Eurozone industrial production remains strong, but EUR/USD stays below 1.1640, approaching one-month lows at 1.1635
EUR/USD is trading at 1.1635, close to a one-month low of 1.1618, even after positive Industrial Production data from the Eurozone. Production in the Eurozone increased by 0.7% in November and 2.5% year-on-year, which was better than expected.
The Euro remains under pressure due to strong US economic data and steady interest rates from the Federal Reserve. In November, US producer prices rose by 3%, and retail sales grew by 0.6%, supporting the US Dollar.
US Dollar maintains a bullish trend, encountering resistance around the 0.8020 level
The USD/CHF currency pair is currently testing the resistance level at 0.8020, buoyed by strong economic data from the US. While the pair remains in an upward trend, it faces challenges in staying above this resistance zone.
Concerns about geopolitical issues are lessening, which affects the demand for safe-haven currencies like the Swiss Franc. This shift in sentiment follows US President Trump’s remarks about reduced violence in Iran.
Technical Analysis And Market Indicators
Technical analysis indicates that the USD/CHF pair is forming an ascending triangle pattern on the 4-hour chart, suggesting a potential upward break. The Relative Strength Index (14) is at 59.6, indicating bullish momentum, while the MACD is neutral. A rise above the 0.8020 resistance may lead to a test of December highs at 0.8080. Conversely, if the price drops below 0.8000, it could weaken the upward trend, prompting traders to keep an eye on support at 0.7956. The Swiss Franc is influenced by market sentiment and the actions of the Swiss National Bank (SNB), reflecting the economic conditions in Switzerland. It is viewed as a safe-haven currency due to the country’s stable economy and political neutrality. Changes in the Eurozone can significantly affect the Franc due to Switzerland’s strong economic ties there. The US dollar is currently strong against the Swiss franc, testing a key resistance level around 0.8020. This upward momentum is driven by positive US economic reports, which suggest that the Federal Reserve is likely to keep interest rates steady. The pair is forming an ascending triangle, a pattern that often indicates a potential breakout to the upside.Economic Data And Monetary Policy Divergence
Recent data showed the US economy added 215,000 jobs in December 2025, with the latest Consumer Price Index (CPI) reading at 3.3%, indicating persistent inflation. This scenario makes it unlikely for the Fed to cut rates soon, keeping the dollar appealing. We see this economic strength as a key factor supporting the current USD/CHF trend. In contrast, Switzerland’s inflation data from December 2025 showed a decline to 1.4%, which is well below the Swiss National Bank’s target. This difference in monetary policy perspectives—between a strong Fed and a possibly dovish SNB—further weakens the franc. This situation suggests that the pair’s most likely direction remains upwards. For traders, this is a prime opportunity to consider buying call options with a strike price just above the 0.8020 resistance level. This strategy allows them to take advantage of a potential breakout toward the 0.8080 target. Utilizing options helps to define risk in advance, limiting potential losses to the premium paid if the resistance holds. It’s important to note that today marks the 11th anniversary of the Swiss National Bank’s decision to abandon its currency peg in 2015, which caused significant market volatility. While current market sentiment is stable and favors riskier assets over the safe-haven franc, any sudden geopolitical changes could quickly reverse these gains. This historical event serves as a reminder of how the franc can experience abrupt and powerful movements. Create your live VT Markets account and start trading now.NZD/USD stays stable around 0.5740 amid strong US economic data and cautious investor sentiment
International Trade Tensions
Trade tensions between the US and China are putting pressure on the New Zealand Dollar. President Trump has set 25% tariffs on certain semiconductors and essential minerals. However, recent trade data from China is easing worries about the effects of these tariffs, which helps stabilize the New Zealand Dollar. Moreover, President Trump has stated he will not replace Fed Chair Jerome Powell, easing prior concerns in the market. Investors are now looking ahead to the upcoming US jobless claims data and speeches from Federal Reserve officials to assess the economy’s direction. Today’s figures show the New Zealand Dollar gaining strength against the British Pound but only changing slightly against other major currencies. The USD remains strong as fears about the independence of the Federal Reserve diminish. In late 2025, the NZD/USD pair hovered around 0.5740, affected by a strong US economy and ongoing trade tensions. Back then, strong US retail sales and producer price inflation at 3% led us to believe that the Federal Reserve would keep interest rates high, keeping pressure on this currency pair.Fed and RBNZ Divergence
Today, the situation has changed, making the case for Kiwi strength stronger. The Fed’s previous stance of keeping rates high for a long time has shifted towards easing, as core inflation has dropped to 2.4%, and recent job data showed slower wage growth. Meanwhile, the Reserve Bank of New Zealand (RBNZ) is maintaining its Official Cash Rate at 5.5%, citing ongoing inflation at home. This growing difference in policies—a dovish Fed and a hawkish RBNZ—creates a supportive environment for the NZD/USD pair. Even with ongoing US-China trade issues, recent data shows that China’s economy is stabilizing. Its Caixin Manufacturing PMI has remained above 50 for three straight months, signaling growth. This stability in New Zealand’s largest trading partner eases concerns that negatively affected the Kiwi last year. For derivative traders, this suggests positioning for more upside in the NZD/USD from its current level of around 0.6180. Buying call options with strike prices near 0.6300 for the upcoming months is a way to benefit from this expected rise while keeping a defined risk. Since implied volatility has decreased since the high levels during the 2024 US elections, option premiums are now more affordable. Another strategy is to sell out-of-the-money put options to gain premium, as this reflects a belief that the pair has limited downside. For instance, selling a put option with a strike price of 0.6000 leverages the view that strong RBNZ policy will support the currency. This strategy benefits from both time decay and a stable or higher NZD/USD exchange rate. Create your live VT Markets account and start trading now.Retail sales in Brazil surpass expectations with a 1% increase, compared to a 0.3% forecast.
