**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. Create your live VT Markets account and start trading now.

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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.

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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.

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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.

Interest Rate Differential Keeps Bias Upwards

The interest rate gap between the UK and Japan keeps the overall GBP/JPY trend leaning upward. Initially, the Bank of Japan’s significant stimulus caused the Yen to decline, but recent policy shifts are lessening these effects. The recent drop in GBP/JPY below 212.00 directly results from weaker UK PMI data for December 2025, which showed a slowdown in economic activity. This indicates that the Pound’s upward momentum is facing challenges as the new year begins. Traders should be cautious about pursuing new highs in this pair for now. The economic slowdown is complicated by persistent inflation. In the latest UK CPI report for December 2025, inflation remained steady at 3.8%. The Bank of England is struggling to support a weakening economy while combating inflation. This situation suggests ongoing volatility, which could make long option strategies like straddles potentially profitable. On the flip side, Japan’s policy outlook for Yen weakness is less certain. With the latest Tokyo Core CPI data showing inflation at 2.3%, well above the Bank of Japan’s target, the likelihood of further interest rate hikes in 2026 is increasing. This makes shorting the Yen less appealing.

Narrowing Policy And Risk Management

The key factor affecting this pair, the wide interest rate differential, is starting to narrow, a trend we expect to continue into 2026. While being long GBP/JPY is still profitable, its attractiveness is waning, and the risks of sudden downturns are rising. Looking back at 2025, we see that this narrowing policy can trigger significant corrections. For those holding long positions through futures or forwards, it’s time to manage risk more actively. Consider tightening stop-loss orders or reducing position sizes to safeguard profits from a potential decline. The easy gains from the policy divergence may be behind us for now. Create your live VT Markets account and start trading now.

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In related market news, the FXStreet team shares updates on different financial markets. We see the GBP/USD weakening and gold prices fluctuating due to geopolitical issues.

Cryptocurrency Trends

There are also changes in cryptocurrency trends. Profit-taking is slowing down the growth seen in Bitcoin and Ethereum. At the same time, Cardano appears to have the potential to break out if it can rise above the 50-day EMA resistance. In the broader economy, U.S. involvement in Venezuela during political unrest is being discussed. While these international developments are important, they haven’t significantly changed financial or economic forecasts. The recent drop in the Redbook Index to 7.1% may indicate a slowdown in consumer spending as we move into 2026. This trend calls for caution, making it a good time to look at protective put options for consumer discretionary ETFs. We experienced a similar post-holiday slowdown early last year in 2025, but the market bounced back after a strong jobs report.

Upcoming US Employment Data

Everyone is now watching the upcoming U.S. employment data for insights into the economy’s future. In January 2025, the jobs report revealed a surprising gain of 225,000 jobs, contradicting fears of an economic slowdown. If we see a similarly strong report now, the market could react sharply, making call options on the VIX a smart hedge against that uncertainty. Gold remains around $4,500 even as the dollar strengthens, showing a solid demand for safe-haven assets amid geopolitical tensions. Gold usually performs well in uncertain times, and its current strength suggests traders should stay invested. Call options on gold miners (GDX) could be a way to benefit from further price increases in gold. Bitcoin’s recent dip from its highs near $95,000 seems like a healthy consolidation, especially with strong ETF inflows. Last quarter, net inflows into spot Bitcoin ETFs averaged over $500 million daily, indicating strong institutional demand. This dip might be a good opportunity to adopt bullish positions through call options on major crypto ETFs. Create your live VT Markets account and start trading now.

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Silver’s price has jumped, thanks to increased demand for safe investments amid tensions between the US and Venezuela. Recent arrests in Venezuela have added to the uncertainty, pushing precious metals like Silver higher. Additionally, the possibility of rate cuts by the US Federal Reserve has weakened the US Dollar, which benefits Silver. As of Tuesday, Silver is trading at about $78.40, up 2.90%, marking its fourth consecutive day of gains. Lower interest rates in the US encourage Silver investments by making it less costly to hold non-yielding assets. The US Dollar’s recent decline also helps keep Silver prices high. Upcoming US economic reports, particularly on the labor market, are being closely watched. The December Nonfarm Payrolls report could influence expectations for Federal Reserve actions. If labor data is strong, it may support the Dollar and limit Silver’s gains; if it’s weak, Silver could continue to rise. Silver is a smart investment choice that helps against inflation and diversifies portfolios. Its prices are influenced by geopolitical events, interest rates, the US Dollar’s movement, and industrial demand. Silver often follows Gold’s price trends due to their similar roles as safe havens. The Gold/Silver ratio is useful for assessing their relative worth. Given the ongoing geopolitical issues and expected Federal Reserve policies, we anticipate increased volatility in the silver market. The situation in Venezuela is adding a risk premium that derivative traders can capitalize on using options. This means there could be significant and unpredictable price changes in the weeks ahead. For those optimistic about Silver’s future, buying call options could be a smart move to gain potential upside while controlling risk to the premium paid. During geopolitical tensions in 2024, implied volatility in silver futures rose above 70%, indicating that the current situation with Venezuela could lead to similar conditions. This makes long volatility positions potentially profitable, even if price movements are sideways before climbing again. However, since Silver prices are near multi-year highs, it’s wise to think about protecting against possible losses ahead of Friday’s Nonfarm Payrolls data. We remember how a strong jobs report in October 2025 led to a quick 5% drop in Silver prices in one day. Buying put options can be a good way to hedge for those already holding long positions in futures or physical silver. We’re also paying close attention to the Gold/Silver ratio, which is now around 44.6, based on a gold price of about $3500. This is notably lower than the 21st-century average of about 65, suggesting Silver may be overpriced compared to Gold. This could create an opportunity for a pairs trade, buying Gold while selling Silver to benefit from a possible return to historical averages. Lastly, the underlying industrial demand for Silver provides strong support that shouldn’t be overlooked amid current political distractions. Projections from late last year indicate global demand from the solar and electric vehicle industries will rise by over 12% by 2026, creating a solid price floor. Therefore, any sharp price drops driven by political events might be seen as chances to buy longer-dated futures contracts.

