Brazil’s industrial output declines by 1.2% year on year in November, missing predictions.
Brazil’s industrial output in November dropped by 1.2% compared to the same time last year. This decline was more significant than the expected 0.1% drop, showing weaker industrial activity than forecasted.
In the currency market, the Japanese yen remained steady, with less volatility. The British pound saw a small decrease as it continued to stabilize after a recent rise.
In December, Mexico’s annual inflation rate was 3.69%, which was below the expected 3.8%
Commodities and Cryptocurrency Market
Gold prices have fallen to around $4,430. This drop is linked to the strengthening US dollar and higher Treasury yields. In the cryptocurrency world, the Pi Network experienced a nearly 2% decline, trading just above $0.2000, while Centralized Exchanges gained 1.90 million PI tokens. Looking ahead to 2026, it’s important to stay cautious, even if there’s some hope for improvement. Forex traders are advised to choose brokers that cater to different markets and trading styles. This is crucial for making wise investment decisions given possible risks. Remember, this information is for your reference and not financial advice. In December, Mexico’s inflation rate was 3.69%, which is lower than our expected 3.8%. This indicates that the price pressures observed in mid-2025 are easing faster than we thought. Consequently, Mexico’s central bank, Banxico, may consider lowering interest rates in the first quarter of this year. Traders should prepare for a weaker Mexican Peso in the upcoming weeks. The high interest rates in Mexico led to a successful carry trade that boosted the peso through much of 2025, but this trend could soon change. We should look for strategies that benefit from a rising USD/MXN exchange rate, such as buying call options on this pair.Interest Rate Futures and Mexican Bonds
The trend of disinflation is becoming clearer, with the current inflation rate of 3.69% moving closer to Banxico’s 3.0% target. With the central bank keeping its policy rate at a high 10.00%, there is plenty of room for potential cuts. This situation is different from that in the US, where a strong dollar indicates the Federal Reserve might take longer to ease policies, potentially pushing the USD/MXN rate higher. Additionally, traders should expect declining yields on Mexican government bonds. The market will start to price in rate cuts more aggressively as we approach the next policy meetings. This makes interest rate futures that bet on a lower TIIE rate increasingly appealing in the short term. Create your live VT Markets account and start trading now.Brazil’s industrial output for the month stayed at 0%, missing the 0.2% forecast.
In November, Brazil’s industrial output stayed at 0%, which was below analysts’ expectations of a 0.2% increase. This stagnant performance raises concerns about the growth of the industrial sector.
The US dollar has strengthened, affecting various currency pairs like GBP/USD and EUR/USD. The EUR/USD pair is currently around 1.1670. This stronger dollar is also impacting commodities, notably gold, which has dropped to roughly $4,430 per troy ounce.
Cryptocurrency Update
In the cryptocurrency market, Pi Network is seeing a downward trend as sellers dominate. About 1.90 million PI tokens were traded on centralized exchanges in just 24 hours. Although there was a recent 2% drop in price, it is still trading slightly above $0.2000. Looking ahead to 2026, the economic conditions we see in 2025 will continue to shape the landscape. Traders and investors are being careful due to possible changes in the global market. Brazil’s flat industrial output for November 2025 is concerning, hinting at a possible economic slowdown as we enter the new year. This follows a weak fourth quarter where the manufacturing sector shrank by 0.5%. We should be cautious about taking long positions on the Brazilian Real (BRL) since this weakness might persist.US Dollar Strength
Currently, the main trend is the strength of the US dollar, pushing EUR/USD and GBP/USD to multi-day lows. Recent data shows initial jobless claims are stable at around 215,000, indicating a strong US labor market supporting the dollar. This positive sentiment for the dollar is influencing the currency markets significantly. All eyes are on tomorrow’s US Non-Farm Payrolls report, which is a key event to watch. Following several policy changes by central banks in 2025, this jobs report will be important for predicting the Federal Reserve’s future actions. A strong report, which many analysts expect, could lead to further gains for the dollar. Gold is under pressure due to both the stronger dollar and rising bond yields. The US 10-year Treasury yield has risen back toward 3.95% this week, making gold, which does not yield interest, less appealing. If yields keep climbing, gold may test lower support levels. After a stable 2025, we are now entering a cautious period of normalization. The shocks we experienced last year are not expected to be repeated, but we should remain alert. We will see if the resilience from 2025 continues into the first quarter of this new year. Create your live VT Markets account and start trading now.The Dollar Index is approaching its 200-day moving average, suggesting potential upward momentum for the USD.
The US Dollar is rising against most major currencies, with the Dollar Index nearing its 200-day moving average. A breakthrough here could boost momentum, but predictions indicate any gains may be short-lived. Recent data supports an expected 50 basis point interest rate cut by 2026.
