The US Dollar held up against other currencies on Tuesday after early-week volatility, but eased on Wednesday as market mood improved. Eurostat is due to release revisions to January Harmonised Index of Consumer Prices (HICP) data, while attention in the US is on comments from Federal Reserve policymakers.<\/p>\n
US equities rose strongly on Tuesday, and the USD Index slipped from its daily highs to finish marginally higher. On Wednesday morning in Europe, US stock index futures were flat and the USD Index was lower near 97.70.<\/p>\n
During Asian trading on Wednesday, President Donald Trump delivered his State of the Union speech. He said there is no inflation and described \u201ctremendous growth\u201d, linked tariffs to an economic turnaround, and said trading partners want to keep existing trade deals despite a Supreme Court ruling.<\/p>\n
EUR\/USD was near 1.1800, up more than 0.2% on the day after ending Tuesday slightly lower. USD\/JPY, after three straight daily gains, traded around 156.00, while Japan\u2019s Deputy Chief Cabinet Secretary Masanao Ozaki said monetary policy specifics should be left to the Bank of Japan.<\/p>\n
Gold fell more than 1% on Tuesday but stayed above $5,100, then moved up towards $5,200. Australia\u2019s CPI inflation held at 3.8% in January versus 3.7% expected, and AUD\/USD rose above 0.7100; GBP\/USD traded above 1.3500.<\/p>\n
We remember seeing the US Dollar lose steam this time last year, with the DXY dipping near 97.70 amid political claims of “no inflation.” Today, the situation is markedly different as the latest January 2026 CPI report came in at 3.1%, proving inflation remains a key focus for the Federal Reserve. This persistent inflation suggests the Fed’s hawkish stance will continue, making a sustained dollar slide unlikely in the coming weeks.<\/p>\n
Given the potential for surprising comments from Fed officials, traders should consider strategies that profit from volatility rather than direction. For instance, buying a straddle on the USD, using options on an ETF like UUP, could be an effective way to position for a significant move in either direction. This approach mitigates the risk of betting on a specific directional outcome in a news-driven environment.<\/p>\n
A year ago, we watched USD\/JPY consolidate around the 156.00 mark as markets awaited clues on the Bank of Japan’s policy. The landscape has since shifted, as the BoJ finally began its policy normalization in late 2025, providing a fundamental tailwind for the Yen. As of this morning, USD\/JPY is trading closer to 149.50, establishing that former 156.00 level as a significant point of technical resistance.<\/p>\n
This makes selling out-of-the-money call options on USD\/JPY an interesting proposition for generating income. A strike price around 155.00 would offer a substantial premium while providing a buffer against smaller upward moves. The risk of the pair returning to those highs seems contained unless the BoJ unexpectedly reverses its current tightening bias.<\/p>\n
Last February, gold was pushing towards $5,200 an ounce, showing strength despite other market movements. We are now seeing gold struggle to hold the $4,900 level as higher real yields in the US make non-yielding assets less attractive. US 10-year real yields have climbed to over 2.1% in February 2026, a stark contrast to the lower-yield environment that supported gold in early 2025.<\/p>\n
For traders concerned about further downside, purchasing put options on gold, or a gold ETF like GLD, offers a direct hedge. This protects a portfolio from a drop below key support levels, which could be triggered if upcoming US jobs data comes in strong and reinforces the Fed’s hawkish stance.<\/p>\n
We also recall the strong risk-on sentiment in equities this time last year, but the current market mood is far more cautious. The VIX is currently hovering around 19, up from the low teens seen throughout much of early 2025, reflecting investor anxiety over corporate profit margins. This cautiousness makes outright bullish derivative plays riskier than they were a year ago.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Dollar steadied after volatility, then eased as risk improved; Eurozone HICP revisions and Fed comments awaited.<\/p>\n","protected":false},"author":62,"featured_media":16959,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-43591","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\/43591","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=43591"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/43591\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16959"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=43591"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=43591"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=43591"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}