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The VanEck Junior Gold Miners ETF (GDXJ) gives investors access to smaller mining companies worldwide. Recent Elliott Wave analysis suggests that the ETF started a growth phase from a low of $17.94. The price rallied to $52.50 before dropping to $19.52. The overall trend remains upward as long as the lows hold as support. On the daily chart, the major corrective wave II hit a low around $26, paving the way for wave III’s upward movement. Subdivision ((1)) peaked near $55.60, followed by wave ((2)), which retraced to about $42. The current subwave (3) is close to finishing, leading to a predicted wave (4) pullback before moving up again.

Near Term Dips and Support Levels

This forecast indicates that short-term dips may attract buyers as long as the crucial support level around $26 remains intact. This situation supports the continuation of the overall upward trend and the potential for more price gains. It’s essential to focus on this key support level to maintain momentum in this mining-focused ETF. Overall, the Junior Gold Miners ETF (GDXJ) shows a positive long-term outlook. The trend indicates that any pullbacks are likely temporary corrections within a larger upward movement. As long as the important low of approximately $26 is upheld, the main trend stays strongly positive. The technical strength is further supported by a notable move in gold prices, which are approaching $4,500 per ounce. This momentum built up throughout 2025 due to persistent inflation, averaging over 4% and diminishing the value of fiat currencies. Historically, such conditions are highly favorable for gold mining stocks, offering leveraged exposure to gold prices.

Derivative Trades and Risk Management

Despite several interest rate hikes from the Federal Reserve in 2025, geopolitical tensions and worries about sovereign debt have kept demand for safe havens high. Gold’s ability to climb despite rising yields last year shows its strong role as a wealth-preserving asset. The GDXJ, which increased by over 60% in 2025, directly benefited from these supportive economic conditions. From a trading standpoint, we are nearing the end of a short-term uptrend, likely followed by a corrective dip. This pullback should be viewed as a buying opportunity rather than a reason to be negative. We recommend preparing to buy into this weakness in the coming weeks. For derivative traders, this means considering buying call options or setting up bull call spreads on GDXJ with March and April 2026 expirations. This plan allows participation in the forthcoming upward leg while managing risk. The expected pullback would create a chance to enter these positions at better prices. It’s crucial to keep an eye on the essential support levels identified in the wave analysis. A drop below the significant $26 pivot would invalidate this positive outlook, requiring a re-evaluation of the entire trend. Therefore, any long positions should have risk management strategies that address this potential invalidation point. Create your live VT Markets account and start trading now.

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Walmart has recently performed well in the market, bouncing back from last year. An analysis using the Elliott Wave structure shows a clear upward trend with positive momentum. The rally started when Walmart’s stock was between $86 and $77, as buyers jumped in during a dip in April 2025. After completing its wave IV pullback, the stock reached new all-time highs in wave V. Currently, three new high swings indicate that the upward movement isn’t over yet. Walmart is now in the $111 to $120 target zone, which suggests that it’s wise to be cautious instead of chasing the rally. After wave ((III)), a larger pullback in wave ((IV)) is expected, creating a new chance to buy before the upward trend resumes. The bullish cycle for Walmart looks strong on a weekly basis, indicating that investors should look for buying opportunities during pullbacks. Timing is essential; using the Elliott Wave strategy can help set positions after corrections of 3, 7, or 11 swings. The proprietary Blue Box system aids in finding high-probability entry points for future trading success. As we look ahead to early January 2026, last year’s analysis has held up well, with Walmart reaching its $111 – $120 target zone by late 2025. The stock is now signaling a potential wave ((IV)) pullback, opening up new opportunities. Traders should shift focus from chasing upward movement to preparing for this corrective phase. With the stock withdrawing from its recent highs, traders should consider strategies that benefit from a brief halt or decline in price. Selling out-of-the-money call credit spreads could generate income, especially if a new immediate high seems unlikely. This fits with the expectation that wave ((III)) has likely wrapped up, marking the start of a consolidation or decline period. This technical viewpoint is backed by recent economic data from late 2025. The December retail sales report showed a slight 0.2% increase, missing expectations and indicating that consumer spending may be cooling after a strong year. This economic backdrop supports the forecast for a short-term pullback in consumer-focused stocks like Walmart. The expected pullback offers a strategic entry point, and selling cash-secured puts is a smart way to approach this. By selling puts at strike prices near expected support levels, possibly around $100 to $105, traders can collect premiums while waiting for the correction to stabilize. This approach aligns with the strategy of buying the dip after a clear corrective pattern forms. Historically, Walmart’s pullbacks have provided good entry points, such as the 15% correction seen in the second quarter of 2025. A similar decline from the recent peak would target around $102, making it an important level to watch. An increase in implied volatility during this dip would further enhance the appeal of premium-selling strategies.

