Signal Check: 26 February 2026

Dollar extends post-SOTU weakness to 97.65 as Geneva nuclear talks and tomorrow's PPI define the next 48 hours — gold reclaims 5,200 on the structural bid.

The dollar drifted lower for a second session on Wednesday, settling at 97.65 after the SOTU delivered no tariff surprises and no meaningful policy change. USTR Jamieson Greer raised the possibility that Section 122 tariff rates could move to 15% or higher from the current 10%, but offered no specifics — the market read this as posturing, not policy. EUR/USD pushed to 1.1818 and GBP/USD cleared 1.3550 for the first time in three sessions, both benefiting from broad dollar weakness and a yuan rally to a 2.75-year high against the greenback. USD/JPY pulled back to 155.60 as the yen firmed on positioning ahead of Geneva.

Gold was the standout, reclaiming 5,200 with conviction. The session range ran 5,122–5,218, and the close at 5,206 marks a +1.21% gain — the strongest daily move in a week. JP Morgan raised its long-term gold forecast to $4,500/oz on Wednesday, with a year-end target of $6,300. The structural bid is intact: central bank purchases remain elevated with China's central bank extending gold buying for a fifteenth consecutive month, CFTC asset manager positioning is heavily long, and the metal continues to absorb dollar volatility without breaking structure. Brent edged to $71.19 with the Iran risk premium holding ahead of today's talks.

CFTC positioning from the Feb 17 report shows leveraged funds nearly flat on the USD index (+1,834 net contracts), while asset managers remain heavily EUR-long (+437K contracts net). The squeeze thesis from concentrated short-USD positioning remains mechanically live, but the corrective bounce to 97.9 appears to have exhausted — today's fade back to 97.65 confirms the resistance rejection. Friday's COT update will capture the post-SOTU repositioning.