Major currency pairs stay in familiar ranges as markets await key events and data this week. US stock and bond markets are closed for Presidents Day, while Europe releases December Industrial Production data on Monday.<\/p>\n
The USD Index ended last week lower after US inflation came in softer than expected. US CPI rose 2.4% year on year in January versus 2.7% in December and a 2.5% forecast, leaving the USD Index near 97.00.<\/p>\n
CBS News reported that Donald Trump told Benjamin Netanyahu he would support Israeli strikes on Iran\u2019s ballistic missile programme. Markets showed little response, with WTI near $62.80.<\/p>\n
EUR\/USD trades in a tight band above 1.1850 after a small weekly rise, with an ECB speech from Joachim Nagel due. Japan\u2019s GDP grew at a 0.2% annual rate in Q4 after a 2.6% contraction in Q3, below the 1.6% forecast.<\/p>\n
USD\/JPY rebounds after nearly 3% losses last week, up 0.4% near 153.30. AUD\/USD stays below 0.7100 ahead of RBA minutes after a 25 basis point rate rise to 3.85%.<\/p>\n
Gold ended last week higher but trades below $5,000. UK jobs data and Canada\u2019s January CPI are due Tuesday, with GBP\/USD near 1.3650 and USD\/CAD around 1.3600.<\/p>\n
With US markets closed today, we are seeing thin trading conditions, which provides an opportunity to position for the week’s upcoming data. Implied volatility on major currency pairs has fallen to its lowest level since the third quarter of 2025, trading under 6.5% for EUR\/USD. This presents a chance to buy options cheaply ahead of key inflation and employment numbers later this week.<\/p>\n
The softer US inflation data from last week, showing a drop to 2.4%, is a significant development. After seeing the Federal Reserve aggressively hike rates throughout most of 2025, this continued cooling of inflation suggests their policy might shift to neutral. We should consider using put options on the US Dollar Index to position for further weakness as the market prices out future rate hikes.<\/p>\n
The geopolitical news regarding Iran is being ignored for now, but it represents a classic tail risk. We only need to look back to the supply chain disruptions of 2024 to see how quickly markets can reprice such risks. Buying out-of-the-money call options on oil futures offers a low-cost way to hedge portfolios against a sudden escalation.<\/p>\n
Japan’s extremely weak GDP report should logically weaken the dollar against the yen, but we’re seeing the opposite this morning. This suggests the recent drop in USD\/JPY was overdone, but we remain skeptical of this rebound. Selling call options with strike prices above 154.50 could be a prudent strategy to bet against sustained strength.<\/p>\n
The Reserve Bank of Australia is one of the few central banks still actively hiking rates, yet the AUD is failing to gain traction. The upcoming RBA minutes will be critical, and we could see a significant move if they signal a pause is near. We can use a strangle strategy, buying both a call and a put option, to profit from a breakout in either direction following the release.<\/p>\n
Gold’s failure to rally above $5,000, even with a softer US dollar, is a sign of underlying weakness. This suggests that for now, investors are not seeking safety in precious metals. For traders holding gold futures, selling covered calls could be an effective way to generate income while the metal consolidates.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Major FX pairs range-bound as traders await key data; softer US CPI weakens dollar, holidays thin liquidity.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41965","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\/41965","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=41965"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41965\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}