← Back to posts🧠Dollar grinds higher as metals stabilise and oil eases

🧠Dollar grinds higher as metals stabilise and oil eases

Published: 2/5/2026

Good morning traders from a frosty, mostly cloudy IntelliTrade desk. It is hovering just below freezing with a slow shift toward intermittent sun this afternoon, so while the streets stay icy, the real thaw is in metals volatility and not in the macro debate.


Overall Market Sentiment



The broad tone is cautious, slightly risk off, dollar supported. The US Dollar Index is nudging toward 97.8, extending this week’s recovery and now up a little over 0.8 percent in five trading days, even though it remains roughly 9 percent weaker than a year ago.


Gold is stabilising after its spectacular crash. Spot is trading in a wide 4,650–4,850 range and has bounced about 3 percent from the overnight lows, as dip buyers test the water following a 20 percent drawdown from last week’s record near 5,600.Silver remains under heavy pressure, with some contracts still testing exchange lower circuits.


Oil is softer. Brent is sitting around 68–68.5 dollars and WTI near 64 dollars, down roughly 2 percent on the day as confirmation of US–Iran talks in Oman takes some of the war premium out of prices.Equities are mixed: the S&P 500 and Nasdaq have come under pressure from another tech and software selloff, while the Dow holds closer to record territory as investors rotate toward more defensive or old-economy names.





Geopolitics and policy



The main geopolitical valve today is tension management in the Gulf. Washington and Tehran have agreed to hold talks in Oman, which has pulled oil back from yesterday’s highs and eased immediate fears of supply disruption through the Strait of Hormuz.The market message is simple: energy risk is not gone, but for now it is in “headline watching” mode rather than full-blown crisis.


On the policy front, traders are still adjusting to the Warsh Fed story. A more hawkish-perceived future chair alongside resilient US data has pushed DXY higher, hit precious metals and high-beta FX, and reinforced the idea that cuts may come later and fewer than markets expected in late 2025.At the same time, the partial US government shutdown means this Friday’s Nonfarm Payrolls and other labour reports are on hold, so investors are flying partly blind on jobs and relying more on private surveys and ISM numbers.


In Europe, focus is on today’s ECB meeting, where rates are widely expected to be left unchanged. With Eurozone inflation now near 2 percent and growth still soft, the Bank is likely to stress policy stability and data dependence, which tends to cap how far EUR can run on policy divergence alone.





Today and the rest of the week



Today, Thursday


  • Markets are watching whether the dollar’s grind higher can continue without fresh hard data while the labour statistics machinery is partially offline. DXY has now risen three sessions in a row, but moves remain incremental, not explosive.
  • The ECB decision and press conference are the main scheduled event. A steady hand and emphasis on patience would fit with the current pause in EURUSD just below 1.18–1.19.
  • Oil and gold are in “price discovery after shock” mode, with traders probing for where real two-way interest returns after last week’s extremes.



Rest of the week


  • In the US, ISM services, jobless claims and private-sector labour data now carry extra weight as NFP is delayed. They will strongly influence whether markets keep leaning toward “higher for longer” under Warsh or start to doubt the growth side of that story.
  • In Europe and the UK, both the ECB today and the BoE decision window are key for how far EUR and GBP can stretch against a recovering dollar after strong January moves.
  • In Asia-Pacific, the RBA’s fresh hike to 3.85 percent and a still-solid Chinese backdrop keep AUD supported, while NZD reacts to labour data that showed higher unemployment but firmer underlying conditions, leaving the RBNZ cautious on cuts.






Currency outlooks




🔺 USD – Dollar recovery continues, but data blackout limits conviction



The dollar is still grinding higher. DXY is trading around 97.8, up roughly 2 percent from the late-January trough, as markets price fewer Fed cuts and adjust to a leadership profile that looks more hawkish on inflation and balance-sheet policy.


The missing piece is labour data. With the shutdown suspending this week’s official NFP release, traders are relying on proxies such as private employment surveys and ISM services to judge how much tightening the economy can withstand.That uncertainty caps how aggressively markets want to extend long-USD exposure after a big move in January and a fast unwind in metals and crypto.


