← Back to posts🧠Dollar holds gains as data and oil drive tone

🧠Dollar holds gains as data and oil drive tone

Published: 2/19/2026

Good morning traders from a softly snow-glazed IntelliTrade desk, where it is sitting around 1°C with a fresh layer of slush and a yellow ice warning on the roads. Perfect conditions to stay indoors, wrap both hands around your coffee and walk through a market that is suddenly juggling Fed minutes, oil at 70 and gold flirting with 5,000 again.



Overall Market Sentiment



The mood is cautious risk on with a firm dollar. The US Dollar Index (DXY) is consolidating near 97.7, its highest level in over a week, after yesterday’s Fed minutes nudged rate cut expectations slightly further out. Over the past month the dollar is still down just under 1 percent, and about 8 percent over 12 months, so this is a rebound inside a broader cooling trend rather than a new super cycle.


EURUSD trades around 1.18, slightly softer than earlier in the week but still about 12 percent stronger than a year ago. GBPUSD is hovering near 1.35, at the lower end of its recent range, after UK inflation dipped to 3.0 percent in January, a ten month low that boosted expectations of a Bank of England cut as soon as March.


Across assets, capital is rotating rather than fleeing. Gold is hovering near the 5,000 dollars per ounce mark after a sharp rebound yesterday. Fed minutes and upcoming US inflation data are limiting further upside but geopolitical worries are preventing a deeper selloff.Brent crude is holding above 70 dollars, having logged its biggest daily gain since October on reports of rising US–Iran tensions.


Equity indices have bounced from their recent lows, helped by resilient US data and a partial easing of AI related earnings fears, though volatility in tech remains elevated.Bitcoin trades just under 67,000 dollars, down versus yesterday but still well above the early February lows, as crypto behaves like a high beta macro asset that reacts strongly to shifts in real yields and liquidity.





Geopolitics



Geopolitics is back in focus through the energy channel. Oil gained more than 3 percent yesterday after headlines around possible near term US military action against Iran and broader regional tensions. Brent is now steady above 70 dollars per barrel, while WTI is trading north of 65 dollars, with traders adding a risk premium for potential supply disruptions.


For FX and macro, this matters mainly through headline inflation expectations and risk appetite. A sustained move in Brent toward the mid 70s would keep pressure on central banks that thought energy was no longer a problem and could slow plans for rapid easing. That tends to support the dollar and safe havens while weighing on higher beta FX such as AUD and NZD. If the situation stabilises and oil drifts back into the high 60s, the soft landing narrative regains space and the recent dollar rebound looks more like a short squeeze than a new trend.





Policy and data: today and the rest of the week




Today (Thursday)



  • Markets are digesting FOMC minutes, which showed a Fed still cautious about cutting too early. The tone was not aggressively hawkish, but it did stress uncertainty around services inflation and the risk of loosening financial conditions too quickly, which helps explain the firmer dollar today.
  • In the UK, CPI for January fell to 3.0 percent, its lowest in ten months. Headline disinflation gives the Bank of England more flexibility, even though services inflation remains sticky, so markets are now pricing a high chance of a cut within the next one or two meetings.
  • Across the euro area, survey and sentiment data are being watched to see whether manufacturing is finally stabilising after a long slump.




Rest of the week



The rest of the week is where the hard macro data hit:


United States

  • Friday brings the advance print of Q4 GDP together with core PCE, the Fed’s preferred inflation gauge. Consensus is roughly 2.8 percent annualised growth and 0.3 percent month on month core PCE, which would support the soft landing narrative and gradual cuts. A stronger combination would keep the dollar bid and pressure risk assets, while a weaker mix would revive talk of faster easing.


Euro area and UK

  • Flash PMIs for February will give a timely read on growth momentum. For the UK, those PMIs will come on the back of yesterday’s inflation surprise and ahead of retail sales, so they will feed directly into the BoE rate path debate.


Canada

  • Markets are still digesting the recent CPI print that came in around 2.3 percent year on year, sitting comfortably inside the target band. That keeps the Bank of Canada in wait and see mode, with US data and oil doing much of the heavy lifting for CAD.

Japan

  • After weak Q4 GDP and stronger exports, attention shifts to inflation and labour data that will either support or challenge expectations that the Bank of Japan moves its policy rate toward 1 percent by mid year, with intervention risks rising near 160 on USDJPY.


New Zealand

  • The RBNZ has already delivered a hold at 2.25 percent, but its cautious tone knocked NZD lower. Markets now focus on how quickly it might need to move if inflation does not cool as expected.




