EUR/USD fluctuates near 1.1710 as Eurozone data disappoints, raising economic concerns
EUR/USD has dropped to around 1.1710, down by 0.15%. This change comes after new data showed weaker economic performance in the Eurozone and lower inflation rates in Germany, raising worries about economic growth in the region.
The Eurozone Services PMI was revised to 52.4 in December, down from 52.6 and lower than November’s 53.1, signaling a slowdown. In Germany, inflation fell in December, with the CPI decreasing to 1.8% from 2.3% in November. The HICP also declined to 2% from 2.6%.
Chevron Corporation attracts significant attention in the energy market with a surge exceeding 5%
Chevron Corporation is a top player in the energy industry, managing everything from extraction to retail. On Monday, its stock price jumped over 5%, with trading volume more than tripling. This rise was driven by positive developments in Venezuela, where Chevron’s existing infrastructure puts it in a strong position.
On a technical note, Monday’s stock increase broke above a long-term downward trendline that has existed since late 2022. To confirm this breakout, the stock needs to keep its momentum and close above Monday’s high on Tuesday. If it can do this, the next target will be the resistance level at $168.96.
Potential Breakout and Target Levels
Clearing this resistance will validate the breakout, turning the old trendline at $159.84 into primary support. If the stock pulls back to this level, it could be a good buying opportunity. This setup indicates a promising trade potential with a target price of $177.35. However, caution is necessary, as the situation in Venezuela is still evolving. If the stock drops back below the declining trendline, the upward trend would be invalidated. The 5% spike in Chevron’s stock on January 5th, 2026, has led to a rise in short-term implied volatility, making options more expensive. Traders should use clear strategies when approaching this situation. The increase was caused by confirmation that the Venezuelan government has given Chevron more control over important joint ventures, a much more reliable development compared to the speculation of 2025.Trading Strategies Amidst Volatility
If the stock closes above yesterday’s high, a bullish position makes sense with a target of $177.35. Given the increased volatility, we should consider buying call debit spreads, like the February 2026 $170/$177.50 spread. This will help keep our costs and risks in check, allowing us to benefit from the potential price rise while offsetting the impact of high option premiums. If momentum slows and the stock pulls back to the old trendline around $159.84, a different opportunity arises. This would be an ideal point to sell cash-secured puts or put credit spreads with a strike price near $160. This strategy allows us to benefit from high volatility while establishing a good entry point at a solid support level. However, we must be mindful of the risk that the breakout could fail, especially considering the political instability we observed in the region last year. A daily close below the $159 trendline would invalidate the bullish setup. In that case, we would exit any long positions and may consider initiating bearish positions by buying puts. This breakout is supported by new estimates indicating that the Venezuelan deal could add over 50,000 barrels to Chevron’s daily production by the third quarter of this year. This fundamental boost comes as Brent crude prices have remained steady, trading above $90 a barrel for the past three months. This stability provides a stronger basis for the current stock movement compared to the OPEC-driven volatility we encountered in 2024. Create your live VT Markets account and start trading now.Kraft Heinz Company’s stock has fallen more than 18% from its July peak in recent months.
Kraft Heinz Company (KHC) has seen its stock price drop over 18% since hitting its peak in July, even though earnings and dividend payments have remained steady. The trendline created from the highs in July and November acts as a slanted resistance line on the chart.
If the stock breaks above this trendline, it could signal a change. Sellers who have controlled the stock since July may start to lose their grip. This breakout could lead to a bigger upward movement and a shift in how investors feel about the stock.
There are two trading strategies for this situation. One is to buy a long position when the stock cleanly breaks above the trendline. The other is to wait for the stock to pull back to the trendline after a breakout and look for confirmation before acting. Both strategies use clear technical levels to guide decision-making.
Kraft Heinz is still a key player in the market because of its earnings and dividends, but the main focus remains on the technical analysis of the chart. It’s important to manage risks carefully, including setting risk levels, position sizes, and invalidation points. This approach helps ensure that trading decisions are based on market structure rather than just market movement.
We are closely monitoring the clearly defined downsloping trendline on Kraft Heinz, which connects the highs from July 30, 2025, and November 26, 2025. The stock has been trading just below this level, creating tension in the market. A strong breakout above this resistance in the next few weeks would indicate a major shift after several months of decline.