For the next few sessions, risks for USD remain slightly tilted to the upside, but with humility. Stronger services and labour proxies would reinforce the “higher for longer” narrative and keep DXY supported above 97, while any soft surprise or rapid progress toward resolving the shutdown would open the door to another round of diversification into gold and higher-beta FX.


Key reference areas that desks are watching: 97.3–97.5 as immediate support and the 98.5 region as first meaningful resistance that would need to break to talk about a more durable new uptrend.





🔻 EUR – Pre-ECB pause as growth drag offsets policy support



EURUSD has slipped back toward 1.18, with spot near 1.1790, after failing to hold last week’s push above 1.19 as the dollar stabilised and Eurozone data stayed only modestly positive.Inflation around 2 percent gives the ECB room to be patient, but not yet enough to declare victory and green-light early cuts, which is why policy itself is not driving the euro sharply in either direction.


The near term challenge for EUR is that growth remains sluggish, so a stronger currency quickly sharpens the drag from weaker exports and tighter financial conditions. If today’s ECB messaging leans too cautious on growth or hints at cuts sooner than markets expect, EURUSD could see further pressure, especially with DXY now on the front foot.


For the rest of the week, risks for EUR versus USD lean mildly to the downside. Markets are likely to respect 1.17–1.18 as the first support band, while the 1.20–1.21 region remains the key resistance zone that needs fresh positive surprises to be convincingly reclaimed.





⚖️ GBP – High, choppy and tethered to BoE and Fed expectations



GBPUSD is trading around 1.36–1.37, with recent prints near 1.361–1.365, after repeated failures to break and hold above the 1.38 area in January.UK front-end yields remain relatively elevated and the market expects the Bank of England to cut later and more cautiously than some peers, but growth momentum is modest and the currency is already much stronger than a year ago.


With the BoE widely seen on hold near 3.75 percent, the question today is about tone rather than actions: a message that stresses patience and acknowledges sticky services inflation without sounding worried about sterling strength would keep GBP supported, while any hint of earlier cuts could see it drift toward the lower end of its recent range.


For this week, GBP risks versus USD look broadly balanced. The 1.36 area is key near support and the 1.38–1.39 zone remains the resistance band where many participants are reluctant to push fresh bullish exposure without clear domestic data surprises.





🔻 CAD – Stronger dollar and softer oil edge USDCAD higher



USDCAD is hovering in the mid-1.36s to high-1.36s, with live quotes around 1.368–1.369, as the dollar grind higher and the pullback in oil remove some of the loonie’s recent support.Brent around the high 60s is still a solid terms-of-trade backdrop, but the direction has flipped from last week’s spike that strongly favoured CAD.


Domestic Canadian data and inflation remain roughly in line with the Bank of Canada’s targets, so near term moves are dominated by external drivers: the Warsh-supported USD, oil headlines around US–Iran talks, and general risk appetite.


Over the coming days, risks for CAD versus USD lean slightly toward further weakness. A stronger dollar or another leg down in crude would likely push USDCAD toward 1.37–1.38, while a softer USD and more constructive oil tape would be needed to revisit the recent lows near 1.35.





⚖️ CHF – Franc still firm, with USDCHF inching higher inside the range



USDCHF is trading near 0.777–0.778, up slightly on the day but still close to the lower end of this year’s range, which means the franc remains structurally strong both in nominal and real terms.


Low Swiss inflation and a very low policy rate give the central bank room to tolerate currency strength as a buffer against imported price pressures. At the same time, the modest dollar recovery and calmer short-term risk tone in Europe have slowed further CHF appreciation in the last few sessions.


Short term, CHF risks versus USD look neutral. If the dollar fails to move beyond the high 97s on DXY, USDCHF can drift back toward 0.77. Conversely, a further push toward 98–99 on DXY would likely carry the pair back into the 0.78–0.79 region without fundamentally changing the story of a strong franc.





🔻 JPY – Stuck near 156 as yield gap and intervention risk collide



USDJPY is trading in the mid-155s to low-156s, with intraday guidance suggesting price will spend most of the day around 156, reflecting a tug of war between a stronger dollar, ultra-low Japanese yields and persistent intervention worries.The Bank of Japan policy rate near 0.75 percent keeps rate differentials wide even after tentative normalisation steps, and recent domestic data have not forced a more aggressive tightening path.