In December, ADP private payroll growth was lower than expected, adding only 41,000 jobs. The growth mainly came from the education and health services sectors, hinting at a potential slowdown in the labor market. The JOLTS report for November also shows decreased labor demand, with fewer hiring and job openings.
ISM Services Index Update
The ISM services index for December reflected strong activity in the sector, while price pressures eased. The index reached 54.4, exceeding forecasts, and new orders hit their highest level since September 2022. Employment rates increased, and Prices Paid fell to the lowest in nine months. An increase in productivity, driven by AI, could support the USD’s strength by allowing the Fed to keep its policies tight for longer. Higher productivity can boost growth potential without raising inflation. The expected Q3 non-farm productivity data is a growth estimate of 5.0% SAAR, much higher than the long-term average. The Dollar Index is approaching a key resistance level, nearing its 200-day moving average of around 103.85, which might limit the recent rally. A clear break above this point would suggest further gains for the dollar in the coming weeks. Yesterday’s weak ADP payrolls data of +41k confirms the cooling labor market trend seen in late 2025. This supports the market’s current pricing, showing a high likelihood of 50 basis points in rate cuts this year according to CME FedWatch data. Consequently, any dollar strength should be seen as an opportunity to sell.Services Sector Update
Despite this, the services sector remains robust, with the ISM New Orders index reaching its highest point since September 2022. Importantly, the Prices Paid component fell, indicating disinflation even in a strong environment. This complicates the narrative for a straightforward, dovish Fed pivot. The biggest risk to a weaker dollar is a potential surge in AI-driven productivity, which could enable the Fed to maintain high rates without fueling inflation. Today’s Q3 2025 productivity data is expected to be an impressive 5.0%, significantly above the 1.3% average from 2007 to 2019. Such a high figure could alter the outlook and support renewed dollar strength. With these mixed signals, traders should consider strategies that could benefit from significant price movements, rather than predicting a direction. The upcoming productivity report is a clear catalyst for volatility, making options straddles or strangles on dollar-related instruments attractive for capitalizing on a breakout, whether from a productivity surprise or a confirmation of the labor market slowdown. Create your live VT Markets account and start trading now.Hints of EU reconciliation boost the pound and spark renewed Brexit talks in Britain
The Brexit topic is back in British politics. Labour politicians are now focusing on its long-term impact on public finances and economic growth, which is surprising since they previously shied away from the discussion.
On Monday, the pound increased in value against both the US dollar and the euro. This rise happened even though there was not much data to back it up. The euro and dollar weakened, and the Prime Minister’s remarks about strengthening ties with the EU also helped boost the pound.
Brexit Challenges Continue
The UK faced challenges before Brexit, and the situation has gotten worse since. A closer relationship with the EU could help ease some recent issues, but it won’t solve everything. Gaining access to the EU single market may involve trade-offs, and changes may not come quickly. If access to the EU single market improves, the pound could rise even more. Recent currency changes hint at these possible benefits, but it’s too early to see all the positive results from warming relations with the EU. This week, the pound surged based mainly on political comments about a closer UK-EU relationship. This follows discussions from last summer, when politicians began openly addressing Brexit’s negative long-term effects on the economy. Currently, the foreign exchange market seems overly optimistic about these early signs.Pound’s Fragile Strength
Despite a weak economic situation, the pound recently hit a multi-month high against the dollar. UK GDP growth for 2025 is expected to be just around 1.9%, according to last year’s forecasts. The productivity issue, which existed before the Brexit vote, is still not resolved. This indicates that the pound’s strength relies more on hope than on economic realities, making it prone to changes in sentiment. Because of this disconnect, we should expect increased implied volatility in sterling options in the coming weeks. The current rally feels premature since real access to the EU single market won’t come soon or without major political compromises from the UK. This uncertainty makes it a good time to use options strategies, such as buying straddles, to prepare for potential price swings in either direction. Any formal negotiations will likely be complex and lengthy, requiring compromises on sensitive topics that the market is currently ignoring. Our experience from the original Brexit talks between 2017 and 2019 shows that there is a high level of risk in these situations. Sterling will likely react sharply to any news from London or Brussels, creating significant short-term trading opportunities. Therefore, it’s wise to use derivatives to manage risk, such as buying call options to join in on potential gains while limiting losses if political goodwill fades. Create your live VT Markets account and start trading now.During European trading, the AUD/USD pair fell to around 0.6690 after reaching 0.6766.
The AUD/USD is making a downward move, reaching around 0.6690 due to a weaker Australian Dollar. The trade surplus decreased to 2,936 million AUD in November, mainly from falling exports.
