The US Dollar (USD) maintained its position against other currencies on February 26, as markets monitored developments regarding Trump’s tariff policy. Upcoming US economic data includes New Home Sales figures for January, alongside speeches from Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin.
This week, the USD displayed varied performance against major currencies, showing its weakest performance against the Swiss Franc, with a decrease of 0.41%. Falling US Treasury bond yields also affected the USD, following comments from Treasury Secretary Scott Bessent about spending reductions.
EUR/USD initially rose over 0.4% but lost momentum to trade just below 1.0500. GBP/USD saw minor gains, trading around 1.2650, while AUD/USD faced continuous losses, remaining below 0.6350 despite the annual Consumer Price Index (CPI) rising by 2.5% in January.
USD/JPY dropped nearly 0.5%, marking its lowest close since early October but saw a slight rebound near 149.50. Gold prices faced selling pressure, losing over 1% before stabilising slightly above $2,910 after hitting a weekly low at $2,888.
With the US dollar holding steady, attention remains on Trump’s tariff policy and upcoming economic data, including home sales figures and speeches from Raphael and Thomas. Traders will be listening closely to both Federal Reserve officials, as their remarks could hint at future monetary policy shifts. While bond yields have dipped in response to Scott’s mention of spending reductions, the broader impact on the currency market will depend on how investors weigh these remarks against upcoming data releases.
Given the mixed performance of the USD against major counterparts, traders navigating derivatives will need to pay close attention to individual currency movements. The drop against the Swiss Franc, for example, suggests a move towards safe-haven assets, often a response to uncertainty in US fiscal policy. Meanwhile, the euro showed some strength before reversing course, indicating a lack of follow-through by buyers. $1.0500 remains an important threshold, and further downside could prompt reassessment by short-term traders looking for opportunities in EUR-related instruments.
The British pound held modest gains, trading near 1.2650. Traders should watch for any new economic data from the UK that might change Sterling’s trajectory. A stable pound suggests confidence in the UK’s own economic outlook, but movements in US yields could still shift the balance. Meanwhile, the Australian dollar continues to struggle despite rising inflation, reflecting broader weakness, likely due to external factors like demand for commodities and signals from global central banks. The fact that it remains below 0.6350 suggests a lack of conviction from buyers, making it vulnerable to additional declines if sentiment worsens.
As for the Japanese yen, its brief drop of nearly half a percent pushed USD/JPY to its lowest level since early October before a slight recovery. This suggests that the yen remains a real alternative during moments of doubt in the dollar. However, any sustained movement below 149.50 could signal further yen strength, impacting how traders approach yen-related derivatives.
Gold prices saw a sharp decline of over 1% before stabilising just above $2,910. While it bounced after hitting a low of $2,888, the selling pressure here aligns with shifting risk sentiment. Those watching commodity markets may take this as an early sign of potential volatility, particularly if the dollar strengthens further.
The coming weeks will likely bring more fluctuations across these markets. Derivatives traders should be prepared for possible price swings driven by policy updates, bond yield movements, and fresh economic reports. Holding a clear plan will be key in adapting to rapid shifts in market direction.