Brazil’s retail sales increased by 1% in November, which is better than the expected growth of 0.3%.
This rise suggests that consumers are spending actively, showing strong demand in the retail sector.
November Retail Growth
In November 2025, Brazil’s retail sales outperformed expectations with a 1% month-over-month increase. This indicates strong consumer demand as we approach the holiday season and year-end. This positive trend sets a strong foundation for economic activity as we enter 2026. The unexpectedly strong data from late 2025 contributes to the ongoing discussion about the Selic interest rate. With December’s IPCA inflation data showing a slight rise to 4.7%, the central bank may hesitate to lower rates in the upcoming meeting. Traders should consider strategies that benefit from stable interest rates in the near term.Impact on Interest Rates and Currency
The strong consumer activity supports a robust Brazilian Real. Given this situation, there is growing interest in options strategies that bet on the USD/BRL exchange rate dropping below its recent support level of 4.90. Selling out-of-the-money USD calls or purchasing BRL calls could position traders for this potential strength. For equity derivatives, this trend points to a positive outlook for sectors focused on consumer spending. We are exploring call options on key retailers and banks that will benefit from increased spending and stable interest rates. This underlying economic strength may help the Ibovespa index futures approach the 130,000 point resistance level seen in late 2025. Create your live VT Markets account and start trading now.The US Dollar Index is experiencing small rises, approaching a monthly high of about 99.25.
The US Dollar Index is currently around 99.25, holding strong. The Federal Reserve is expected to keep interest rates steady later this month, with no further cuts anticipated soon.
The CME FedWatch tool suggests the Fed will maintain interest rates between 3.50% and 3.75%. Recent cuts of 25 basis points haven’t fully impacted the economy yet, and ongoing US CPI data supports the decision to hold rates steady.
The US Dollar’s Momentum
Atlanta Fed President Bostic stressed the need for a tight monetary policy because inflation has surpassed the 2% target. The US Dollar Index has a short-term bullish trend, currently at 99.16 and above a rising trend line. Key indicators, such as the 20-day Exponential Moving Average and the 14-day Relative Strength Index, show rising momentum. A major resistance level is at 100.27, with support around 98.11. The Federal Reserve’s job is to adjust interest rates to balance price stability with employment. It holds eight policy meetings each year to assess economic conditions. Quantitative Easing and Quantitative Tightening are special measures that can influence the Dollar’s value, used during different economic periods. The US Dollar remains strong, hovering near 99.25 as the Fed signals a pause. After a series of rate cuts late in 2025 to help a struggling job market, the Fed has now decided to hold steady. The market is adapting to the fact that with December’s headline CPI at 3.4%, more cuts are not likely for the time being.Market Strategies
For traders in derivatives, it’s wise to keep or start long positions on the Dollar. Consider buying call options on the Dollar Index with strike prices approaching the 100.27 resistance level. This strategy bets that the Fed’s determination to tackle inflation will be stronger than concerns about slow job growth, which averaged only 95,000 new jobs in the last quarter of 2025. Expect more fluctuations in currency markets as traders balance signs of a weak labor market with stubborn inflation. This situation is perfect for volatility plays, such as option straddles on major pairs like EUR/USD ahead of the next CPI or jobs reports. Unlike the clear trends of 2022 during the rate hiking cycle, the Fed’s current pause leads to uncertainty that can be capitalized on. Interest rate futures are now forecasting a prolonged hold, making immediate trading opportunities centered on the currency itself. The strength of the DXY is expected to continue as long as Fed officials, like Bostic, stick to a tight stance. A stronger dollar could also pose challenges for commodities; therefore, consider using put options on gold or oil ETFs as a related strategy. Create your live VT Markets account and start trading now.The US dollar stays stable near recent peaks, backed by strong economic data and consumer spending.
