← Back to posts🧠Dollar firms as markets rotate back to growth

🧠Dollar firms as markets rotate back to growth

Published: 2/17/2026

Good morning traders from a damp, slowly brightening IntelliTrade desk, where early showers are starting to give way to patches of blue and about 5–7°C on the thermometer. It is one of those grey-then-glimpses-of-sun mornings that fits the market mood perfectly: cautious, but not gloomy.

Overall Market Sentiment



The mood is cautious and data-watching. The US Dollar Index (DXY) is around 97.1, slightly higher on the day and up about 0.2% from the previous session, but still roughly 2.3% weaker over the month and more than 9% lower over the past year.A widely followed global survey shows investor positioning in USD at its most bearish since 2012, so the dollar is simultaneously under-owned and not quite ready to roll over further without a fresh macro catalyst.


Gold has slipped back below the 5,000 dollar mark, with profit-taking and very thin Lunar New Year liquidity weighing on prices after January’s surge.Brent crude trades near 68.3 dollars, a touch lower on the day, as traders balance ongoing geopolitical risk with the idea of ample supply later in the year.


US equity futures are modestly in the red, with major index futures down roughly 0.3–0.5%, as investors juggle AI-related margin worries with an incoming wave of growth and inflation data.Bitcoin has stabilised after its recent shake-out, trading around 68,900 dollars, where it behaves much more like a high-beta macro asset than an independent safe haven.





Geopolitics



Geopolitics is not the only driver today, but it remains a key background catalyst. Markets are watching US–Iran nuclear talks in Geneva, which have shifted the focus back to the Middle East after an otherwise quiet, holiday-thinned start to the week.


For markets, the transmission is straightforward: if negotiations falter and the risk of future supply disruption rises, oil risk premia and headline inflation expectations could move higher, supporting the dollar and weighing on growth-sensitive FX. If talks continue constructively, the market can lean more into a soft-landing narrative with oil anchored around the mid-60s to high-60s range in Brent.





Policy and data: today and the rest of the week




Today (Tuesday)



  • US markets reopen after Presidents Day, with trading returning to something closer to normal liquidity after the long weekend and Lunar New Year closures across a large part of Asia.
  • The US calendar is still relatively light, centred on regional activity data such as the Empire State manufacturing survey, which is more about fine-tuning growth expectations than changing the big picture.
  • Attention is already rotating toward Federal Reserve minutes and the first estimate of Q4 GDP, which markets see as crucial for confirming whether rate cuts can begin around mid-year.




The rest of this week



This is a classic growth-and-inflation week across the majors:


United States

  • Wednesday: FOMC minutes from the January meeting, where rates were held, will be combed for any hints on how close the Fed thinks it is to the first cut.
  • Friday: Advance Q4 GDP (consensus near 2.8% annualised) and core PCE (consensus around 0.3% month on month, roughly 3.0% year on year) arrive together and are widely viewed as the week’s “macro blockbuster” for the dollar and risk assets.

Euro area

  • Flash PMIs and German sentiment data will show whether the region is slowly climbing out of its manufacturing slump or stuck in low-growth mode.


United Kingdom

  • A full UK data gauntlet: labour market figures, CPI, and retail sales across the week. These will heavily influence how quickly markets expect the Bank of England to move with further cuts after already trimming rates to help a fragile economy.

Canada

  • CPI lands this week and will help determine whether the Bank of Canada can remain one of the more patient central banks or needs to signal a clearer easing path.

Japan

  • After a weak Q4 GDP print, investors now look to inflation data and PMIs for clues on whether the Bank of Japan can keep normalising or must proceed even more cautiously.

New Zealand

  • Wednesday brings the RBNZ policy decision, with the policy rate widely expected to stay at 2.25%, but the projections and tone could pull forward expectations for the next hike if inflation pressures persist.




Net-net, this is a week where Fed minutes, GDP, PCE, and three separate CPI prints (UK, Canada, Japan) share the stage, and the FX market will use them to decide whether the recent dollar pullback has gone far enough.





