Global forex market overview week of Feb 16–20, 2026: USD rebounds but faces volatility from hawkish Fed signals and a policy shift following the SCOTUS tariff ruling
📌DXY gained around 0.9% from 96.92 to near 97.8, with a strong mid-week rally before easing into the close, highlighting how rate expectations are currently driving price action more than isolated data prints.
💡The main driver came from hawkish FOMC minutes, where some officials signaled openness to further tightening if inflation remains persistent, pushing US yields higher and triggering USD short-covering amid previously stretched positioning.
🔎EUR/USD slipped toward 1.1786, reflecting continued pressure on the euro as growth signals remain soft and policy divergence still favors the US, despite some late-week stabilization from flash data.
⚠️GBP/USD dropped sharply to around 1.3498 following weak UK labor data and cooling inflation, reinforcing expectations for earlier BoE easing and positioning sterling as one of the weaker major currencies this week.
🧭USD/JPY climbed toward 154.8 as the yen weakened after soft Q4 GDP, with yield differentials continuing to dominate flows; commodity currencies like AUD and CAD showed mixed performance, driven by oil and domestic data, reinforcing a fragmented market backdrop.
✅USD pulled back slightly into the weekend after the SCOTUS partially struck down tariffs under IEEPA, raising fiscal concerns, though swift replacement measures kept policy uncertainty elevated; with a dense data calendar ahead, volatility may pick up again around inflation, growth, and central bank communication.
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