Markets are set for the US February employment report on Friday, including Nonfarm Payrolls (NFP), the Unemployment Rate and wage inflation, while monitoring updates tied to the Middle East crisis. The USD Index ended Thursday higher on safe-haven demand and held near 99.00 early Friday, with US stock index futures marginally up. After a Senate vote on Wednesday, the US House rejected a measure on Thursday that would limit President Donald Trump’s ability to take further military action against Iran. Trump said Iranian officials reached out to seek an agreement to end the war, while Iran’s foreign minister said Iran has not asked for a ceasefire and has rejected negotiations with the US.

Oil Prices Extend Rally

WTI oil rose for a fifth straight day, last trading above $80.50 and up more than 2% on the day. WTI is up nearly 20% on the week, and the US administration is weighing options to address higher oil and petrol prices. February NFP is forecast at 59K after 130K in January, with unemployment seen steady at 4.3%. Gold fell more than 1% on Thursday but rebounded above $5,100; EUR/USD held just over 1.1600 ahead of revised eurozone Q4 Employment Change and GDP. Japan said it is ready to respond to economic effects from the Iran conflict and has not fully exited deflation, while the BoJ reiterated gradual policy adjustment. USD/JPY held above 157.50, and GBP/USD traded above 1.3350 in the lower half of its weekly range. Looking back to this time in 2025, we saw crude oil prices surging past $80 a barrel amid the conflict in Iran, a move that created massive volatility. Today, with West Texas Intermediate crude hovering around $78, tensions in the Middle East remain a key factor, and recent data from the EIA shows US crude inventories have drawn down for three consecutive weeks, suggesting tight supply. Derivative traders should consider call options on oil futures as any renewed escalation could easily send prices back toward last year’s highs.

Dollar And Gold Positioning

The US Dollar was finding strength as a safe haven then, with the DXY index at 99.00. A year later, persistent inflation, with the last CPI report for January 2026 coming in at a sticky 3.2%, has kept the Federal Reserve from cutting interest rates. This policy divergence with other central banks supports continued dollar strength, making long positions in USD futures or call options on the UUP ETF attractive strategies. Gold’s incredible price of over $5,100 an ounce last year underscored its status as the ultimate crisis hedge, even against a strong dollar. In early 2026, gold has consolidated near $5,050, supported by continued central bank buying, a trend confirmed by World Gold Council data showing record purchases through the second half of 2025. This creates a floor under the price, suggesting selling out-of-the-money puts could be a way to collect premium while waiting for the next geopolitical flare-up. In March 2025, the market was bracing for a weak jobs report, which added to the uncertainty. Now in 2026, the ongoing high energy prices and restrictive interest rates are weighing on corporate outlooks, a fact reflected in the cautious guidance issued during the last earnings season. We believe maintaining long volatility positions through VIX futures or buying protective puts on broad market indices like the SPX is a prudent hedge for the coming weeks. Create your live VT Markets account and start trading now.

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