Alphabet plans to boost its spending in 2026. The company beat forecasts for earnings and revenue, but the market reacted cautiously to the news of a 50% increase in capital expenditures, now estimated at $199.50 billion. The goal is to strengthen its AI position after experiencing growth in Cloud revenue. However, there are worries about possible risks if this increased spending does not produce the expected results. As earnings reports roll in, doubts about whether this money is well spent may linger into 2026. With Alphabet signaling a major spending boost, we see a spike in implied volatility in its options. This indicates that the market is uncertain about whether the AI investment will pay off or simply waste cash. This scenario is ideal for traders who focus on volatility, rather than just the stock’s direction. This announcement follows a year where the “AI arms race” heated up, with Microsoft and Amazon increasing their infrastructure budgets by over 30%. By the end of 2025, Google Cloud held 11% of the market, still behind AWS and Azure. This large capital investment seeks to narrow that gap and gain a bigger share of the AI-powered cloud market. Traders confident that this investment will secure Alphabet’s future dominance might consider buying call options or selling put spreads. This strategy focuses on the anticipation that short-term fears will ease as the long-term AI revenue potential becomes clearer. The aim is to be positioned for a significant rebound once the market digests this new spending. On the other hand, those who view this as a risky gamble can buy put options. This allows them to profit if the stock continues to fall due to concerns about decreasing profit margins in the coming quarters. It also serves as a useful hedge for anyone holding a significant amount of the stock. The strong divide between optimistic and pessimistic investors suggests a significant price swing is likely in the upcoming weeks. Strategies like a long straddle, which involves buying both a call and put option, can take advantage of substantial moves in either direction amid the high uncertainty. We experienced a similar situation in the early 2020s when Meta shifted toward the metaverse. Its stock dropped sharply due to spending concerns but eventually recovered. That period of significant uncertainty greatly benefited volatility traders. Alphabet’s current situation with AI spending mirrors that time, presenting opportunities for those ready for big changes.

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Heading into its earnings report, Advanced Micro Devices, Inc. (AMD) had high expectations. The semiconductor market is focused on progress in AI GPUs. AMD aimed to catch up with Nvidia Corporation while keeping strong profit margins. There was a need for proof of consistent AI demand that isn’t influenced by location or product mix. AMD reported revenue of $10.27 billion, beating the expectation of $9.9 billion. Their adjusted earnings per share (EPS) was $1.53, exceeding the expected $1.46. However, despite these solid performances, concerns grew about the nature of this growth, tied to short-term AI sales in China. Analysts noted that data-center performance declined when these sales were taken into account. The stock fell even with these positive numbers due to worries about AMD’s speed in executing AI strategies and its valuation. Analysts were skeptical about AMD’s ability to catch up to Nvidia in the AI GPU market quickly. The stock’s valuation included expectations for rapid AI earnings growth, leading to a sell-off due to uncertainty in maintaining margins and demand. AMD needs to show continuous and diverse growth in GPUs while preserving strong profit margins. Future drivers could include large deployments and better margins from sustained AI revenue in data centers. The stock, currently oversold, will recover only if there is proof of scalable AI revenue and improved margins. The market wants to see AI creating steady earnings, not just promising narratives. AMD’s earnings report highlighted how strong numbers weren’t enough for an AI-hungry market. The stock’s drop reflects that any perceived weakness in the AI growth story, especially against a dominant competitor, is met with harsh consequences. This situation creates opportunities for derivative traders as the stock tests a crucial support zone. Market skepticism comes from data dating back to last year. In 2025, Nvidia held over 80% of the data center AI chip market, setting a high bar for competitors. This history raises doubts about whether AMD’s MI300 series can quickly capture enough market share to validate its high valuation. For derivative traders, the drop in implied volatility after the earnings announcement is critical. Options are now much cheaper than they were last week, making it less expensive to open new positions. This dynamic favors buying options instead of selling them, as the risk of a volatility drop has diminished. The stock is currently oversold with a relative strength index (RSI) around 29, testing the vital $195-$200 support range. Bullish traders might consider buying call spreads for a short-term bounce or a return to the average price. Selling cash-secured puts with a strike price below $195 could also be a good strategy to earn premiums while setting a lower entry point. On the other hand, the negative reaction to a good report raises concerns for momentum. Bearish traders should keep a close watch on the $195 level because a break below that could indicate more losses. Buying puts or put spreads would be a straightforward way to bet on a continued decline if the narrative does not improve. Key catalysts in the coming weeks will include announcements of new customer wins, especially from major cloud providers. We are looking for news similar to the deployments with Microsoft Azure we saw in late 2025 since this would provide concrete proof of market adoption. Without such updates, the stock may struggle to find its footing.