Overall, this remains a week where Fed minutes, GDP, PCE and multiple CPI prints share the stage, and the FX market uses them to decide whether the recent dollar bounce is a brief squeeze or the start of a longer consolidation phase.





Currency outlooks




🔺 USD – Fed minutes underpin a cautious dollar rebound



The US Dollar Index around 97.7 is holding near a one week high after the Fed minutes signalled little urgency to cut rates. Over the past month the index is still down about 1 percent and roughly 8 percent over the last year, so the bigger picture remains one of gradual cooling from past strength.


The near term story is about positioning and data risk. Surveys show very bearish dollar positioning relative to history, which means that even modestly firmer data can generate outsized moves as shorts are covered. Friday’s GDP and core PCE will be the key test. A soft landing profile, with solid growth and gradually easing core inflation, would probably keep the dollar supported but contained. A stronger combination, especially on core PCE, would validate the current rebound and open further upside.


For the rest of this week, risks for USD look modestly tilted to the upside. Markets are watching the 97.5 to 98.0 zone on DXY as an area where the rebound might pause if data are only slightly better than expected, while a downside surprise on PCE would quickly shift attention back to support in the mid 96s.





⚖️ EUR – Euro softens but remains in a constructive range



EURUSD is trading around 1.18, near the lower end of its recent band after last week’s push toward 1.19 faded. Even so, the euro is up roughly 0.6 percent over the month and more than 12 percent over 12 months, which confirms that the recent pullback is, so far, just a consolidation inside a broader recovery.


This week’s flash PMIs and confidence data will indicate whether the euro area is crawling out of its industrial slump or still stuck in very low growth. Markets largely assume that the ECB will sit on its hands for longer than the Fed, which supports the euro on crosses, but that assumption relies on Europe avoiding a more severe downturn.


Short term, risks for EUR versus USD look balanced. If PMIs and US data both land close to consensus, EURUSD likely oscillates between 1.18 as a support reference and 1.19 to 1.20 as resistance. A hawkish combination of Fed data and minutes would favour a drift toward the high 1.17s, while a softer US profile would allow the euro to retest 1.19 without needing dramatically better European numbers.





🔻 GBP – UK inflation cools, leaving sterling on the defensive



GBPUSD is trading around 1.35, after breaking below the 1.3510 area that many charts flagged as near term support. The move came as UK headline CPI dropped to 3.0 percent in January, a ten month low that sharply increased market pricing for a Bank of England cut within the next meeting or two.


Services inflation is still sticky, which means the BoE cannot relax completely, but the direction of travel clearly gives it more flexibility than a few months ago. Against the backdrop of a firmer dollar and lingering growth concerns at home, that combination tends to weigh on sterling at the margin.


For the rest of this week, risks for GBP versus USD lean to the downside. Market participants are watching the 1.345 to 1.35 zone as a key area. A sustained break could open space toward 1.34, especially if US data surprise on the strong side, while any bounce back toward the mid 1.36s is likely to be treated as a consolidation unless UK data or BoE communication clearly shift the story.





🔻 CAD – Softer inflation and stronger dollar keep CAD on back foot



The Canadian dollar is modestly weaker, with USDCAD trading in the 1.36 to 1.37 range, near the top of its recent band. Over the past week the pair has touched a high around 1.3703, as a firmer dollar and softer Canadian inflation combined to nudge CAD lower.


Recent CPI data near 2.3 percent year on year give the Bank of Canada room to stay patient or even contemplate eventual cuts if growth disappoints, while still remaining inside its inflation target band. At the same time, oil above 70 dollars provides a partial cushion, so CAD is not behaving like a classic high beta casualty of USD strength.


Near term, risks for CAD versus USD are tilted slightly toward further CAD weakness. If US GDP and PCE come in firm, USDCAD could spend more time close to the 1.37 handle, while a softer US profile and calm risk sentiment would likely bring it back toward 1.36 or slightly below.





🔺 CHF – Franc still a favoured hedge despite tiny dollar bounce



The Swiss franc remains strong in a broader sense. USDCHF is around 0.77 to 0.773, slightly lower compared with yesterday and roughly 2.2 percent weaker in the dollar leg over the past month, while CHF is up nearly 14 percent over the year.


Low Swiss inflation and steady domestic growth allow the Swiss National Bank to tolerate a firm franc, which helps damp imported price pressures. In a week dominated by Fed minutes and US data, CHF continues to serve as a quiet hedge for portfolios that are otherwise long risk.