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EOG Resources, Inc. (NYSE: EOG) is currently showing a positive trend on the monthly chart with a bullish Elliott Wave pattern. The company is in a strong long-term upward trend that started from its lows during the pandemic, indicating a strong bullish phase. EOG has completed a full market cycle, with red Waves I and II already in position. After Wave II ended at the pandemic bottom, EOG began Wave III, which is known for significant price increases, supported by patterns from the 2020 low.

Wave Structure Analysis

The rise from 2020 is taking shape as an impulsive move in red Wave III. The internal structure, marked in blue, consists of waves (1), (2), (3), and (4). Waves (1) and (2) created an upward trend, while Wave (3) provided strong momentum, consistent with typical third wave patterns. Wave (4) is either almost complete or still developing. EOG Resources has traded within a narrow range, indicating a consolidation phase referred to as Wave (4). This sideways movement is happening within a larger, powerful bullish trend that started from the 2020 lows. The market seems to be building energy for its next major upward move. The fundamentals support this bullish technical outlook. WTI crude prices recently stabilized above $88 per barrel, a level we didn’t see for much of late 2025. Moreover, EOG’s investor guidance from late last year projected a slight production increase for the first half of 2026. This combination of solid energy prices and stable operations increases the likelihood of a technical breakout. In the upcoming weeks, we are considering near-term call options to prepare for a potential breakout. March and April 2026 contracts could provide an opportunity to benefit from a move towards the initial target of $168.49. This strategy allows for leveraged exposure if the stock begins its next upward wave.

Managing Investment Risk

However, we should be cautious, as implied volatility in the energy sector remains high due to uncertainties experienced in mid-2025. To manage higher premium costs, using bull call spreads may be a smarter approach. This involves buying a call option while simultaneously selling another one at a higher strike price to lower the initial investment. Reflecting on the strong rally in 2022, during the previous Wave (3), we see how quickly this stock can rise once it breaks out of its range. A sustained move above the current consolidation highs will be the key indicator we are monitoring. Historical price behavior suggests that if a breakout occurs, momentum could quickly build. Create your live VT Markets account and start trading now.

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SoFi Technologies, Inc. (SOFI) provides financial services in the US, Latin America, Canada, and Hong Kong. Their offerings are grouped into three main areas: Lending, Technology Platform, and Financial Services. SOFI has been on an upward trend since its low in December 2022. It is expected to rise between $34.95 and $38.49, as long as prices stay above the low from November 21, 2025. A breakthrough above the high on November 12, 2025, would signal a continuation of this rally. Key points in the price history include lows and highs like $11.70 in July 2023 and $6.01 in August 2024. Important levels to note are $18.42 (labeled as ((1)) of III) and $8.60 (labeled as ((2))). The current rally, within ((5)) of III, is likely to exceed $34.95. Significant price levels to watch are $14.78, $12.74, $30.30, $26.38, and $32.56. Currently, SOFI is working on the (3) of ((5)), with a focus on the $32.08–$36.33 area, using the December 17, 2025 low as support. Investors are advised to consider buying after a break above the November 12, 2025 high or during a later IV pullback. Looking back, the bullish trend we expected to start in late 2025 has begun, bringing SOFI into our targeted range. The stock is now trading around $35.10, close to the lower limit of the $34.95 – $38.49 range. This rally gained strength after surpassing the key high of November 12, 2025. The recent rise is supported by strong fundamentals from the Q4 2025 earnings call, showing a 15% increase in revenue compared to last year and member growth of over 400,000. Additionally, recent changes in federal policies have led to an increase in private student loan refinancing applications. Overall market stability, with the VIX staying below 15, has also helped. As we approach the target area, traders might think about selling cash-secured puts with strike prices close to $32.50 to earn premium. This strategy takes advantage of the ongoing high implied volatility from the sharp rally. Historically, after similar rapid price movements in 2024, volatility decreased by about 20% as the price consolidated. For those anticipating a move towards the upper limit near $38.49, buying call debit spreads is a smart strategy. For instance, buying the February $36 call and selling the February $39 call can help control risk while targeting further gains. This approach is often more cost-effective than buying calls outright, protecting against time decay if the stock remains stable for weeks. Monitoring the $32.56 level is crucial, as it marked the peak of a significant wave in mid-2025. If the stock closes below this level on a weekly basis, it may indicate that the bullish trend has lost momentum. This breakdown could invalidate the bullish scenario and lead to a deeper correction.

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