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Alphabet outperformed Wall Street’s expectations in the fourth quarter, reporting $2.82 in adjusted earnings per share on $113.82 billion in revenue. Earnings beat estimates by $0.18, while revenue exceeded predictions by $2.34 billion. Initially, the market reacted negatively to Alphabet’s projected capital expenditures of $175 billion to $185 billion. However, shares later rose by 3% in after-hours trading. This uptick was reassuring after the NASDAQ 100 dropped by 1.77% during the regular session, marking its second straight day of losses. Alphabet’s net income climbed 30% from last year to $34.46 billion, and revenue grew by 18%. Google Cloud revenue soared 48% year-over-year to $17.7 billion. Meanwhile, the Services segment also increased by 14% to $95.5 billion. Search revenue rose by 17%, and YouTube ad revenue grew by 9%. However, the Google Ad Network saw a slight decline of 2%. For the first time ever, Alphabet’s total annual revenue surpassed $400 billion, driven by advancements in AI and the rollout of Gemini 3, which improved their services. Despite a rocky start to the week for tech, Alphabet’s strong results are seen as a positive sign. The earnings and revenue beats provide essential support for the sector, especially after the January jobs report was stronger than expected, which unsettled the market. This performance indicates that solid fundamentals can outweigh broader economic concerns. As a result of this report, we anticipate that traders will take bullish positions in GOOGL over the next few weeks. The initial decline due to high capital expenditure guidance was quickly reversed, highlighting investor confidence in Alphabet’s long-term AI strategy. Open interest for GOOGL call options expiring in March surged over 20% in overnight trading, signaling strong directional interest. The 48% growth in Google Cloud stands out and is likely to attract significant attention. This figure shines even more when compared to Microsoft’s recent report, which showed a solid but less impressive 34% growth in its Azure segment. This suggests Alphabet is capturing a larger share of this important growth market. This positive news from Alphabet should boost the entire NASDAQ 100. We observed a similar trend in the second quarter of 2025, where strong earnings from major companies helped the index break out of a multi-week consolidation phase. Traders will likely use this momentum to buy calls on the QQQ, betting on a broader recovery in tech. The success of Gemini is now clear, with 750 million monthly active users demonstrating that the AI product strategy works. Just last year, the monetization of generative AI was still a topic of debate. These results decisively show the value of the massive capital investment, making longer-dated bullish options strategies appealing.

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On Wednesday, GBP/USD is moving in a short-term cycle, fluctuating between 1.3700 and 1.3650. Traders are awaiting the Bank of England’s interest rate decision on Thursday. However, expectations for changes to long-term fundamentals are low. The Monetary Policy Committee is likely to keep rates unchanged after a close vote in December, with only a 4.1% chance of a rate cut in February. In the U.S., important data coming up includes ADP Employment Changes and Initial Jobless Claims, but the main focus is on the delayed Nonfarm Payrolls report, now due February 11. Technical analysis shows GBP/USD is at 1.3652 on the daily chart, leaning bullish as the 50-day moving average is rising above the 200-day. The 4-hour chart also supports a bullish sentiment, whereas the 15-minute chart shows a bearish bias below the declining 200-EMA.

Significance Of The Pound Sterling

The Pound Sterling is the official currency of the UK and plays a crucial role in global trading, making up 12% of transactions. Its value is shaped by the Bank of England’s monetary policy, which targets a 2% inflation rate through interest rate changes. Economic data and trade balances also impact the Pound’s strength. GBP/USD is struggling to stay above 1.2800, a big drop from the tight 1.3650-1.3700 range we saw last year. The market lacks direction ahead of key inflation data next week. This uncertainty gives traders using options a chance to sell volatility, such as with an iron condor strategy. The memory of last year’s close 5-4 vote to cut rates feels distant now. With UK inflation still high at 3.6% as of January 2026, the Bank of England is expected to maintain steady rates through the second quarter. This suggests selling out-of-the-money calls on GBP/USD could be a smart strategy since a major rate hike surprise seems unlikely.