Over the coming days, risks for CHF versus USD lean toward modest additional franc strength. If US data are only in line with expectations, markets can keep using CHF as a diversifier, which would keep USDCHF gravitating around or below 0.77. A clearly stronger US inflation and growth profile would be needed to force a sustained move back toward 0.78 to 0.79.





🔻 JPY – Fed minutes push USDJPY higher while BoJ shift stays distant



The yen is weaker, with USDJPY trading around 154 to 155, close to the upper end of the recent range after the Fed minutes reminded markets that US policy is still some distance from aggressive easing. The pair has traded between roughly 152 and 159 this year, with the current level nearer the top of that corridor.


At the same time, expectations are building that the Bank of Japan could lift its policy rate toward 1 percent by mid year, which supports Japanese yields and slightly reduces the carry appeal of being short JPY. Intervention risk from the Ministry of Finance also increases as USDJPY moves closer to 160, which may help cap the upside.


For this week, however, risks for JPY versus USD still lean to the downside. A firm US data mix and oil above 70 would both support higher yields and risk appetite in ways that usually keep yen under pressure. Traders are watching the 155 area as a near term pivot. A clear break higher would refocus attention on the 158 to 160 zone, while a softer US profile could drag the pair back toward 152 to 153.





⚖️ AUD – Strong jobs, softer intraday tone as AUD digests dollar rebound



The Australian dollar is consolidating after a busy Asia session. AUDUSD trades just above 0.70, giving back early gains and sitting near 0.704 to 0.705 after an initial spike on tight labour market data. Over the past month AUD is still up around 3 to 4 percent, helped by carry appeal and a relatively hawkish Reserve Bank of Australia.


The RBA’s cash rate of 3.60 percent leaves Australia with a meaningful yield advantage over some peers, but markets are beginning to question how much further it can push, especially if global growth moderates. At the same time, higher oil and a firmer dollar limit the scope for immediate upside.


Short term, risks for AUD versus USD look fairly balanced. A calm US data outcome and supportive commodity backdrop would allow AUDUSD to hold above 0.70 and possibly re approach the 0.71 area, while a strong USD on the back of GDP and PCE would keep the pair anchored closer to the low 0.70s or below.





🔻 NZD – Kiwi still heavy after dovish RBNZ, despite small bounce



The New Zealand dollar remains under pressure. NZDUSD dropped sharply after the RBNZ held the cash rate at 2.25 percent and signalled a more cautious tightening path, and is now hovering just below 0.60, with live quotes around 0.597 to 0.598.


There has been a modest intraday rebound from yesterday’s lows in the mid 0.59s, helped by slightly less dovish comments from Governor Breman, but the pair remains vulnerable as long as the dollar is firm and markets reassess how much future hiking power the RBNZ really has.


For this week, risks for NZD versus USD still lean to the downside. Unless US data soften clearly or global risk sentiment improves sharply, rallies toward 0.60 to 0.605 are likely to attract selling interest, while any renewed risk off move or stronger dollar could drag NZDUSD back toward 0.59.





Cross asset wrap



  • 🪙 Gold:
    Gold is trading very close to 5,000 dollars per ounce, oscillating around that psychological level after a sharp intraday move above it yesterday. The metal is caught between safe haven demand from geopolitics and the drag from a firmer dollar and higher yields. Friday’s core PCE print is the next key catalyst. Softer inflation would support the idea that gold can hold or build on the 5,000 area, while a stronger reading would likely cap rallies and keep it in a broad range.
  • 🛢 Oil:
    Oil has jumped and then steadied. Brent is holding above 70 dollars after a more than 4 percent spike driven by US–Iran tension headlines and talk of possible military action. Markets are now weighing that supply risk against still comfortable inventories and a mixed demand picture. For FX, current levels support exporters like CAD at the margin but are not yet extreme enough to force urgent central bank rethinks on their own.
  • 📈 Stocks:
    Global equities are in repair mode. The Nasdaq 100 has reclaimed the 25,000 level after earlier AI related jitters, while broader US indices have stabilised as investors digest better growth data and a Fed that talks about patience rather than panic. The sustainability of the rebound will depend heavily on how GDP and PCE shape expectations for the timing and scale of cuts.
  • ₿ Crypto:
    Bitcoin trades just under 67,000 dollars, down roughly half a percent on the day, as the crypto complex faces a mix of price weakness and deeper institutional involvement. News that prominent Wall Street figures are building BTC exposure has reinforced the idea that Bitcoin now trades as part of the broader macro universe rather than as a separate world, which puts even more focus on Fed policy, real yields and equity volatility for the near term path.






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


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