In contrast, the AUD/USD has pulled back from the previous day’s high of 0.6766. The weak Consumer Price Index (CPI) and disappointing trade data are putting pressure on the Australian Dollar.
Australian Dollar Faces Challenges
Inflation in Australia rose by 3.4%, which is lower than the expected 3.7%, and it remained stable month-over-month. The Reserve Bank of Australia has indicated that interest rate cuts are not on the horizon, although rate hikes might still be possible. Exports dropped by 2.9% in November, following a rise of 2.8% the month before. Meanwhile, the US Dollar is holding steady, supported by strong ISM Services PMI data from December. The US Dollar Index has risen to about 98.86, marking a four-week high. The ISM reported an increase in Services PMI to 54.4 from 52.6 in November. Upcoming US Nonfarm Payrolls data is very important, scheduled for release on Friday, and it will be closely watched.Economic Trends and Trading Outlook
We see the AUD/USD pair under stress, reminding us of the early part of 2025. Back then, the pair sharply fell from its highs after disappointing Australian economic figures for late 2024, which included an unexpected drop in the trade surplus and softer inflation data. In January 2025, the Reserve Bank of Australia maintained a tough stance, hinting at potential interest rate hikes even with cooling inflation. Deputy Governor Hauser remarked that rate cuts were “unlikely anytime soon” due to high inflation levels, which offered some temporary support for the Australian Dollar. At the same time, the US Dollar was gaining strength due to robust economic reports. The ISM Services PMI for December 2024 was significantly above expectations, driving the US Dollar Index to a four-week high. This created a favorable situation for a lower AUD/USD. Now, in early 2026, this gap seems to be widening again, setting up a promising trading scenario. The most recent Australian CPI data for November 2025 has dropped below the RBA’s target range at 2.8%, while the trade surplus shrank to just 1,950 million, influenced by declining iron ore prices. This is a stark contrast to the RBA’s position from a year ago. On the other hand, the latest US Nonfarm Payrolls report for December 2025 showed a solid increase of 195,000 jobs, surpassing market expectations. This strong performance in the US labor market suggests that the Federal Reserve is unlikely to quicken any potential rate cuts. The significant disparity in economic performance between the two countries indicates ongoing weakness for the Australian Dollar. Given this situation, traders should consider positioning for further declines in AUD/USD in the coming weeks. Buying put options on AUD/USD is a straightforward way to profit from a continued drop while managing risk. Bearish put spreads could also be considered to reduce the initial cost of the trade. Create your live VT Markets account and start trading now.Mixed European data and Japanese policy expectations keep EUR/JPY around 183.00 today
Eurozone Economic Indicators Show Mixed Results
Consumer Confidence in the Eurozone increased to -13.1 from -14.6, and Industrial Confidence also saw a slight rise. However, the Services Sentiment indicator dropped to 5.6, which was below expectations, and the Economic Sentiment Index fell to 96.7 from 97.1. According to Eurostat, the Producer Price Index rose by 0.5% month-over-month, but the annual figure decreased by 1.7%. The Unemployment Rate fell to 6.3% in November from 6.4%, showing a slight improvement in the labor market. These mixed signals from the Eurozone, along with previous inflation data, indicate easing consumer price pressures. As a result, the Euro remains under pressure against the Yen. The EUR/JPY exchange rate is around 183.00, reflecting cautious market sentiment due to uncertainty over the Eurozone’s recovery and Japan’s monetary policy. We are seeing the EUR/JPY trading closely around the 183.00 mark, indicating a standoff between these two major currencies. Traders believe the Bank of Japan (BoJ) is finally leaning towards higher interest rates, which is boosting the Yen. Meanwhile, the Euro faces challenges as mixed economic data raises doubts about its strength.Strategies For Trading EUR/JPY
Looking back to 2025, we noticed the BoJ started preparing for this policy shift after years of very loose monetary policy. Currently, markets believe there is over a 70% chance that the BoJ will raise interest rates by 15 basis points at its March 2026 meeting. This growing confidence in a stronger Yen adds pressure to the EUR/JPY pair. The Eurozone’s situation adds to this pressure. Although the unemployment rate dropped to 6.3%, it is overshadowed by negative trends, such as the unexpected 1.2% decline in German factory orders. This suggests that Europe’s industrial sector is struggling, which weakens the Euro’s attractiveness. Given this outlook, we should consider strategies that could benefit from a possible decline in the currency pair. Buying put options with strike prices below the current 183.00 level, targeting around the psychological support of 180.00, offers a clear bet with defined risk. Choosing expiration dates in late February or March allows time to adjust for upcoming central bank announcements. For those who expect the pair to stay within a range or slowly decrease, selling out-of-the-money call options is a solid strategy. You can take a short position with a strike price near the 185.00 resistance level to collect premiums. This strategy takes advantage of the belief that upward momentum is limited due to weak economic data from Europe and a strengthening Yen. Create your live VT Markets account and start trading now.Euro rises for three days to near 0.8700 due to positive Eurozone sentiment and lower unemployment