Focus On The US Labor Market

This year, instead of waiting for a delayed Nonfarm Payrolls report due to government issues, we are focused on a weakening U.S. labor market. The latest January 2026 report showed only 95,000 jobs gained, a sharp decline from the over 200,000 monthly gains seen in 2025. This slowdown may indicate future weakness for the U.S. dollar, making long-dated puts on the dollar an appealing hedge. The previously bullish technical outlook from 2025 has flipped. The 50-day moving average is at 1.2850, now trading below the 200-day moving average at 1.2975, signaling a bearish trend. This situation suggests traders should think about buying puts or setting up bear put spreads on any rally that doesn’t break above the 1.2900 resistance level. Create your live VT Markets account and start trading now.

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EUR/USD fell as strong US services data boosted the Dollar, despite softer labor market signals. In the Eurozone, inflation data was weaker than expected, increasing the chances of a rate cut by the European Central Bank (ECB). The US services sector exceeded estimates, but labor market figures indicated slower employment growth. A brief government shutdown in the US postponed key jobs data, which will be released in February.

Eurozone Inflation Data

Eurozone inflation in January was below expectations, with year-on-year rates at 1.7% for the headline and 2.2% for core inflation. Many are waiting for the ECB’s policy decision, particularly focusing on comments from Christine Lagarde about the Euro’s strength. Currency moves showed the Euro was weak, trading near 1.1800 and behaving inconsistently against major currencies. Ahead of the ECB meeting, the Euro fluctuated between 1.1770 and 1.1837. Upcoming US Consumer Price Index data and Trump’s conversation with Xi from China sparked discussions about broad economic issues. The ISM Services PMI rose to 53.8, matching December’s figures, with higher input costs noted.

US Policy Impacts

The US Treasury Secretary reinforced the country’s strong Dollar policy. Market developments include ECB survey results suggesting a possible interest rate cut due to declining profits. The gap between the US and Eurozone economies is becoming clearer. Strong US services data indicates that the Federal Reserve can hold off on rate cuts, while weak inflation in Europe pressures the ECB to ease policy. This scenario favors a weaker Euro against the US Dollar in the near future. Given this, we recommend buying put options on the EUR/USD, aiming for a drop below the 1.1770 support level in the coming weeks. A break below could lead to testing the 20-day moving average around 1.1759. This approach allows profit from a declining Euro while limiting the maximum risk to the premium paid for the options. A similar situation occurred in 2022 and 2023. During that time, aggressive Fed rate hikes compared to a slower ECB caused the EUR/USD to fall below parity for the first time in twenty years. This historical example shows how effective policy divergence can be for this currency pair. The upcoming Nonfarm Payrolls on February 11 and US inflation data on February 13 are key events to monitor. Implied volatility in the options market has risen, with one-month EUR/USD volatility now at 7.2%, indicating expectations for significant price changes. Any strong US data could speed up the Euro’s decline. While the US ISM report reflects ongoing economic strength, the Eurozone’s Harmonized Index of Consumer Prices dropping to 1.7% signals weakness. This is below the ECB’s 2% target, giving Christine Lagarde a solid reason to hint at a rate cut. We will be attentive to any comments regarding the Euro’s strength, as a desire to weaken it could trigger additional bearish movements. Create your live VT Markets account and start trading now.

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The Korean Won is feeling pressure even though the overall economy seems stable. Recent GDP data shows a contraction, and the Bank of Korea is expected to keep its policy rate steady as housing prices rise and the currency market remains volatile.

