A report from Nordea notes the USD’s recent rebound against the EUR and JPY, despite a long-term bearish outlook. The report suggests the USD’s strength is not in immediate peril, although a weakening trend could continue as alternatives are pursued.<\/p>\n
The report forecasts no rate changes from the Fed or ECB this year, expecting longer rates to rise gradually. It underscores the need for independent research on market investments as FXStreet disclaimers warn of possible risks and errors.<\/p>\n
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The recent bounce in the dollar shows it isn’t collapsing, providing some near-term stability. The latest jobs report for January 2026, which added a solid 210,000 positions, supports this temporary strength. This suggests that aggressively shorting the dollar in the immediate coming weeks might be premature.<\/p>\n
Despite this, we see the bigger picture as one of gradual dollar weakening as investors continue to look elsewhere. We saw this trend of central banks diversifying reserves away from the dollar throughout 2025, a slow but steady shift that is likely to persist. Therefore, rallies like the current one should be viewed as better opportunities to build positions for a longer-term decline, perhaps using longer-dated put options on the dollar index.<\/p>\n
With both the Federal Reserve and the European Central Bank expected to keep interest rates on hold for the rest of the year, a major driver of volatility is off the table. Sticky inflation data from last month, with the Consumer Price Index at 2.8%, reinforces why policymakers are hesitant to make any moves. This environment could favor strategies that profit from lower currency volatility, such as selling short-dated straddles on pairs like EUR\/USD.<\/p>\n
At the same time, we expect longer-term interest rates to continue their slow climb higher. This trend, which began in the second half of 2025, could keep the dollar supported against currencies with lower yields, like the yen. This creates a complex picture where short-term carry trades might work, even if the dollar’s long-term outlook is negative.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD rebounds versus EUR and JPY; outlook cautious; no rate changes expected; research and caution stressed.<\/p>\n","protected":false},"author":62,"featured_media":16967,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41192","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41192","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41192"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41192\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16967"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}