For those aiming for a potential breakout, near-term call options are a way to manage risk while aiming for upward momentum. Specifically, February and March 2026 contracts could allow for participation in a move past that important trendline. This strategy offers leveraged involvement in case sellers lose control of the stock’s direction.
This technical setup is backed by a favorable economic climate for consumer staples. Last week’s CPI report showed food-at-home inflation fell to 2.1%, the lowest since 2023, easing cost pressure for companies like Kraft Heinz. This could provide a fundamental boost for a potential technical breakout.
With the company set to release its fourth-quarter 2025 earnings report around mid-February, we expect implied volatility to increase from its current level of about 22%. Buying calls now could not only benefit from price movement but also take advantage of a predicted rise in option premiums leading up to the announcement. Historically, KHC has seen implied volatility rise by 5-8 percentage points in the weeks before its earnings release.
For traders who feel neutral to bullish, selling cash-secured puts at strike prices below current support, like the $30 strike for February, could be a good strategy. This lets us collect premium while setting a price we’re willing to pay if the stock drops. It’s a way to earn money while waiting for the breakout to confirm.
No matter the strategy, the risk of a false breakout is important to consider. If the price cannot hold above the trendline, the value of long call positions will quickly decrease. Therefore, we need to wait for the price action to confirm the breakout before committing significant funds to a bullish position.
The Pound Sterling falls to around 1.3520 as the US Dollar strengthens against it.
The Pound Sterling (GBP) has fallen against the US Dollar (USD), dropping to about 1.3520 during Tuesday’s European trading session. This dip comes as the US Dollar strengthens, with the Dollar Index (DXY) rising slightly to around 98.45.
Analysts think the GBP might bounce back to test 1.3560 before stabilizing. However, they don’t expect it to rise to 1.3590 in the short term. In the long run, reaching 1.3590 could happen, but further increases beyond that are seen as unlikely.
Impact Of Currency Fluctuations
The US Dollar lost some value earlier due to a general risk-on sentiment, while the Pound Sterling performed better than other major currencies overnight. According to FXStreet, exchange rate changes are influenced by several factors, including geopolitical events and economic data releases. Editorial content and broker recommendations for 2026 can help choose the right Forex brokers based on individual trading needs. It’s essential to do thorough research and acknowledge the risks involved before making financial decisions. FXStreet emphasizes that their information does not count as financial advice and highlights the risks of market investments. Given the Pound’s drop to 1.3520, there’s a possibility for a short-term rise to around 1.3560 before it likely stalls. The chances of a significant rally beyond 1.3590 are low, which suggests traders might focus on this limited gain. A strategy to consider is selling call options with a strike price at or above 1.3600 to earn premiums from the expected price ceiling. This perspective is supported by recent economic data from late 2025. The UK’s final Q4 2025 GDP figures showed modest growth at just 0.3%, providing some backing but not enough for a major breakout. Additionally, the minutes from the Bank of England’s December 2025 meeting revealed a divided stance on interest rate policy, dampening enthusiasm for the Sterling.Market Reaction To Economic Data
The US Dollar Index is steady around 98.45, boosted by a strong US jobs report for December 2025, which added 210,000 jobs and kept the unemployment rate at 3.9%. This underlying strength of the dollar poses challenges for the GBP/USD pair, making it risky for traders to buy out-of-the-money GBP calls in the coming weeks. In terms of volatility, the 1-month implied volatility for GBP/USD has dropped to 7.2%, down from over 9.5% during the market fluctuations of November 2025. This decline suggests that traders expect the market to remain relatively stable, making strategies that benefit from time decay, like selling strangles or iron condors, more appealing. This aligns with predictions that the pair will level off soon. We also need to consider the wider risk environment, as Gold trades near $4,500 an ounce, reflecting ongoing geopolitical concerns. Any sudden shift towards a risk-off sentiment could boost the safe-haven US dollar. Therefore, traders who hold long GBP positions might want to buy protective puts to guard against a sudden downturn. Create your live VT Markets account and start trading now.S&P Global Services PMI for the United States falls to 52.5 from 52.9
The S&P Global Services PMI in the United States was 52.5 in December, down from 52.9 the month before. This shows a slight slowdown in the service sector’s growth.
In the foreign exchange market, the EUR/USD pair has dipped below 1.1700, nearing its weekly low of 1.1660, thanks to a stronger US Dollar. Meanwhile, GBP/USD is just under 1.3500 after falling from a recent three-month high.