Currency outlooks




⚖️ USD – Dollar supported by positioning, awaiting data confirmation



The dollar starts Tuesday on the front foot but not in full uptrend mode. DXY around 97.1 represents a modest bounce from last week’s lows, yet the index is still more than 2% weaker on the month and roughly 9% down over the past year, which fits a narrative of a currency coming off extreme strength rather than collapsing.


At the same time, a major fund-manager survey shows record net short positioning in USD, which raises the risk of a squeeze if this week’s US data fail to validate the dovish rate-cut story.That makes the trio of Fed minutes, GDP, and core PCE especially important, because any combination of resilient growth and sticky core inflation would slow or even partially reverse the recent dollar downtrend.


For the next few days, risks for USD look broadly balanced. If GDP and PCE line up with the current soft-landing narrative, DXY could drift back toward the 96.5 area, whereas a hotter-than-expected PCE and solid GDP print would justify another push into the 97.5–98.0 zone that many participants view as near-term resistance.





⚖️ EUR – Euro easing slightly but still in a constructive range



EURUSD is trading near 1.184, slightly lower on the day after last week’s attempt toward 1.19 faded. Over the past month, the pair is still up around 1.5–1.7%, and about 13% higher year on year, which leaves the euro in a clearly improved but not runaway-strong position.


This week’s flash PMIs and sentiment surveys will be key to sustaining that story. The market currently assumes the euro area can grind along with modest growth and inflation near, but slightly below, target while the European Central Bank stays on hold for longer than the Fed. If PMIs or confidence undershoot, the narrative shifts back toward “low-growth Europe” and the euro becomes more vulnerable to US data outperformance.


In the very near term, EUR risks versus USD look mixed. Thin holiday liquidity and the Iran focus might generate intraday noise, but the more structural drivers are still relative growth data and the Fed path. Markets see 1.18–1.183 as the first support area and 1.19–1.20 as the main resistance band for this week’s data run.





🔻 GBP – Sterling walks into a heavy data week on the back foot



GBPUSD trades around 1.36, a touch softer than yesterday as traders mark down the pound in thin liquidity ahead of an intense UK macro calendar.Market debate is centred on how quickly the Bank of England can deliver additional cuts without reigniting inflation or destabilising an already fragile growth outlook.


This week brings labour market numbers, CPI and retail sales, which together will determine whether the recent easing has already done enough or whether more action is needed in the first half of the year. A softer labour market and further disinflation would reinforce current expectations for more cuts, which usually acts as a mild drag on the currency, especially if US data hold up well.


Short term, risks for GBP versus USD lean to the downside. The 1.36 region is the first support that markets are watching, with a break opening room toward 1.35–1.34, while rallies back toward 1.38 are likely to meet selling interest unless the UK data decisively surprise to the upside.





⚖️ CAD – Loonie softens ahead of CPI despite steady oil



The Canadian dollar is slightly weaker, with USDCAD around 1.36–1.365 after edging to a one-week high as traders wait for Canada’s CPI later in the week.Oil is not a major drag or driver today, since Brent around 68.5 dollars and WTI near 63.7 dollars point to a broadly stable terms-of-trade backdrop.


Markets see the Bank of Canada as one of the more patient central banks, but with inflation not far from target, it does not have to fight markets the way it did in 2022–2023. That means USDCAD is currently more sensitive to external drivers such as the dollar’s global path and global risk sentiment than to BoC rhetoric.


Near term, risks for CAD versus USD look balanced. A benign CPI print and friendly risk tone could nudge USDCAD back toward the 1.35 handle, while a firmer inflation number or risk-off move would justify another test of the 1.37 area that corresponds to the upper end of the recent range.





🔺 CHF – Franc stays firm as a quiet hedge into event risk



The Swiss franc remains strong and in demand. USDCHF is trading just under 0.77, close to the lower end of its one-year range, reflecting both persistent safe-haven demand and relatively contained Swiss inflation that allows policymakers to tolerate currency strength.


With the week packed with Fed minutes, GDP, PCE and multiple CPI releases elsewhere, CHF again serves as a discreet portfolio hedge in an environment where many investors already hold substantial positions in yen and gold. There is little in the Swiss domestic data calendar to challenge that role.


Over the next few days, risks for CHF versus USD still lean toward modest additional franc strength, especially if US data do not materially surprise to the upside. Market participants are watching the 0.77 area as a pivot, with scope toward 0.76 on further USD softness and room back toward 0.79–0.80 if US yields push higher again.