Strong Eurozone Data
Economic indicators from the European Commission have exceeded expectations. In December, Consumer Confidence rose to -13.1, Business Climate improved to -0.56, and Industrial Sentiment increased to -9. In a surprising turn, German Factory Orders jumped by 5.6% in November, defying predictions of a 1.0% decline. On the other hand, the Pound remains weak due to recent updates in the S&P Global Services PMI, highlighting ongoing economic difficulties in the UK. Eurostat’s report shows a decrease in unemployment, which is a positive sign for the Euro. Additionally, the Producer Price Index indicates that domestic commodity prices are higher than expected, which could also benefit the Euro.Strategy and Technical Analysis
The noticeable difference between the strong Eurozone data and the weak UK economic outlook suggests we should prepare for a further rise in EUR/GBP in the weeks ahead. A simple strategy is to consider buying call options with a strike price around 0.8700. This approach allows us to take advantage of the upward trend while keeping potential losses in check. The favorable Eurozone numbers, especially the decline in unemployment to a multi-year low of 6.3%, along with the unexpected increase in producer prices, give the European Central Bank a reason to stay firm. Throughout 2025, we’ve seen the unemployment rate gradually decrease from 6.5%, and this trend might delay any interest rate cuts. This strong policy stance should continue to support the Euro against other currencies. Create your live VT Markets account and start trading now.UOB Group analysts predict NZD/USD will range between 0.5740 and 0.5825 based on observations
NZD/USD is expected to move between 0.5740 and 0.5825, according to UOB Group analysts. The NZD traded between 0.5770 and 0.5792, closing slightly lower at 0.5771, a decrease of 0.22%.
This predicted movement suggests a possible dip to 0.5760, but it’s unlikely that the main support at 0.5740 will be tested. Resistance levels are at 0.5785 and 0.5795, with the currency likely to stay within this range.
Market Insights From FXStreet
The FXStreet Insights Team, recognized for sharing expert market analysis, emphasizes these predictions and trends. They also offer additional content focused on current market movements and forecasts. A legal notice warns that the information provided carries risks and uncertainties. It is essential to research thoroughly before making any financial decisions, as the views expressed belong solely to the authors. The platform and contributors are not responsible for any errors or investment losses. In the weeks ahead, we expect the NZD/USD pair to remain stable, likely trading between 0.5740 and 0.5825. This indicates a period of low volatility, making strategies that benefit from the currency staying within a channel preferable. Therefore, we recommend against betting on a significant breakout in either direction.Market Outlook For 2025
This outlook is supported by the economic situations in New Zealand and the United States at the end of 2025. In its last meeting of 2025, the Reserve Bank of New Zealand kept its Official Cash Rate unchanged, and Q4 inflation data was reported at 2.8%, within the RBNZ’s target range. This lack of pressure to change the rate is helping to stabilize the Kiwi dollar. The US Federal Reserve has also indicated a neutral stance, with the December 2025 jobs report showing steady, moderate growth. With neither central bank providing strong direction, the currency pair is likely to remain stable. The low implied volatility, currently around 9% for one-month options, supports the expectation of limited movement. For derivative traders, this environment is perfect for selling premium. We should consider strategies like an iron condor, which involves selling a call spread with a strike above the 0.5825 resistance and a put spread below the 0.5740 support. This strategy allows us to profit from time decay as long as the NZD/USD exchange rate stays within this established range. The main risk would be an unexpected economic shock, such as a surprise in the upcoming US CPI data, which could push the pair out of this channel. We need to closely monitor the key support and resistance levels. A decisive daily close outside the 0.5740-0.5825 range would indicate that this stable environment has changed. Create your live VT Markets account and start trading now.Indian Rupee falls against US Dollar after rise as importers react to intervention
The Indian Rupee (INR) fell against the US Dollar (USD) on Thursday, nearing 90.30. This happened even after the Reserve Bank of India (RBI) sold US Dollars heavily on Wednesday to stabilize the market. Indian importers took advantage of the fluctuations caused by rising trade tensions between the US and India, especially after New Delhi’s import tariffs on oil from Russia went up to 50%.
These ongoing trade tensions have made investors wary of the Indian stock market. Consequently, Foreign Institutional Investors (FIIs) have been net sellers for most of 2025, offloading shares worth Rs. 4,650.39 crore just this January. Although the US released strong ISM Services PMI data, both the ADP Employment Change and JOLTS Job Openings came in below expectations, leading to speculation about possible interest rate cuts by the Federal Reserve.
