Weekly Forex News & Market Pulse

The forex market saw strong macro-driven volatility during February 16–20, 2026. US GDP data, FOMC minutes, rising geopolitical tension, and weak economic numbers from the UK and Japan shaped price action across major currency pairs. The US dollar dominated the week, while GBP and JPY faced pressure. Oil price swings added further momentum to CAD pairs.

US Dollar Volatility Explosion: GDP Slowdown, FOMC Minutes & Iran Tensions Shake Forex Market

This week in the forex market, major focus stayed on US GDP data, FOMC minutes, inflation outlook, and rising US-Iran geopolitical tensions. Q4 GDP showed slower but steady growth, while Federal Reserve minutes signalled caution on rate cuts. Oil prices jumped on geopolitical risk, and the US dollar stayed firm across major currency pairs.

US GDP Data Slows: What It Means for USD & Rate Cuts

The advanced US GDP Q4 2025 report showed economic growth slowed compared to the previous quarter, but the economy is still expanding. This confirms cooling momentum without signalling recession. Slower growth keeps pressure on the Federal Reserve to carefully manage interest rates and inflation expectations.

FOMC Minutes Signal Caution on Rate Cuts

The Federal Reserve FOMC minutes showed policymakers see inflation progress as uneven. Officials are not rushing into rate cuts despite easing inflation trends. This reduced aggressive rate-cut expectations and kept the US dollar strong in the forex market.

US-Iran Tensions Boost Oil Prices & Trigger Risk-Off Sentiment

Rising geopolitical tension between the US and Iran pushed crude oil prices higher this week. Traders shifted into safe-haven assets due to uncertainty. Higher oil prices added inflation concerns back into the macro outlook and increased overall market volatility.

Gold Drops as US Dollar Gains Strength

Gold prices moved lower this week as the US dollar gained strength after strong Fed messaging and stable GDP data. When the dollar rises, gold often weakens due to currency pressure and reduced safe-haven demand.

US Dollar Surges as Geopolitical Tension and Strong Data Drive Forex Volatility

The US dollar recorded its strongest weekly performance in months. Rising US-Iran geopolitical tension, steady US economic data, and cautious Federal Reserve tone supported the greenback. Traders shifted toward safe-haven assets as risk sentiment weakened across global markets.

Oil Price Spike Triggers Risk-Off Sentiment Across Currency Market

Crude oil prices jumped this week due to escalating Middle East tension and supply risk concerns. Higher oil revived inflation fears globally. Commodity markets reacted quickly, and forex traders adjusted positions based on rising energy prices and global risk uncertainty.

Japanese Yen Weakens After Soft Japan GDP Data

Japan’s latest GDP data showed weaker-than-expected economic growth. The slowdown reduced expectations of aggressive policy tightening from the Bank of Japan. As a result, traders sold the yen while the US dollar gained strength in the USD/JPY pair.

British Pound Falls as UK Unemployment Rises

UK unemployment rose to multi-year highs, increasing pressure on the Bank of England to consider rate cuts. Slower wage growth and weaker labor data hurt confidence in the British economy. Forex traders reacted by selling the pound against stronger currencies.

Euro Gains Long-Term Support from ECB Liquidity Expansion Plan

The European Central Bank expanded its euro liquidity facility to strengthen the euro’s global role. While this is a long-term structural move, short-term euro gains remained limited due to overall US dollar strength and cautious global sentiment.

Major Currency Pair Movements

EUR/USD: Pair stayed under pressure as strong US dollar momentum outweighed ECB liquidity support. Cautious Federal Reserve tone and safe haven demand limited euro upside. Weak eurozone growth outlook kept traders defensive.

GBP/USD: Pair declined after UK unemployment rose sharply, increasing Bank of England rate cut expectations. Strong USD demand added further downside pressure on the pound throughout the week.

USD/JPY: Pair rallied as weak Japan GDP reduced expectations of aggressive Bank of Japan tightening. Diverging monetary policy outlook between the Fed and BOJ supported further upside.

AUD/USD: Pair remained volatile as global risk-off sentiment and US dollar strength weighed on the Australian dollar. Commodity market fluctuations added short-term instability.

USD/CAD: Pair saw mixed movement as rising oil prices supported the Canadian dollar, but broad US dollar strength kept upside pressure intact.

Trader’s Takeaway

• US dollar strength was driven by Fed tone + geopolitical risk positioning: This week confirmed that macro sentiment builds before confirmation. Traders positioned long USD ahead of clarity from FOMC minutes and global tension headlines. Watch for pre-event consolidation zones next week.
• Policy divergence is creating clean directional trades: Weak Japan GDP and rising UK unemployment showed that currencies react fast when economic weakness meets strong USD momentum. Focus on central bank divergence rather than isolated data prints.
• Oil volatility directly influenced CAD flows: Rising crude prices supported the Canadian dollar, but broader dollar dominance limited sustained moves. Monitor oil price structure before entering USD/CAD trades.
• Risk sentiment punished high beta currencies: AUD remained under pressure as markets shifted to safe-haven demand. When geopolitical tension rises, risk currencies weaken first.
• Trend continuation worked better than reversal trading: This week rewarded traders who followed momentum in USD/JPY and sold rallies in GBP/USD. Fighting macro strength proved costly.

What to Watch Next Week

• US Dollar Follow Through: After strong moves driven by US GDP and FOMC minutes, watch if US dollar momentum continues. Monitor EUR/USD and GBP/USD for trend continuation or reversal signals.
• Bank of England Rate Cut Expectations: Rising UK unemployment increased rate cut bets. Track Bank of England commentary for further GBP/USD downside pressure.
• USD/JPY and Yield Spread: Weak Japan GDP supported the USD/JPY rally. Watch US bond yields and Bank of Japan signals for the next breakout move.
• Oil Prices and USD/CAD Volatility: The crude oil surge impacted CAD pairs. Monitor oil price stability and geopolitical headlines for USD/CAD direction.
• Risk Sentiment and Safe Haven Demand: Geopolitical tension boosted the USD strength. If risk-off sentiment continues, expect pressure on AUD/USD and EUR/USD.

Weekly Market Summary

This week, the forex market remained volatile as traders reacted to US GDP data, FOMC minutes, and rising geopolitical tension. The US dollar strengthened on cautious Federal Reserve commentary and safe-haven demand, keeping major currency pairs under pressure.

In Europe, ECB policy stability helped the euro stay supported, but weak growth expectations capped gains in EUR/USD. The British pound declined sharply after rising UK unemployment increased Bank of England to cut its rate, pushing GBP/USD lower.

The Japanese yen weakened after soft Japan GDP reduced tightening expectations, lifting USD/JPY higher. Oil price volatility driven by Middle East developments influenced CAD flows, making USD/CAD highly reactive.

Overall, the week was driven by central bank policy outlook, economic growth data, and risk sentiment shifts, creating strong movement in major pairs like EUR/USD, GBP/USD, USD/JPY, AUD/USD, and USD/CAD.

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Disclaimer

This newsletter provides market insights and weekly summaries. These are expectations, not guarantees. Markets can change due to unexpected events. Always trade responsibly and use proper risk management.