The US Dollar is showing mixed results but is close to weekly highs, supported by steady consumer spending. Retail sales in November met expectations with a 0.4% month-on-month increase, while October’s growth was revised to 0.6%. The Fed’s Beige Book highlights a “mildly optimistic” economic outlook, with slight to modest growth expected in most areas.
The Dollar Index (DXY) is struggling to break above 100.00 as easing inflation hints at possible Fed rate cuts. The Trade Services PPI reached a 15-month low at 1.0% year-on-year, suggesting that businesses are absorbing costs instead of passing them on. January’s Beige Book indicates companies anticipate slower price growth.
Rate Cut Expectations
Currently, there is low expectation of a rate cut in the next three Federal Open Market Committee (FOMC) meetings, though a 25 basis point cut is priced in for June 17. By the end of the year, a total of 50 basis points in cuts is expected. The FOMC’s median rate forecast suggests one rate cut in 2026. Political pressure on the Fed could hinder the US Dollar’s strength. Poland is watching potential effects from the US Department of Justice investigation into the Fed, which relates to upcoming dollar debt issuances. This could signal a gradual decline in the dollar’s status as a reserve currency, as countries begin to consider policy predictability in their borrowing decisions. The US Dollar is holding steady, thanks to economic data that is stable. This was evident in last week’s December jobs report, where payrolls exceeded expectations at 190,000 while wage growth remained limited. This stability makes it risky to bet against the dollar in the short term.Market Volatility and Political Pressure
We expect the Dollar Index will find it hard to stay above the 100.00 mark for long. Recent CPI data from December shows inflation cooling to 2.4% year-on-year, clearing the way for the Fed to consider cutting rates. The important point to watch is the market’s expectation of two rate cuts this year, while the Fed’s own forecasts only indicate one. Since the market isn’t pricing in any rate cuts until the June 17 meeting, implied volatility on short-term dollar options is likely to stay low. This creates an opportunity to sell near-term strangles on currency pairs like EUR/USD, betting on a stable range until clearer signals emerge. We should think about buying longer-term options, such as dollar puts, to prepare for cuts expected in the second half of the year. We also need to consider the political pressures on the Federal Reserve, as these could impact the dollar’s long-term strength. As we saw during the political standoffs in 2025, any perceived loss of Fed independence can lead to sharp, unexpected currency fluctuations. This prompts us to hold some inexpensive, out-of-the-money options as protection against sudden volatility changes. Create your live VT Markets account and start trading now.Gold price surpasses $4,600 again after dipping to around $4,580
Gold (XAU/USD) has recently pulled back from its all-time highs, reaching $4,580 before climbing above $4,600 during European trading on Thursday. The price of this precious metal benefits from a weaker US Dollar, even with easing geopolitical concerns and strong US economic data.