Currency Range Expectations

Commerzbank’s FX Analyst Moses Lim believes that USD-KRW could stay within a certain range. The Bank of Korea is forecasted to hold its policy rate at 2.5% during its next meeting on February 26. Instead of aiming for a specific rate, the Bank of Korea may focus on reducing large swings in the currency market. The piece was created with Artificial Intelligence and reviewed by an FXStreet Insights Team editor. With the Korean Won showing weakness, managing big price changes seems to be the Bank of Korea’s priority, rather than defending a specific exchange rate. Most expect that the policy rate will stay at 2.5% after the February 26 meeting. This means traders shouldn’t expect any major shifts that could change the currency’s course. Currently, the USD-KRW pair is trading near 1350, influenced by the reported GDP decline in the last quarter of 2025. However, since January’s inflation rate is steady at 2.8%, the central bank is unlikely to lower rates to stimulate the economy, which supports currency stability. This situation creates a more predictable environment for derivative traders in the short term.

Strategies for Profiting from Stability

Considering that the central bank will likely intervene to limit sharp increases, betting on KRW weakness becomes riskier. Their focus on reducing market volatility suggests that strategies benefiting from a stable, range-bound market are better. We think option selling strategies will perform better than directional trades in the upcoming weeks. Historically, during cautious periods from the Bank of Korea in 2025, implied volatility tended to decrease as the market anticipated a stable currency. Thus, setting up trades like short strangles or iron condors on the USD-KRW pair could be effective. These strategies can profit from time decay and from the currency staying within a predictable range, which appears to be the central bank’s main goal. Create your live VT Markets account and start trading now.

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Nasdaq 100 futures fell after hitting a peak at 26,036 and breaking below the 25,405 pivot point. Right now, the price relies on the support range between 25,051 and 24,774. If it can recover this level, it might reset the market structure. However, if it drops below 24,774, we may see further declines. The market couldn’t hold above the previous high and has now tested the lower support range. This pressure started when it was rejected early at the daily pivot of 25,405, causing a sharp decline of over 2%, dropping to 24,774. The market’s next move depends on whether it stabilizes above the support range or breaks through it. A drop below 24,774 could lead to a further decline towards 24,579–24,142, marking the next support zone. Traders will look for signals of price acceptance or rejection at these critical levels. Daily updates monitor key levels and follow a structure-first strategy, watching how prices change over time. This technical analysis helps understand market behavior and is not financial advice. Understanding the structure is essential, as price action indicates how the market reacts. The Nasdaq 100 was clearly turned away from the 26,036 level, and the drop below 25,405 shows that sellers are in control for now. The support range between 25,051 and 24,774 is crucial, as it will determine the market’s next big move. This decline isn’t surprising. In January 2026, major tech firms reported an average 5% downward revision in earnings guidance, the first dip since late 2024. Additionally, recent U.S. Producer Price Index (PPI) data showed a surprising increase of 0.4% month-over-month, diminishing hopes for aggressive Fed rate cuts. This mix of slowing growth and persistent inflation is creating challenges. If the market accepts prices below 24,774, traders should consider protective measures. Buying puts or setting up put debit spreads on NQ futures or related ETFs could be a smart move if the market rotates down to the 24,142 area. This would indicate that the downward trend from late 2025 is reemerging. On the other hand, if buyers defend the 25,051–24,774 range and successfully reclaim 25,051, it could be a good chance to sell puts or start call credit spreads. A successful defense here might trap aggressive short-sellers and spur a rally back up to the 25,405 pivot. The key is to wait for confirmation that support holds instead of trying to guess the bottom. We’ve seen similar patterns before, like the sideways movement after the sharp drop in early 2022. During that time, failed upward attempts were often followed by tests of lower levels, giving nimble traders opportunities. This current scenario feels similar; identifying key structural levels is more important than picking a long-term direction.

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The US private sector added 22,000 jobs in January, falling short of the expected 48,000. However, the ISM Services PMI held steady at 53.8, slightly better than the anticipated 53.5. President Trump signed a bill that ended the partial government shutdown, providing some relief. He also announced plans to talk with Iran in Oman. The US Dollar Index (DXY) is close to 97.70, despite mixed data. Notably, the Prices Paid Index rose to 66.6, while the Employment Index dropped from 51.7 to 50.3.

