above 20, suggesting traders expect more turbulence. Unlike early 2025—when record breadth supported a broad rally—the current rally looks narrow and is being led by only a few large-cap tech stocks. That makes hedging more important. Using options to hedge long positions, or buying puts on broader market indices, may be a sensible approach.

Ftse 100 Outlook And Commodities

The idea of the FTSE 100 as a safe haven looks less convincing than it did before. Commodity prices, a key source of support in 2025, have weakened. The Bloomberg Commodity Index is down 3% year-to-date, removing an important tailwind for the UK index versus US markets. The bearish view on Bitcoin has played out. Its long decline since 2025 has left it stuck below prior highs. Implied volatility on Bitcoin options has dropped to multi-year lows, showing limited speculative interest in the derivatives market. Traders may look at selling calls or using bearish spreads, as there appears to be little near-term catalyst for a sharp move higher. Gold, however, remains in demand and is holding above $2,200 per ounce. Ongoing geopolitical risks and central-bank buying continue to support it as a true safe-haven asset. This supports the idea of using gold call options, or gold miner ETFs, to hedge against wider market volatility. Create your live VT Markets account and start trading now.

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GBP/USD rose during the North American session on Wednesday, but later gave back part of the move after a stronger-than-expected US jobs report lowered expectations for Federal Reserve rate cuts. The pair retreated from a daily high of 1.3712 and was trading at 1.3655 at the time of writing, up 0.10%.

Us Jobs Report Shifts Rate Cut Odds

Expectations have shifted sharply after a blockbuster US Non-Farm Payrolls report. Payrolls rose by more than 350,000, far above the 180,000 expected. This surprise strength has materially changed the outlook for a Federal Reserve rate cut in March. As a result, the market-implied probability of a March cut has dropped from above 70% to below 40%. This abrupt repricing suggests GBP/USD volatility could increase in the coming weeks. The 1.3712 high now acts as a key resistance level and may be hard to break. One potential approach is to sell out-of-the-money call options with strike prices above 1.3725 to collect premium if upside remains limited. US Dollar strength also contrasts with recent UK inflation data. Last week, UK inflation came in below forecasts at 2.1%. This gap in economic momentum supports the case for a weaker Pound versus the Dollar. Traders may also consider buying put options to benefit from a possible pullback toward the 1.3500 level. A similar pattern appeared in the third quarter of 2025. At that time, a run of strong US data repeatedly pushed back rate-cut expectations and capped GBP/USD rallies. If the current US data trend continues, it could keep the Pound under pressure for a full quarter.

Historical Parallel Points To Continued Pressure

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