Business inventories in the United States increased by 0.3%, surpassing expectations of 0.2%
In October, US business inventories increased by 0.3%, which was higher than the expected 0.2%. This rise suggests that inventory levels in the US market were adjusted during this time.
Gold prices surged above $4,600 due to a weaker US dollar and ongoing tensions in Iran. Likewise, WTI crude oil reached its highest point since late October, fueled by the unrest in Iran, which added to the risk premium.
US home sales surpass December predictions with an actual figure of 4.35 million
Existing home sales in the United States exceeded expectations in December, hitting 4.35 million compared to the forecast of 4.21 million.
Gold prices are climbing, reaching close to $4,650 per ounce. This increase is fueled by a weaker US Dollar and decreasing US Treasury yields.
Ethereum Experiences Growth
Ethereum is gaining traction, with US-listed spot ETFs attracting $130 million in net inflows, the highest in nearly a week. The GBP/USD pair is under selling pressure, nearing the 1.3420 level, as markets brace for upcoming UK GDP data releases. Hyperliquid is gaining momentum, trading above $26.00, bolstered by strong on-chain metrics and rising activity in the derivatives market. The article discusses various market movements but advises readers that this information should not be seen as investment advice.Do Your Research Before Investing
Readers should thoroughly research before making investment choices, considering the risks tied to open market investments. The current market is marked by uncertainty, suggesting increased volatility in the coming weeks. As Jerome Powell’s term ends and the Fed’s independence faces challenges, buying volatility through options like straddles on the S&P 500 could be a strategic move. This approach directly addresses the growing political and monetary risks that are not yet fully factored in. The unexpected strength in housing data complicates the Federal Reserve’s decisions, reflecting the enduring economic strength that persisted through 2025 despite numerous rate hikes. This data supports the view that the fight against inflation is ongoing, which clashes with market expectations for rate cuts. We can consider using derivatives on SOFR futures to make a bet on a prolonged rate hike path that the market isn’t currently anticipating. Rising geopolitical tensions in Iran are pushing up crude oil prices, with WTI reaching its highest point since last October. This mirrors the energy price shock from 2022, which contributed to inflation and prompted central banks to act decisively. Looking at long positions in crude oil futures or purchasing call options could be beneficial to capitalize on potential supply disruptions. Gold’s rise above $4,600 clearly indicates that traders are seeking safety amid dollar weakness and global instability. Historically, Gold thrives in these conditions, as seen during past geopolitical tensions. Buying Gold call spreads is a prudent way to engage in further gains while limiting our maximum risk at these new record highs. Political concerns are significantly impacting the US Dollar, providing a rare but strong influence on currency markets. This opens an opportunity to short the dollar index (DXY) using futures. We can also take a long position on currencies like the British Pound, which has been rising in response. Create your live VT Markets account and start trading now.Home sales in the United States increased to 5.1% in December, up from 0.5% previously
In December, existing home sales in the United States rose by 5.1% compared to the previous month, which was only a 0.5% increase. This data emerged during a time of fluctuations in several markets, including commodities and currencies.
Gold prices surged above $4,600 as a result of a weaker US dollar and geopolitical tensions in Iran. The GBP/USD exchange rate also climbed, influenced by concerns over the independence of the Federal Reserve.