On the other side, authorities are clearly uncomfortable with rapid moves toward 160 and have already shown a willingness to lean against excessive weakness. Markets increasingly treat the 155–157 band as a high-tension zone where any further USD strength runs into rising intervention risk.


Near term, yen risks still lean toward weakness, but with a very asymmetric profile: USDJPY can grind higher on incremental dollar strength and steady yields, yet any sharp risk-off episode or explicit official action could produce fast reversals lower.





🔺 AUD – RBA’s hawkish hike keeps AUD bid above 0.70



AUDUSD is holding just above the 0.70 handle, with spot having recently tested the 0.703–0.704 area, after the RBA raised its cash rate by 25 basis points to 3.85 percent and signalled it is not convinced inflation is beaten.


Markets now price the possibility of further tightening later in 2026 and see Australian inflation staying above target longer than in some peers, which supports AUD as a relative yield story even against a somewhat stronger USD. Positioning is more crowded after a strong January, which means corrections can be sharp, but the structural backdrop looks more supportive than it did in mid-2025.


For the remainder of the week, risks for AUD versus USD lean moderately to the upside, as long as the global risk backdrop does not deteriorate sharply. Market participants highlight the 0.695–0.70 zone as important support and the 0.71 region as initial resistance, where several desks expect profit-taking on first tests.





⚖️ NZD – Holding the 0.60 line as labour data and stronger USD offset



NZDUSD is trading just under the psychologically important 0.60 level, with recent official fixes around 0.598–0.599, after pulling back from seven-month highs near 0.605 as the stronger USD and mixed domestic labour data took some steam out of the January rally.


New Zealand unemployment has ticked higher, but in a way that reflects increased participation and reasonable employment growth, which keeps the central bank in “wait and see” mode rather than pushing it toward imminent cuts.The kiwi also remains highly sensitive to shifts in global risk appetite and Chinese growth expectations, both of which have been choppy but not disastrous in recent sessions.


For this week, NZD risks versus USD look broadly balanced. Holding 0.60 keeps the recent uptrend technically intact and would leave room for another push toward 0.61–0.62 if the dollar rally cools, while a break below 0.60 would open a deeper corrective window toward the mid-0.58s flagged by several technical analysts.





Cross-asset wrap



  • 🪙 Gold:
    Gold is in repair mode. After dropping more than 20 percent from last week’s record high near 5,600, spot has stabilised between 4,650 and 4,850 and is currently up around 3 percent on the day as traders test dip-buying appetite. This move looks more like a violent reset in a crowded trade than a clean macro regime change, but with a stronger dollar and tighter Fed expectations, the bar for a quick return to the highs is now much higher.
  • 🛢 Oil:
    Brent sits around 68.5 dollars and WTI near 64 dollars, lower on the day as confirmation of US–Iran talks in Oman removes some of the worst-case supply risk from the market. At these levels, energy remains a mild inflation headwind rather than a full macro shock. If the talks falter or any incident hits shipping, the risk premium would likely return quickly, but for now the market is treating diplomacy as the base case.
  • 📈 Stocks:
    Global equities are in a rotation rather than capitulation phase. The S&P 500 and Nasdaq have been dragged lower by another software and AI-linked tech selloff, even as the Dow holds close to record levels on the back of more traditional cyclicals. That pattern fits a world where the Fed may stay tighter for longer and where energy and metals volatility encourage investors to rebalance rather than abandon risk entirely.
  • ₿ Crypto:
    Bitcoin is under significant pressure, trading near 70–71 thousand and flirting with a break of the 70k line after another 3 percent drop, taking 2026’s drawdown close to 20 percent so far.The combination of tighter Fed expectations, a stronger dollar, metals volatility and outflows from spot ETFs has turned crypto back into the high-beta expression of risk aversion rather than a haven, at least in the current phase of the cycle.






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


Need help decoding this article? Get our free Macro Decoder ebook when signing up to our newsletter using the sign up button below! No spam, just value.