US Dollar Dominance

The US Dollar showed strong performance against the New Zealand Dollar. The AUD/USD pair fell to about 0.6970, influenced by a strong USD and an interest rate hike from the RBA. The EUR/USD pair remains around 1.1800, with the ECB likely to keep interest rates steady ahead of an upcoming announcement. Currently, USD/CAD is trading at about 1.3680, while GBP/USD is at 1.3640, both awaiting central bank decisions. USD/JPY has risen to a seven-day high of 156.70, showcasing the USD’s strength against all major currencies. Gold has stabilized at around $4,908 following the end of the government shutdown and easing tensions in global affairs. Looking ahead, important economic data releases and monetary policy decisions from the Bank of England and the European Central Bank are on the horizon. Reflecting on this time in 2025, we observed the US Dollar strengthen even with mixed signals like a disappointing private jobs report. The resolution of the government shutdown boosted the Dollar Index (DXY) toward 97.70. This showed a trend where the dollar could rise as domestic uncertainties were resolved.

Inflationary Pressures And Economic Outperformance

Today’s labor market is vastly different, and this should guide our strategy. The ADP report indicated only 22,000 jobs added in January 2025, but January 2026 brought a stunning Non-Farm Payrolls report with 353,000 jobs added, far exceeding expectations. This improved economic strength supports the Federal Reserve’s hawkish stance and a stronger dollar. The Dollar Index now trades firmly above 104, a significant rise from the previous year’s 97.70 level. For derivative traders, this sustained strength suggests that buying call options on the USD against currencies with weaker outlooks is a sound strategy. The dollar’s yield advantage, with the Fed Funds rate between 5.25% and 5.50%, makes it costly to bet against. Inflationary pressures have been a key focus of the Federal Reserve over the past year. While headline CPI has dropped to about 3.1%, it remains above the Fed’s target. This continues to reinforce the expectation of “higher for longer” interest rates, making volatility options appealing around major inflation data releases. The gap between major economies is clearer now. In February 2025, EUR/USD was near 1.1800 despite weak inflation data; today, it struggles to stay close to 1.0700. This pattern over the past year makes bearish strategies, like buying puts on the EUR/USD, a logical choice, especially as the US economy outperforms the Eurozone. Similarly, other currency pairs reflect dollar strength. AUD/USD, which was near 0.6970 then, now trades around 0.6500, affected by global growth concerns despite the RBA’s initiatives. The consistent theme is that the resilient US economy supports long dollar positions through futures or options. Last year, the focus was on resolving domestic political issues, while today it’s on the Fed’s data-driven policy. We should expect that any upcoming data suggesting the US economy remains strong will boost dollar strength further. Therefore, positioning for ongoing high interest rates and a strong dollar is advisable in the coming weeks. Create your live VT Markets account and start trading now.

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The Canadian Dollar (CAD) stayed steady against the US Dollar (USD), trading below 1.3700. This stability followed the conclusion of a US government shutdown and a disappointing private payrolls report that influenced the market. The Loonie has pulled back from its highest points in sixteen months due to weaker Canadian growth data and increased demand for USD. President Trump approved a $1.2 trillion funding package to end the partial shutdown. Meanwhile, the Department of Homeland Security only secured a two-week funding extension, as negotiations are still ongoing. The Bureau of Labor Statistics postponed the release of important labor data because of the brief closure.

Private Payrolls and Economic Concerns

The ADP National Employment Report showed that private payrolls grew by just 22,000 in January, which was below expectations. In 2025, private employers added 398,000 jobs, a significant drop from 771,000 in 2024. We await the release of the January Nonfarm Payrolls report until government funding is fully restored. Treasury Secretary Scott Bessent spoke to Congress about how tariffs affect costs. Despite previous claims, he stated that tariffs haven’t driven prices up. The market is also focused on a Supreme Court ruling related to trade duties. WTI crude oil approached $64 per barrel after recent US military actions, with API data reporting an 11.1 million barrel decrease in inventories. The US Dollar Index held at 97.4, as the lack of official labor data raised market caution. The USD/CAD exchange rate was around 1.3635, showing minor changes after dropping from 1.3490. Key resistance levels include the 50-day EMA at 1.3700, while support lies near 1.3600. The broader downtrend for this pair continues, with movements in oil prices and interest rates set by the Bank of Canada impacting the CAD’s value. Other economic indicators and trade conditions are also crucial.