⚖️ JPY – Yen caught between weak GDP and crowded positioning



The yen is trading near 153.5 per dollar, recovering slightly from last week’s lows but still close to the weaker end of this year’s range.The recent disappointing Japanese GDP reading reinforces the idea that the domestic economy is too fragile for aggressive tightening, even as the Bank of Japan slowly steps away from ultra-easy policy settings.


At the same time, some of the earlier crowded yen shorts have already been reduced after last month’s move above 158, which limits the risk of a fresh one-way squeeze. For now, the yen is mostly a function of US yields and global risk appetite, with this week’s US data likely to matter more than local releases.


Short term, JPY risks versus USD look mixed. A calm week for US yields would keep USDJPY oscillating around the 152.5–154.0 band, while any combination of stronger US data and higher yields would quickly refocus attention on the mid-150s, the area that tends to invite closer scrutiny from Japanese officials.





🔻 AUD – Aussie consolidates after RBA-driven outperformance



AUDUSD has eased to around 0.706–0.707, marginally lower on the day, after a strong run over the past month that saw it gain more than 5% against the dollar.The RBA’s recent hike to 3.85% and its explicit willingness to do more if inflation persists gave AUD a clear rate-support story, but today’s minutes have been interpreted as cautious at the margin, which has taken some of the immediate shine off.


Positioning now looks much cleaner, and with China still in holiday mode and global risk sentiment wobbling around AI headlines, there is less new fuel for an immediate extension higher. For the rest of this week, risks for AUD versus USD lean mildly to the downside, with 0.70 seen as key support and 0.71–0.715 as resistance where rallies may pause unless US data come in particularly soft.





⚖️ NZD – Kiwi in holding pattern ahead of the RBNZ



The New Zealand dollar is in wait-and-see mode, with NZDUSD around 0.603–0.604 and intraday moves contained.The RBNZ is widely expected to keep the cash rate at 2.25% tomorrow, and recent comments suggest a central bank that is alert to upside inflation risks but not yet ready to start a new hiking phase.


Because a hold is widely priced, the currency reaction will be mainly about forecasts and tone. A projected path that brings forward the next hike or emphasises upside inflation risk would be supportive for NZD relative to both USD and AUD, whereas a very cautious message that stresses external risks would keep NZD more tightly tied to global risk swings.


For this week, NZD risks versus USD look broadly balanced. A steady but not alarmist RBNZ combined with benign US data would favour a drift toward 0.61–0.62, while a surprisingly dovish RBNZ tone or stronger-than-expected US data would open room for a move back into the high 0.59s to 0.60 region.





Cross-asset wrap



  • 🪙 Gold:
    Gold has fallen back below 5,000 dollars, pressured by thin holiday trading, profit-taking and a marginally firmer dollar. The metal remains very sensitive to any upside surprise in core PCE later this week, which would lift real yields and usually weigh on non-yielding assets, while a softer reading would likely allow gold to rebuild a base around that 5,000 pivot.
  • 🛢 Oil:
    Brent around 68.3 dollars and WTI near 63.7 dollars reflect a market that is still pricing some geopolitical risk premium from the Iran talks, but also acknowledges increasing supply and the risk of a medium-term surplus. With inventories comfortable and demand expectations modest, price action is likely to stay range-bound unless negotiations in Geneva suddenly break down or US data significantly change the global growth picture.
  • 📈 Stocks:
    Global equities remain caught between solid macro data and AI-related valuation anxiety. US index futures are modestly lower after last week’s tech-led weakness, and investors are looking to Fed minutes, GDP, PCE and upcoming big-tech earnings to decide whether the latest pullback is just another consolidation in a bull market or the start of a more prolonged re-rating.
  • ₿ Crypto:
    Bitcoin is trading around 68,900 dollars, having recovered from the capitulation move toward the low 60,000s earlier in February. Institutional flows remain supportive, but crypto is still trading as a high-beta expression of global risk appetite and real-yield expectations, which means this week’s US data and any swings in equity volatility will likely dominate the price action more than crypto-specific headlines.






This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.


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