In June, construction spending in the United States fell by 0.4%, which was below expectations of no change at 0%. This decline gives us a glimpse into the construction sector’s health and its impact on the overall economy. The EUR/USD currency pair rose above 1.1550, following disappointing US non-farm payroll data that weakened the US Dollar. Similarly, the GBP/USD pair recovered, climbing above 1.3250 due to the weaker USD after the job figures were released. Gold prices increased, exceeding $3,350, as US Treasury bond yields decreased. This change reflects market expectations regarding future decisions by the Federal Reserve after the poor employment report. Cryptocurrencies are currently facing downward trends, unlike the positive performance seen in July. Bitcoin is nearing the $112,000 support level. In contrast, the euro area’s economy is surprisingly stable, benefiting from recent EU-US agreements, even with concerns over wage growth. Recent data indicates a slowing US economy, likely influencing market trends. The drop in construction spending in June 2025, along with poor job figures, suggests that the Federal Reserve may need to adopt a less strict monetary policy. We can recall the Fed’s quick policy shift in late 2018 when economic indicators started to weaken. Given this environment, we have a bearish outlook on the US dollar. Therefore, we are exploring strategies that could benefit from rising EUR/USD and GBP/USD values. The US inflation figures from July 2025 show a small drop to 2.8%, reducing pressure on the Fed to support the dollar. We believe the EUR/USD could potentially reach the 1.1600 level in the upcoming weeks. We see gold as a key safe-haven asset in this situation, especially with falling US Treasury yields. The yield on 10-year notes recently dipped below 3.5%, which has historically suggested a bullish outlook for gold since it makes bonds less appealing. Buying call options on gold seems like a smart way to protect against further economic weakness in the US. On the other hand, we are becoming cautious about cryptocurrencies as Bitcoin approaches the $112,000 support level, acting more like a risky asset. Last week saw over $500 million withdrawn from digital asset funds, marking the largest weekly outflow since the second quarter of 2025. This indicates that institutional investors are pulling back for the time being. The euro area’s relatively stable economy adds another consideration to our strategy, making long positions in the euro more appealing. Germany’s latest Ifo Business Climate index for July 2025 unexpectedly grew, revealing a fundamental strength that differs from the outlook in the US. This supports holding positions that favor the euro over the dollar.

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