Federal Reserve Beige Book Outlook
The Federal Reserve’s Beige Book offered a mildly optimistic view, with markets closely watching US data, Fed communications, and UK GDP figures. In the commodities sector, WTI crude prices reached their highest levels since late October due to unrest in Iran. In investment news, forecasts for 2026 pointed out the best brokers across various regions, highlighting features like low spreads, high leverage, and platforms such as MT4. The analysis discussed the advantages and disadvantages of brokers in MENA, Latam, and Indonesia. FXStreet advised caution, mentioning that forward-looking statements come with risks. They encouraged thorough research before investing and reminded readers that they cannot guarantee the accuracy or completeness of their information. Trading in open markets involves risks and potential losses. The surprising 5.1% increase in existing home sales suggests the economy is performing better than expected. We should consider bullish positions through call options on homebuilder ETFs like XHB. This is the largest monthly increase we’ve seen since the market stabilized in mid-2024.Market Implications and Inflation Concerns
However, this strong economic data contradicts Federal Reserve member Bostic’s warning that the battle against inflation is not over, especially with the latest CPI still high at 3.9%. This complicates the Federal Reserve’s next steps and may delay any rate cuts for the foreseeable future. Interest rate futures markets are now scaling back significantly on expectations of rate reductions in the first half of 2026. At the same time, the US dollar is experiencing weakness due to political discussions about the Fed’s independence. This makes derivatives that bet against the dollar attractive. A weaker dollar is supporting the GBP/USD rally, which is reaching heights not seen since late 2025. This presents a good opportunity to consider long call options on currency pairs like GBP/USD and AUD/USD. Geopolitical tensions with Iran are adding a notable risk premium to commodities, pushing WTI crude oil to its highest level in over a year. Gold’s rise above $4,600 per ounce signals that traders are seeking safe havens from inflation and global instability. We believe taking long positions in oil and gold futures or buying call options on their related ETFs is a strategic way to address this uncertainty. The mixed economic signals create a recipe for market volatility, as reflected by the VIX climbing over 18 in recent sessions. This situation suggests that option premiums are increasing, making strategies that profit from large price swings appealing. We should consider using derivatives like long straddles on major indices to take advantage of the expected turbulence. Create your live VT Markets account and start trading now.The AUD/USD pair stays stable around 0.6680 as investors react to recent economic data.
The AUD/USD pair has been stable, with US economic data and positive news from China balancing the situation. In November, US Retail Sales rose by 0.6%, which was better than expected, indicating strong consumer demand. The Producer Price Index grew by 3% year-over-year, and consumer inflation, shown through the CPI, increased by 2.7%, matching predictions.
Interest Rate Outlook
This information suggests the Federal Reserve might keep interest rates steady. In Australia, the Australian Dollar finds support from China’s trade surplus of $114.1 billion in December. Australia’s housing data also supports its currency, as building permits soared by 15.2% in November to nearly a four-year high, reflecting robust housing demand. These factors could affect the Reserve Bank of Australia’s approach to inflation. Right now, the AUD/USD pair is stable, waiting for new macroeconomic data for a clearer direction. Recently, the Australian Dollar showed slight strength against the US Dollar, and a heat map reveals percentage changes among major currencies. Currently, the AUD/USD pair is hovering around 0.6700, reflecting a rivalry between two strong forces: a robust US economy that is bolstering the dollar, and supporting local and Chinese data strengthening the Aussie. This situation indicates that making directional bets may be tricky in the coming weeks. The US economic outlook was reinforced by the December 2025 Consumer Price Index report, which showed a 3.1% annual increase. Although this is a drop from the highs in 2024, inflation remains above the Federal Reserve’s target. This supports our belief that the Fed is unlikely to cut rates before mid-year, providing a solid foundation for the US dollar. In Australia, fourth-quarter inflation in 2025 fell to a two-year low of 4.1%, but it’s still above the Reserve Bank of Australia’s target range of 2-3%. The strong building permit data from late 2025 also argues against any immediate changes in RBA policy regarding rate cuts. The difference in policies between the two central banks helps keep the currency pair contained.Market Strategies and Outlook
However, the strong support for the Australian Dollar from China is facing challenges. While December 2025 trade data was good, we must be cautious due to reports about a major Chinese property developer entering liquidation. This ongoing property crisis in China poses a serious challenge for commodities, which in turn impacts the Australian dollar. This situation creates a classic range-bound market, ideal for strategies that thrive on low volatility. Derivative traders might consider selling options like strangles or iron condors to benefit from premium collection as the pair consolidates. A possible range to watch could be between 0.6550 and 0.6850, where the pair is expected to stay through January. Looking forward, key events will be the upcoming meetings of the central banks, with the Federal Reserve meeting at the end of this month and the RBA in early February. Any change in tone from either bank could be the catalyst needed to break the current stalemate. Until then, implied volatility is likely to remain low, favoring strategies that sell premium. Create your live VT Markets account and start trading now.Rising oil volatility could strengthen NOK against the Euro, say analysts at Société Générale.
Rising geopolitical tensions and increasing volatility in crude oil prices are affecting the EUR/NOK exchange rate. This situation suggests the Norwegian krone (NOK) might strengthen due to concerns about oil supply. Société Générale points out that since September, this currency pair has been closely tied to changes in the oil market, with issues in the Americas and Iran causing fluctuations in crude prices.
