XAU/USD – Daily Chart
Forex Signals Feb 20: The Iran Tensions, PCE Inflation, US GDP in Focus Today
Increased tensions between the US and Iran, together with upcoming PCE and GDP statistics, are making investors rethink growth, inflation...
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Last updated: Friday, February 20, 2026
Quick overview
- Heightened tensions between the U.S. and Iran have led to rising oil prices and a firmer dollar as investors seek safety amid geopolitical risks.
- A weaker U.S. trade balance has prompted downward revisions for GDP growth expectations, with mixed domestic indicators suggesting resilience in parts of the economy.
- The upcoming PCE report is critical for the Federal Reserve's rate expectations, as inflation pressures remain elevated despite a solid labor market.
- In the cryptocurrency market, Bitcoin has experienced significant volatility, recently falling below $70K, while Ethereum has shown resilience, bouncing back above $2,000.
Increased tensions between the US and Iran, together with upcoming PCE and GDP statistics, are making investors rethink growth, inflation, and geopolitical risk, which is causing the market to become cautious.
Iran Tensions Lift Oil and the Dollar
Market attention has increasingly shifted toward geopolitical developments involving Iran and the United States, as oil prices climbed to their highest levels since August amid reports of a sustained U.S. military buildup in the region. Speculation that former President Donald Trump is weighing a limited strike on Iran—potentially as leverage in nuclear negotiations—has added to uncertainty. Tehran has signaled it would retaliate if attacked, reinforcing concerns over escalation.
Energy markets have responded accordingly. Both Brent and WTI crude have strengthened on fears that any disruption to Iranian exports, or in a more severe scenario, a closure of the Strait of Hormuz, could tighten global supply. Analysts suggest Europe may be more vulnerable to such disruptions than the U.S., contributing to a firmer dollar as investors seek relative safety.
Escalation rhetoric has also underpinned safe-haven flows into gold and the U.S. dollar. While no disruption has materialized, the geopolitical risk premium embedded in oil prices appears to be rising, and markets remain sensitive to further headlines.
Key Market Events to Watch Today:
Softer Trade Data Clouds GDP Outlook
On the economic front, a weaker U.S. trade balance report has prompted downward revisions to expectations for the upcoming preliminary fourth-quarter GDP reading. Full-year 2025 growth may now come in below the 3% mark, reflecting some moderation in external demand.
That said, domestic indicators have offered mixed signals. Initial jobless claims declined, and the Philadelphia Fed index improved, pointing to resilience in parts of the economy. Corporate commentary has also been cautiously constructive; for instance, executives at Deere & Company suggested that 2026 could mark the bottom of the current cycle, helping lift its shares sharply.
The advance Q4 GDP estimate is expected to show growth slowing from Q3’s robust 4.4% annualized pace. While trackers such as the Atlanta Fed’s GDPNow model still indicate solid expansion, softer consumer spending data suggest a more controlled deceleration. Policymakers may view moderation as preferable to overheating, but sharper weakness would raise broader concerns.
PCE Inflation: A Critical Test for the Fed
The upcoming Personal Consumption Expenditures (PCE) report— the Federal Reserve’s preferred inflation gauge—will be pivotal for rate expectations. Consensus anticipates firmer readings compared with recent CPI data, partly due to methodological differences that place greater weight on categories experiencing stronger price pressures.
At the January FOMC press conference, Chair Jerome Powell indicated that headline PCE likely rose 2.9% year-over-year in December, with core PCE around 3.0%. Elevated goods inflation, partly linked to tariffs, has complicated the disinflation narrative.
With the labor market outperforming expectations and growth still described as solid, policymakers appear reluctant to commit to further rate cuts without clearer evidence of sustained progress toward the 2% target. As geopolitical risks intensify and growth shows signs of cooling, markets may remain cautious, awaiting confirmation that inflation is firmly back on track.
Gold Reclaims $5,000
Although demand for safe haven assets is still high, gold fell precipitously from record highs following the Fed’s most recent rate cut comments, as profit-taking was prompted by Powell’s cautious tone. In December, gold jumped above $4.3800 following the Federal Reserve’s announcement of a 25 basis point rate decrease. But the impetus soon waned, and prices dropped back to $4,004. The 20 daily SMA (gray) held as support last week and buyers returned and pushed XAU above the $5,000 mark for the first time during Asian hours and extended the rally in New York, printing a fresh record high near $5,111 before retreating below $5,000 late in the session. But buyers returned and XAU climbed to $5,598 but pulled back below $5,000 again.
USD/JPY Returns Back Down
Foreign exchange markets saw sharp swings. Early in the week, U.S. yield differentials and Japanese capital outflows pushed the dollar above ¥150, but disappointing U.S. jobs data triggered profit-taking, causing the USD/JPY to slide by four yen from its peak. However, the new BOJ governor the JPY has weakened and USD/JPY soared to 154 and we decided to close our buy signal for more than 80 pips as the pair found support at the 20 daily SMA (gray) and has rebounded more than 200 pips off that MA but reversed after the 25 bps rate cut from the FED. The price approached $160 but reversed after the BOJ meeting and fell 8 cents but found support at $152 at the 100 daily SMA (red) and rebounded above 156 but have reversed down again this week after the Japanese elections.
USD/JPY – Daily Chart
Cryptocurrency Update
Bitcoin Returns Under $70K
Cryptocurrencies remained highly active over the summer. Bitcoin (BTC) climbed to fresh highs of $123,000 and $124,000 in July and August, supported by institutional inflows and technical strength. However, remarks from Treasury Secretary Scott Bessent ruling out U.S. increases to BTC reserves triggered a steep pullback, sending the coin down to $80K before finding support at the 100 weekly SMA (green). A rebound followed, sending BTC near $100 is the first major text for Bitcoin buyers. However BTC returned lower and fell below $80K, breaking below the but the 100 weekly SMA (green) but the decline stopped at the $60K support where the 200 weekly SM A(purpe) stands and rebounded above $70K.
BTC/USD – Weekly Chart
Ethereum Slips Below $2,000
Ethereum (ETH) has been similarly strong, surging toward $4,800, its highest since 2021 and near its all-time peak of $4,860. Despite a dip last week, ETH found support at the 20-day SMA, with retail enthusiasm and renewed institutional participation driving fresh upside momentum. Last week we saw a dive below $2,000 but buyers returned n d pushed the price above $2K again.
ETH/USD – Weekly Chart
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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