Geopolitical Factors and Market Trends
The US President has toned down his stance against Iran, lowering the chances of immediate military action. Gold remains close to record levels, supported by the US Dollar’s decline, encouraging data from the Eurozone and UK, and cautious Japanese interventions affecting the Yen. Currently trading at $4,620, gold has support in the $4,670-$4,680 range, but bullish momentum is fading. Indicators like the Relative Strength Index (RSI) show signs of bearish divergence, while the MACD indicates weakening upward momentum. Bears are looking to push below $4,570 to trigger further corrections. If gold rises above $4,630, Fibonacci extension targets are set at $4,689 and $4,763. Historically, gold has been a reliable store of value and medium of exchange, especially during times of uncertainty. It serves as a hedge against inflation and currency depreciation, remaining unaffected by specific issuers or governments. Central banks maintain significant gold reserves to enhance economic stability. In 2022, they purchased 1,136 tonnes of gold, reaching a record high. Emerging economies are quickly increasing their reserves, showcasing gold’s lasting appeal as a stable and diverse asset amid changing US Dollar conditions.Price Factors and Investment Strategies
Gold is currently near its all-time high at approximately $4,620, but the recent rally is beginning to lose force. While a softer US Dollar provides some support, the easing geopolitical tensions are reducing immediate demand for gold as a safe haven. This mixed outlook indicates we may face a period of consolidation or potential corrections in the coming weeks. It is important to remember the continuous purchasing by central banks that characterized the market through 2024 and 2025, which creates a solid support level for gold prices. Recent data from the World Gold Council shows that global central banks added over 800 tonnes to their reserves last year, continuing the strong pace from 2022 and 2023. This ongoing demand, combined with inflation remaining above the Fed’s target despite recent rate cuts, limits the chances of a sharp price drop. The bearish divergence on the RSI and the MACD crossover are crucial signals indicating that this rally may be losing strength. Traders anticipating a pullback might consider buying put options with a strike price under the critical $4,570 support level. A less aggressive strategy would involve setting up bear call spreads—selling calls near the $4,690 resistance while buying further out protection—to profit if price remains below this level. For those with existing long positions, it could be wise to hedge profits against a potential sharp reversal. Purchasing protective puts below the current price can help secure gains while still allowing for future upside. Given the current calm might not last, a long straddle—buying both a call and a put—could be beneficial if there’s a significant price swing in either direction. We’ve witnessed similar patterns before, especially during the inflationary period of 2022-2024 when gold initially struggled with rising interest rates before ultimately climbing higher. The market correctly anticipated the central banks’ shift towards easing policies in 2025, which fueled the latest rally. Therefore, any drop toward the $4,500 level should be viewed as a buying opportunity for long-term positions rather than a trend reversal. Create your live VT Markets account and start trading now.USD/JPY approaches yearly peak near 158.50 during European session
The USD/JPY pair is stable around 158.50, close to its yearly high of 159.45 during the European session on Thursday. The Japanese yen is gaining a bit due to speculation that the Japanese government might intervene to address its one-sided movement.
Chief Cabinet Secretary Seiji Kihara emphasized the need for stable currency movements that reflect economic fundamentals. However, the future of the Japanese yen remains unclear, especially with possible changes in Japan’s fiscal policies and potential early elections.
Japanese Elections And Their Impact
Japan’s ruling Liberal Democratic Party does not hold a majority in the lower house, which affects legislation. Reports indicate Prime Minister Sanae Takaichi has a strong chance to win more seats in upcoming elections. The US Dollar is slightly stronger since the Federal Reserve is unlikely to cut interest rates this month. The US Dollar Index is up by 0.1%, nearing its monthly high at 99.26. Japan’s economy, the Bank of Japan’s policies, bond yield differences, and market sentiment all affect the yen’s value. The BoJ’s previous ultra-loose policies led to a drop in the yen, but recent adjustments have provided some support. With USD/JPY trading around 158.50, we’re in a traditional standoff. The strong US dollar dominates, but the risk of Japanese government intervention to support the yen keeps any major surges in check. This tension suggests we may see significant volatility in the coming weeks.Economic Factors Shaping The Currency Pair
The case for a stronger dollar remains strong as we enter 2026. The latest US CPI data from December 2025 shows core inflation at 3.1%, above the Federal Reserve’s target. This is why markets expect no rate cuts this month. With the Fed Funds Rate at 4.75%, the dollar offers considerable yield advantages. In contrast, Japan’s Bank of Japan has an overnight call rate of just 0.1% after slowly reversing its ultra-loose policies throughout 2025. This difference in interest rates is the main reason traders are moving funds from yen to dollar. The gap between the US 10-year Treasury yield, currently at 4.2%, and Japan’s 10-year government bond at 1.1% makes holding yen less appealing. The possibility of a snap election in Japan adds another layer of uncertainty, making options strategies attractive. Traders are buying options that profit from large price fluctuations, as a clear election victory for Prime Minister Takaichi could lead to more government spending and more yen weakness. However, an unexpected result could trigger a sharp reversal. Given the risk of intervention, we should be cautious about a sudden fall in USD/JPY. Looking back at the interventions in late 2022, we saw the currency pair drop several figures within hours after officials acted. Traders should consider buying downside protection, like out-of-the-money put options, to guard against rapid moves. In this environment, traders often structure deals that allow for potential gains but limit losses if the Japanese government intervenes. The market is watching the 160.00 level closely, as this psychological point suggests that intervention is likely. Any movements toward this level should be approached with caution. Create your live VT Markets account and start trading now.In early 2026, silver rises over 25%, continuing its strong upward trend from mid-2025
Silver prices have risen more than 25% since early 2026, continuing a trend that started mid-2025. This surge is driven by supply shortages and rising demand from industries like solar panels and electric vehicles (EVs), along with increased interest from the gold market. OCBC’s FX analysts advise caution due to the rapid increase.