If Iran’s oil supply is disrupted, prices could rise by at least $15 per barrel, which would likely strengthen the NOK. In December, Norway’s inflation rate hit 3.1%, higher than the expected 3.0%. This has led the central bank to adopt a cautious approach. Persistent inflation reduces the likelihood of significant interest rate cuts, with markets anticipating only a small cut in the first half of the year.
NOK/SEK Exchange Rate
The NOK/SEK exchange rate is currently just above 0.91, suggesting a potential support level for the krone. This means the NOK may not be very vulnerable at this point. The central bank’s careful stance is expected to help the NOK remain strong, even though growth forecasts are below normal levels. As of January 14th, 2026, the renewed connection between oil prices and the NOK creates a clear opportunity. Brent crude is now priced above $78 per barrel, a level we haven’t seen consistently since late 2025. This situation may lead to a stronger NOK against the euro, driven by ongoing geopolitical risks that are adding extra pressure on energy markets. Given the potential for supply disruptions, traders might consider buying put options on the EUR/NOK pair to bet on a decrease in the exchange rate with limited risk. Historical data from earlier periods of oil market stress in 2022 shows that a quick $15 rise in crude often led to a 2-3% strengthening of the krone in the following weeks. Implied volatility on EUR/NOK options has already risen to a three-month high of 9.2%, indicating that the market anticipates a significant movement.Norway’s Domestic Policy
Norway’s domestic policy outlook is also positive. The unexpected rise in inflation to 3.1% in December suggests that Norges Bank is unlikely to cut interest rates soon. This approach contrasts with the European Central Bank, which is facing signs of slower growth, particularly after last week when German industrial orders fell short of expectations. This difference in policy is likely to support the NOK against the euro. It is also important to note that the krone’s weakness against the Swedish krona appears to have stabilized around the 0.91 level, which has served as a strong support point for over two years. This indicates that the NOK’s downside risk is limited, making long positions in NOK safer. This support level for NOK/SEK helps contain the overall risk of significant krone vulnerability. Create your live VT Markets account and start trading now.Gold remains near record levels due to safe-haven demand amid ongoing economic and geopolitical concerns.
Gold prices are close to record highs, around $4,642, driven by economic and geopolitical uncertainties. Currently, Gold (XAU/USD) is slightly lower at $4,610, supported by ongoing demand for safe-haven assets due to factors like concerns about the Federal Reserve and unrest in Iran.
Reasons for the Gold Surge
Several factors have led to a nearly 2.5% rise in gold prices this week. Easing inflation in the US has increased hopes that the Federal Reserve might gradually change its monetary policy. Recent data showed that core CPI rose less than expected, reinforcing these expectations. The markets are paying close attention to US economic indicators, like a 0.2% month-over-month rise in the headline PPI and a 0.6% increase in Retail Sales. Core PPI and CPI results fell below predictions, with the core inflation annual rate at 2.6%. These figures are shaping discussions on potential interest rate cuts amid ongoing uncertainties, including the possibility of US military action in Iran. Technically, gold is on an upward trend, but caution is necessary due to overbought conditions. The Relative Strength Index (RSI) and Average Directional Index indicate continued strength, with near-term support at $4,600 and resistance at $4,650. Gold is holding close to its all-time high of $4,642, driven by growing geopolitical and economic fears seen since late 2025. While the uptrend seems fundamentally strong, the overbought RSI near 71 suggests this rally might be reaching its peak, indicating a possible risk of a quick pullback below $4,500 in the coming weeks.Gold Trading Strategies
The soft core CPI data from December, which boosted this rally, is now being questioned by last week’s non-farm payrolls report showing 215,000 new jobs created. This strength might delay the Federal Reserve’s expected rate cuts, which could take away critical support for gold. As a result, buying out-of-the-money puts with February expiration dates could be a smart way to protect long positions against potential price corrections. Implied volatility for gold options is rising, with the CBOE Gold Volatility Index (GVZ) above 25, making long options strategies expensive. Historically, when the daily RSI for gold stayed above 70 for a long time—as it did in August 2020—it led to consolidation, not an immediate crash. Traders may want to consider selling cash-secured puts below key support levels like $4,433 or using bull call spreads to profit from more modest price increases while managing risks. Current tensions with Iran could push gold prices even higher, despite the overbought indicators. This uncertainty makes directional bets risky but enhances the attractiveness of long volatility strategies. Buying a February straddle—purchasing both a call and a put at the same strike price—could effectively position traders to benefit from significant price movements, regardless of direction. Create your live VT Markets account and start trading now.Société Générale observes EUR/CHF rise as geopolitical tensions ease and safe-haven appeal for CHF decreases
EUR/CHF is on the rise as geopolitical tensions ease, causing the Swiss Franc to lose some of its safe-haven appeal. According to analysts at Société Générale, even though the EUR/USD has not performed well, less demand for safe-haven assets is allowing EUR/CHF to gain.