Market Uncertainty and Strategy

Currently, with USD/CAD around 1.3635, there’s a palpable uncertainty in the market. The very weak private payrolls report for January highlights risks for the US economy. This uncertainty contrasts with a slight rebound of the US dollar, creating tension ahead of key data. The delay of the official Nonfarm Payrolls report is a key factor to monitor. This situation creates an opportunity in the options market, as implied volatility may not adequately reflect the risk of a significant surprise when the data is released. Strategies that profit from a substantial move, regardless of direction, should be considered once the data becomes available. Reflecting on 2025, the addition of only 398,000 private sector jobs is troubling, especially compared to millions of job gains in years like 2023. This context makes the upcoming NFP report crucial. A weak report could confirm a severe economic slowdown, severely impacting the US dollar. A strong report, however, could indicate that previous weaknesses were temporary, causing a sharp increase in the dollar’s value. We should also closely watch oil prices, which help support the Canadian dollar. WTI crude rising toward $64 a barrel due to geopolitical tensions and a significant inventory drop provides a strong counter to USD strength. If oil crosses and stays above $65, it may limit any significant upside for USD/CAD, even with positive US news. Market expectations for a Federal Reserve rate cut in June now hang in the balance. A weak NFP release could push those expectations forward to April, which would be bearish for the US dollar. We can track derivatives on Fed Funds futures to observe how these probabilities change in real time. In the upcoming weeks, we should consider buying volatility using strategies like a strangle, where we buy out-of-the-money call and put options. This approach positions us to benefit from a significant breakout from the current 1.3540-1.3735 range once the NFP data clarifies direction. For those who are bearish on the US economy, purchasing straightforward USD/CAD put options offers a defined-risk method to position for a downward move. Create your live VT Markets account and start trading now.

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A new report from OCBC Bank, by Sim Moh Siong and Christopher Wong, discusses how the Indian Rupee (INR) strengthened after news of a trade agreement between the US and India. However, they warn that without more details, this boost may not last as attention shifts to other economic factors. Currently, the US dollar to Indian Rupee (USD/INR) is trading around 90.3. Daily trends show a slight bearish movement, with the Relative Strength Index (RSI) approaching oversold levels. There’s support around the 90 level, based on the 23.6% Fibonacci retracement from the 2025 low to the 2026 high. FXStreet, known for its market analyses, shares this report along with updates on currency movements like EUR/USD and GBP/USD, forecasts for gold prices, and changes in cryptocurrencies like Ethereum and Ripple. These insights aim to inform readers but are not direct investment advice. FXStreet emphasizes the importance of doing your own research before investing. The recent trade deal has helped the Rupee, bringing the USD/INR pair down to test a key support level. We are closely watching the 90.0 marker, which is a critical technical floor based on the 2025 low versus the recent 2026 high. If this level breaks, it could indicate more strength for the INR. However, mixed economic data could dampen this rally’s strength as the market shifts its attention once initial excitement fades. India’s final quarter of 2025 recorded strong GDP growth of 8.4%, but consumer price inflation remains high, last reported at 5.7%. This persistent inflation could limit the central bank’s options. This mixed information suggests the rally might be fragile, especially with the US Federal Reserve keeping rates steady at a 24-year high throughout 2025. The interest rate gap between the US and India supports the dollar, which might quickly reverse INR strength driven by sentiment. For those expecting the USD/INR to keep falling, buying short-dated put options with a strike price just below 90.0 could be a smart move. This strategy profits from a potential breakdown while clearly defining your maximum risk if the support holds, allowing participation in the bearish trend without overcommitting funds. On the flip side, with the RSI near oversold territory, a rebound from the 90.0 support is also possible. Traders who predict a reversal might think about buying call options to capitalize on a move back toward the 90.3 level and higher. A bull call spread may be a cost-effective way to pursue this strategy. Implied volatility for this pair has been decreasing, reaching lows not seen since late 2025, indicating that the market might be underestimating the risk of a sharp price movement. This situation makes strategies like long straddles or strangles appealing to capture potential breakouts in either direction. The lack of specific trade deal details increases uncertainty, suggesting that volatility could return soon.

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