Gold And Cryptocurrency Movements
Gold holds steady above $4,450, despite pressure from a stronger US Dollar and ongoing geopolitical tensions. Bitcoin has dropped to $93,000 after peaking at $94,789, while Ethereum and Ripple may be facing profit-taking. Market watchers are paying close attention to Venezuela due to its potential impact on global market stability. Cardano is on the rise, showing signs of a possible 20% breakout as it surpasses the 50-day EMA resistance, indicating a positive trend in the crypto market. The latest Services PMI data, which slipped to 52.5 from 52.9 in December 2025, suggests that the US economy is still growing, but the rate of growth is slowing down. This signals that we should be cautious about being overly optimistic about the market. The strong momentum we experienced toward the end of last year might be starting to face some challenges. This slowdown in the service sector contrasts with the robust labor market, which added over 215,000 jobs in last week’s employment report. Together, these factors create a mixed outlook for the Federal Reserve. While the job market remains strong, the service sector may be peaking, leading to uncertainty about future interest rates.Economic Outlook And Market Strategies
The 10-year Treasury yield is stable around 4.1%, keeping borrowing costs high and supporting the strength of the US Dollar that characterized much of 2025. With core inflation resting around 3.2%, we do not expect the Fed to announce any rate cuts soon. This situation calls for caution, as easy monetary policy is not on the near horizon. Looking back, we experienced significant rallies in 2025, with gold nearing $4,500 and Bitcoin briefly exceeding $94,000. Given the current economic uncertainty, these assets may face profit-taking. We should prepare for a possible consolidation or pullback from those historic highs. In the coming weeks, consider buying protective puts on major market indices like the S&P 500 to safeguard against a potential downturn. For those with large equity positions, selling out-of-the-money call options might be a smart way to generate income in a market that could become more range-bound. This approach allows us to benefit from increased volatility while managing our risk. For currency traders, the strong dollar trend continues, especially against currencies with weaker economic prospects like the Euro, which struggled below 1.1700 last year. In the crypto market, the cooling pattern may persist, suggesting that volatility-based strategies, such as strangles on Bitcoin options, might be more effective than trying to predict a clear upward or downward movement. We will be looking for signs of breaking support or new catalysts for another upward move. Create your live VT Markets account and start trading now.S&P Global Composite PMI for the United States falls to 52.7 from 53
The S&P Global Composite PMI for the United States dropped to 52.7 in December, down from 53 in November. This indicates slower growth in both the services and manufacturing sectors.
In other market news, analysts expect Australia’s CPI inflation to slow down in November, and silver prices have risen above $80. There’s also cautious optimism before the US employment data release, and gold is climbing back to previous highs.
Editors Picks Market Movements
Editors’ Picks show that the EUR/USD pair continues to fall below 1.1700, while GBP/USD has pulled back from recent peaks. In the cryptocurrency space, the rise of Bitcoin, Ethereum, and XRP has slowed due to increased ETF investments. There are various guides available for selecting the best brokers in 2026. These include lists of the best forex brokers and those with low spreads. Some guides focus on brokers in specific regions like MENA and Latam, as well as for particular instruments like gold. FXStreet highlights that while it provides market insights, it cannot guarantee data accuracy and advises caution when investing. Readers are encouraged to do their research before making investment choices. With the latest US Composite PMI reading showing a decrease to 52.7, we see our first clear sign of slowing economic growth. Although still in growth mode, this decline marks a shift from the stronger performance seen in the past quarter. This change prompts us to rethink our strategies as the market assesses whether this is an isolated case or the beginning of a trend.Monitoring Economic Shifts
This slowdown follows a period of unexpected economic strength in 2025, where inflation eased to a manageable 2.8% in the last quarter, and the job market remained strong. The December jobs report showed a solid gain of 160,000 jobs, although at a slower pace. The current PMI number suggests that the effects of previous Federal Reserve rate hikes may finally be impacting the economy. The likelihood of slowing growth makes it more probable that the Federal Reserve’s next action will be a rate cut instead of an increase. Therefore, we should consider investing in interest rate futures that would benefit from lower rates later this year. Additionally, options on Treasury bond ETFs could be a smart way to take advantage of this potential shift in central bank policy. With this growing uncertainty, we can expect an increase in market volatility. During much of the second half of 2025, the VIX traded below the historical average of 19, resting around 15, making hedging relatively cheap. Now might be a good time to buy VIX call options or protective puts on broad market indices like the SPX to prepare for a possible downturn. We should also assess how this slowdown could affect various sectors. Consumer discretionary and industrial stocks are often more responsive to economic slowdowns, making put options on their respective sector ETFs a smart hedge. On the other hand, defensive sectors like utilities and healthcare may attract more interest, which could be leveraged through call options. The strong dollar, which has impacted pairs like EUR/USD and GBP/USD, may lose momentum if the market starts to price in Fed rate cuts aggressively. This indicates a need to consider options strategies that could capitalize on a reversal or stabilization in major currency pairs. The recent rise in precious metals like gold and silver above $4,500 and $80 indicates that traders are seeking safer investments, and employing options can be a cost-effective strategy to join that trend. Create your live VT Markets account and start trading now.Fed Governor Stephen Miran expects data-driven cuts of more than 100 basis points.