Switzerland’s economy shows signs of weakness. The December manufacturing PMI fell to 45.8, much lower than the expected 49. This drop, along with a GDP contraction in the third quarter, indicates economic problems that lessen the Swiss Franc’s safe-haven status. Combining CHF shorts with NOK longs looks attractive due to Norway’s higher interest rates.
The Swiss Franc’s Safe Haven Premium
The Swiss Franc is losing some of its safe-haven advantage, which helps drive up EUR/CHF. This trend began after the Christmas peak in 2025 as global risk sentiments improved. The franc’s decline is occurring even as the Euro has weakened against the US Dollar. The Swiss economy faces clearer downside risks, limiting the franc’s protective appeal. The December 2025 manufacturing PMI fell to 43.2, indicating a deepening industrial downturn. This decline follows a 0.2% GDP contraction from last year’s third quarter, reflecting a shaky economic outlook. In the upcoming weeks, there are opportunities for bullish option strategies on EUR/CHF. Buying call options that expire in February or March 2026 could take advantage of ongoing upward momentum. This strategy allows traders to profit from a rising spot price while managing risk.Interest Rate Opportunities
The interest rate gap between Switzerland and other countries also presents an opportunity. The Swiss National Bank held its policy rate at 1.50% through the end of 2025, while Norges Bank maintained a higher rate of 4.50%. Using forward contracts to short the franc against currencies like the Norwegian Krone can help capture positive carry. Implied volatility for EUR/CHF options is low, consistent with historical trends for this pair. One-month volatility is around 4.2%, close to the year’s low. This low volatility makes buying options cheaper, providing a cost-effective way to position for gradual appreciation. Create your live VT Markets account and start trading now.Euro gains modestly against the US dollar after retreating from December peaks amid ECB commentary
The Euro is trading slightly higher against the US Dollar, stabilizing after dropping from its peak in late December. Recent comments from the European Central Bank indicate a more neutral approach, showing that risks are balanced.
Currently, the Euro seems to be supported around the 50-day moving average at 1.1660. The currency’s momentum is neutral, as indicated by the Relative Strength Index, which is just below 50. The expected trading range for the Euro is between 1.16 and 1.17.
FXStreet Insights Team
The FXStreet Insights Team is made up of journalists who gather market observations from experts. This includes insights from both internal and external analysts. The opinions expressed are those of the authors and may not represent the views of FXStreet. The information given is for informational purposes only and is not a trading recommendation. It’s crucial for individuals to do their own research before making financial decisions, as trading comes with risks, including the potential loss of capital. The authors are not investment advisors and do not provide personalized advice. FXStreet is not responsible for any errors or omissions in the information shared. The Euro has pulled back from its late December 2025 peak near 1.18 and is now entering a consolidation phase. This stability is due to the European Central Bank taking a more balanced tone, recognizing risks on both sides. This neutral stance is currently limiting the Euro’s potential for growth. Recent data supports this balanced market view. The latest estimate from Eurostat shows Eurozone inflation cooled to 2.3% in December 2025, reducing pressure on the ECB. In contrast, the U.S. jobs report from early January 2026 revealed a solid but moderate growth of 185,000 payrolls. This data allows the Federal Reserve to maintain its current policies without showing new signs of aggression. The figures from both economies indicate that neither central bank is eager to make quick moves.Market Outlook And Strategic Approaches
Looking ahead, we expect the EUR/USD to remain range-bound, likely trading between crucial support at 1.16 and resistance at 1.17. Given this outlook, directional option trades may be challenging due to time decay impacting profits in a sideways market. Derivative traders should consider strategies that benefit from low volatility and the passage of time. In the options market, one-month implied volatility on EUR/USD has dropped to just 5.8%, significantly lower than late 2025 levels, making options cheaper. This situation favors strategies designed to collect premium, like selling strangles or setting up iron condors centered around the current price. These strategies can be profitable as long as the currency pair doesn’t make significant moves in either direction. This scenario is similar to the market conditions we noticed in mid-2023, when a pause from central banks led to a lengthy period of range-trading in the EUR/USD. Technical indicators support this view, as the Relative Strength Index remains near the neutral 50 level, indicating weak momentum. We believe taking advantage of this uncertain period is the best approach. Create your live VT Markets account and start trading now.EUR/USD sees little movement as the Euro remains stable against the Dollar amid mixed US economic reports.