The Gold-Silver ratio fell from last year’s high of 105 to the low 50s, which highlights Silver’s strong performance. Although it’s not at historical lows, the quick decline raises concerns. The recent rise in Silver isn’t due to a rush into exchange-traded funds (ETFs) or speculative buying; major holdings decreased by 2-3% by mid-January, and non-commercial net longs declined despite a 40% price increase.
Medium Term Bullish Outlook
The market positioning isn’t crowded, suggesting a positive outlook for Silver in the medium term and a low risk of a market correction. Silver lease rates are low, indicating that the rally isn’t because of tight physical supplies. While we should be cautious about the swift gains, the bullish case remains strong, with Silver currently at 91.23. Key resistance levels are at 98.70 and 103.20, while support levels are at 84 and 75. This trend encourages buying on dips. Since the start of the year, Silver has surged over 25%, continuing the robust growth from the second half of 2025. This increase is backed by a continued supply shortage, with projections from last year indicating a fourth consecutive annual deficit of over 150 million ounces. Industrial demand, especially for solar panel production, is at an all-time high. Even with solid fundamentals, the rapid price increase calls for caution in the short term. The daily RSI indicates that Silver is now overbought, suggesting a possible pause or pullback ahead. Additionally, the gold-to-silver ratio has plummeted from its 2025 peak near 105 to the low 50s, underscoring Silver’s exceptional performance against gold.Trading Strategy and Market Sentiment
Fortunately, this rally does not seem like a speculative bubble, which is a positive sign for the medium term. Data reveals that holdings in major Silver ETFs have dropped by 2-3% since late December, and the latest CFTC report from January 6th indicates fewer speculative net long positions than a month ago. This means the market isn’t saturated, lowering the risk of a sharp sell-off by leveraged traders. For those trading derivatives, it’s wise to consider buying during price dips rather than chasing prices at current levels. With December 2025 inflation data recorded at 3.5%, precious metals remain a solid hedge against inflation. A drop towards the $84 support level could be an excellent opportunity to enter new long positions or buy call options. The overall bullish trend is still strong, even if we face a short-term consolidation. We’re monitoring key resistance levels at $98.70 and $103.20. The underlying issues of tight supply and strong demand remain unchanged. Create your live VT Markets account and start trading now.The Fed’s actions prompted discussions on de-dollarization, while Brent crude dropped 5% amid tensions.
Energy markets reacted sharply to lowered tensions between the US and Iran, leading to a 5% drop in Brent crude prices. This indicates a cautious atmosphere amid political changes and worries about policy shifts.
**De-Dollarization Discussions**
The Federal Reserve is not rushing to cut interest rates, but talks about de-dollarization are increasing. Recent US Treasury TIC data may show how foreign portfolios are adjusting, shedding light on these discussions.
The Fed’s Beige Book reveals no immediate need for rate cuts, with stability or growth noted in eight out of twelve districts. There are no signs of a weakening labor market, which influences expectations about future rate cuts.
The release of the Beige Book and Treasury data may impact decisions about foreign assets, particularly Chinese investments. If a second rate cut is removed from consideration this year, it could support the dollar.
The 5% drop in Brent crude prices due to eased US-Iran tensions highlights the energy markets’ extreme sensitivity. New data from the Energy Information Administration showed an unexpected increase in U.S. crude inventories, contributing to the downward pressure. In this context, using options on energy ETFs is likely to be a key strategy in the upcoming weeks.
**Federal Reserve Hold**
Based on the latest Beige Book report, we expect the Federal Reserve to hold its rates steady, which should help support the dollar short-term. The CME FedWatch Tool now shows less than a 15% chance of a rate cut before the fourth quarter, a drop from the 40% chance just a month ago. As a result, derivative traders may seek opportunities in strategies that benefit from stable to higher interest rates, such as selling out-of-the-money calls on Treasury note futures.
However, the longer-term trend of de-dollarization is gaining attention, especially amidst ongoing political pressure on the Fed. The latest Treasury International Capital (TIC) data indicates that foreign central banks were net sellers of $55 billion in Treasuries in November 2025, with China’s holdings falling to a new 14-year low. This information suggests that traders might consider longer-dated put options on the dollar as a hedge against this gradual trend.
This scenario creates a conflict between the dollar’s short-term strength and its potential long-term weakness, similar to what we observed in the mid-2000s before a multi-year dollar decline. Traders should monitor for signs of divergence between short-term rate expectations and official sector sales of U.S. assets. This suggests a careful approach, potentially favoring shorter-term bullish dollar positions while using any gains to establish longer-term bearish hedges.
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