**Federal Reserve’s Dual Mandate**
Federal Reserve Governor Stephen Miran is looking forward to data that could support further rate cuts. He believes the Fed should lower rates by more than 100 basis points this year. He mentioned that inflation is getting close to the Fed’s 2% target and that a strict policy could slow down economic growth.
Miran also pointed out that fiscal policy will help boost growth and shared a positive outlook for the economy this year. Following his remarks, the US Dollar Index fell from session highs, stabilizing at around 98.37.
The Federal Reserve has two main goals: keeping prices stable and ensuring full employment. They mainly do this by adjusting interest rates. When inflation goes above 2%, the Fed raises rates, making the US Dollar more attractive. On the flip side, if inflation is low or unemployment is high, they lower rates, which may weaken the Dollar.
In extreme situations, the Fed might use Quantitative Easing (QE) to increase the flow of credit by purchasing bonds, which usually weakens the Dollar. Conversely, Quantitative Tightening (QT) occurs when the Fed stops buying bonds, which helps the Dollar’s value. The Federal Open Market Committee meets eight times a year to guide these policies.
**Fed’s Aggressive Policy Easing**
There’s a clear signal from the Federal Reserve for considerable policy easing this year. A call for cuts exceeding 100 basis points suggests that the current restrictive approach is damaging the economy. This perspective aligns with the latest Core PCE inflation rate, which stands at 2.2% year-over-year, very close to the Fed’s goal.
Given this outlook, we need to adjust our strategies in interest rate derivatives to expect a decline in the yield curve. We should focus on strategies that benefit from decreasing short-term rates, such as buying SOFR futures contracts for the second half of 2026. After navigating through high rates in 2025, this change signals important trading opportunities in the coming months.
Historically, a dovish Fed tends to weaken the US Dollar, and we’re already seeing the Dollar Index pull back from its peaks. We should plan for a broader decline in the dollar since the market had only anticipated about 75 basis points of cuts before these comments. Consider derivative strategies like buying call options on pairs like EUR/USD, which is currently struggling below 1.1700 and might be on the verge of a breakout.
For equity markets, lower borrowing costs are a significant boost that we’ve been waiting for. Major indices, which largely remained stable in late 2025, could experience renewed buying interest. We might want to sell put options on the S&P 500 or buy call options in sectors sensitive to rates, like technology and housing.
This change in tone is likely to increase volatility around upcoming economic data, particularly the next employment report and CPI reading. Last month’s Non-Farm Payrolls number was 155,000, slightly below expectations, and another low figure would support quicker cuts. We should be ready for sharp market movements as traders reevaluate the entire monetary policy path for 2026.
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In the final days of the year, precious metal prices fluctuated, says Commerzbank.
Precious metals saw significant price changes at the end of the year. On Boxing Day, Gold hit an all-time high of $4,550 per troy ounce. By December 29, Silver shot up to $84 per troy ounce. Platinum reached $2,490, and Palladium was close to $2,000 per troy ounce. These price increases were partly due to low trading volume during the holiday season. Concerns about shortages and dwindling inventories in China also boosted Silver prices.
However, prices fell at the year’s end. On December 29, Silver dropped over $10, marking its biggest daily percentage loss in more than five years. Increased margin requirements from the CME and the Shanghai Futures Exchange resulted in margin calls, leading to forced sales. Still, the overall gains for precious metals over the year were impressive: Gold increased by 64.6%, Silver by 148%, Platinum by 127%, and Palladium by 77.5%.