**EUR/USD Stabilizes Despite Mixed US Data**
The EUR/USD pair is holding steady near its one-month low as we digest recent mixed data from the US. The Euro remains stable against the US Dollar, with minimal changes following the release of US Producer Price Index (PPI) and Retail Sales data. Currently, EUR/USD is trading around 1.1656, close to its monthly low.
Looking at the past two months of US producer inflation data, October’s PPI increased by 0.1% month-over-month (MoM), while the annual rate dropped from 3% to 2.8%. Core PPI also changed, rising by 0.3% MoM and holding steady at 2.9% annually. For November, there was a PPI increase of 0.2% MoM, and the annual rate climbed to 3%, exceeding the forecast of 2.7%.
In November, US Retail Sales figures showed strong consumer demand, with sales up by 0.6% MoM—higher than the expected 0.4% and reversing October’s 0.1% drop. The control group, important for GDP calculations, increased by 0.4%, down from October’s 0.6%.
**Federal Reserve’s Monetary Policy Outlook**
The recent PPI and Retail Sales results haven’t significantly changed expectations for the Federal Reserve’s monetary policy, with markets previously anticipating two rate cuts this year. All eyes are now on statements from Fed officials to assess the future economic trajectory.
Back in late 2025, the EUR/USD pair remained around 1.1656 as the market dealt with mixed signals from the US economy. Strong consumer spending, indicated by a 0.6% rise in November’s retail sales, contrasted with some confusion in the inflation data from the PPI, causing uncertainty about the Federal Reserve’s policy direction for the upcoming year.
As of January 14, 2026, the US Dollar continues to show strength, pushing the EUR/USD pair toward the 1.1480 mark. The Fed’s cautious stance during their December 2025 meeting was supported by the latest core CPI data, which showed inflation remaining steady at 2.9% year-over-year. This has reduced the expectations for rate cuts that were discussed late last year.
The market’s previous expectations for a potential July 2026 rate cut now seem unlikely. Currently, Fed funds futures only reflect a 35% chance of a single rate reduction before the fourth quarter ends, a sharp contrast to the two cuts being discussed a few months ago.
**Eurozone’s Economic Conditions and Strategies**
Meanwhile, the economic situation in the Eurozone appears weaker, contributing to the decline in the EUR/USD pair. The latest flash manufacturing PMI for the region shows a contraction at 48.5, and recent dovish comments from European Central Bank (ECB) members suggest a preference for easing policies over the Federal Reserve. Historically, such divergence tends to favor the US Dollar, reminiscent of the 2014-2015 period.
For derivative traders, this divergence indicates that implied volatility on the EUR/USD pair, which has been close to multi-year lows, may be set to rise. Options pricing shows a potential breakout, with one-month risk reversal indicating a stronger preference for EUR puts compared to the previous quarter of 2025. This signals that traders are increasingly positioning for a downward trend.
Given this outlook, strategies that capitalize on a falling euro or increased volatility should be pursued. Buying long-dated EUR/USD puts with a strike price near 1.1400 could provide a direct play on further dollar strength. For those expecting significant movement but unsure of the immediate direction, a long strangle using options expiring in March 2026 could effectively position for a breakout.
Create your live VT Markets account and start trading now.
Canadian dollar stays stable against US dollar due to rebound in oil prices
The Canadian Dollar is holding steady against the US Dollar, with a slight uptick as it stabilizes after a decline in December. The recovery in oil prices is helping support the Canadian currency, while the gap between interest rates is narrowing, which had previously contributed to a weaker CAD.
The USD/CAD pair’s rise has slowed below important resistance levels, such as the 50-day moving average at 1.3887 and the significant 1.39 mark. The RSI is showing a decline from recent highs, suggesting that momentum is fading.