Gold And Silver Price Surge
As the new year began, prices rose again, approaching the highs from late 2025. Gold increased by nearly 3% to $4,450, and Silver rose 5% to $76.6. Increased US military activity in Venezuela and a disappointing ISM manufacturing index increased the demand for safe-haven assets, affecting the US dollar and boosting interest in Gold and Silver. The market is experiencing high volatility, evident from the record prices of precious metals in late December 2025 followed by a sharp sell-off. The Cboe Gold ETF Volatility Index (GVZ) likely reached multi-year highs during this time, reflecting significant uncertainty in the market. Therefore, we should expect continued price swings in the coming weeks. The current rally stems from key factors that support higher prices. The recent US military action in Venezuela has raised demand for safe havens. Additionally, December’s US ISM Manufacturing Index dropped to a 14-month low of 47.1, which puts pressure on the US dollar. As a result, Fed funds futures now indicate more than a 75% chance of an interest rate cut by the end of March, providing a strong boost for Gold and Silver.Manage Leverage Carefully
Given these conditions, implied volatility on options is unusually high, making it costly to purchase calls for further gains. We should learn from the events of December 29, when margin hikes on Silver futures from CME led to forced selling and a price drop. This serves as a crucial reminder to handle leverage wisely and be ready for sudden reversals, even during a strong uptrend. In 2025, Silver’s 148% increase significantly outpaced Gold’s 64.6% rise, a divergence not seen since 1979. This has reduced the gold-to-silver ratio to a multi-decade low of about 54. While Silver currently enjoys momentum, we should keep a close eye on this ratio for signs of a potential reversion, which would favor Gold. Create your live VT Markets account and start trading now.Gas prices drop below EUR 28/MWh as low storage levels and warmer weather are anticipated.
European gas prices have fallen below EUR 28/MWh, even with cold weather and low storage levels. Current gas reserves in Europe are about 10% lower than usual for this time of year, sitting at just over 60%.
Experts predict milder temperatures soon, following the current cold snap in Europe. In the US, Henry Hub prices have dropped by about $2 after peaking at $5.50 per mmBtu due to recent heavy withdrawals.
The FXStreet Insights Team shares insights from market analysts about gas pricing and how it reacts to weather changes.
A similar trend occurred at the end of 2025 when the market overlooked low storage levels, focusing instead on warmer weather forecasts. This caused gas prices in both Europe and the US to decline, showing a pattern of selling off ahead of milder temperatures. This past behavior can guide our current strategy.
Today, the situation in Europe is less severe than in 2025. Gas storage in the EU is currently at a healthy 81%, much better than the 60% observed then. This higher inventory means the market is less likely to react strongly to brief cold spells.
For traders watching TTF futures, this indicates that any price jumps due to cold weather in the coming weeks may not last long. We should see these spikes as chances to start short positions or buy put options. The market has shown it will ignore immediate demand in favor of a milder forecast, and with more gas in storage, that likelihood is even stronger now.
In the US, the Henry Hub market is also in a different place compared to the spike to $5.50/mmBtu in late 2025. Current prices are around $2.75/mmBtu. With US dry gas production reaching record levels of over 105 billion cubic feet per day, the supply pressure is high. This suggests the ceiling for winter price increases is lower than in previous years.
Given these conditions, derivative strategies should align with current market behavior. Selling call spreads during price increases can help us profit from expected declines once weather forecasts become milder. This approach allows us to benefit from the likely decrease in volatility and price once fears of cold weather dissipate.
The Japanese yen gains strength against the British pound as market activity slows and UK PMI declines
GBP/JPY fell as the market adjusted, and weaker UK PMI data put slight pressure on the currency pair. The exchange rate was around 211.45 after briefly going above 212.00 earlier in the Asian session. In December, the UK’s Composite and Services PMIs dropped to 51.4 from 52.1 in November. Although demand is low, input costs rose quickly, which might slow down the Bank of England’s easing.
The Bank of Japan (BoJ) is moving toward normalizing its policy with expectations of future rate hikes. Changes in the BoJ’s policy have affected the Yen’s value, especially since other central banks have raised rates to combat high inflation. The Yen had weakened due to the previous ultra-loose monetary policy, but the BoJ raised interest rates in 2024, which is helping to reverse this trend. Rising inflation in Japan, partly due to higher energy prices and expected salary increases, also influences BoJ’s decisions.
