The US Dollar may strengthen, but it’s likely to stay within the range of 147.20 to 148.25. Current analysis shows that downward momentum is slowing, making it less likely for the US Dollar to drop further. Recently, the US Dollar fell to 146.71 but bounced back to 147.90. Despite this rebound, momentum isn’t strong enough for the Dollar to rise significantly, indicating that any gains will likely stay within the predicted range.

US Dollar’s Potential Range

Looking ahead, forecasts suggested that the Dollar might decline, but not below 145.80. This prediction has held true as the Dollar struggles to drop decisively. If it breaks above 148.20, it will likely continue trading within a range instead of decreasing. The market ahead comes with risks and uncertainties, so it’s important to do thorough research before making any financial decisions. Be aware that trading foreign exchange involves high risks, and losses can exceed initial investments. If you have concerns, seek professional advice. Currently, the US Dollar appears to be stable against the Japanese Yen, with expectations that it will trade between 147.20 and 148.25 in the coming weeks. Recent US inflation data from July 2025 showed a slight slowdown to a 2.8% annual rate. This lessens the need for the central bank to take aggressive action. Downward pressure is fading, mainly due to the large difference in interest rates between the US and Japan. The Federal Reserve kept rates steady at their last meeting, but US rates remain much higher than those of the Bank of Japan, creating a support level for the Dollar. This explains why, over the past month, the price has struggled to stay below 146.71.

Strategies for Derivative Traders

For derivative traders, this suggests a strategy of selling volatility. Since the Dollar is expected to remain stable, consider selling out-of-the-money call options above 148.25 and put options below 146.50. This approach, known as selling a strangle, profits when the currency pair stays stable and time passes. However, caution is advised, especially in light of sudden market shifts seen in late 2023 and 2024. A recent report on US job openings showed a slight decline, creating uncertainty that could lead to short-term fluctuations within the broader range. Also, any unexpected hawkish remarks from central bank officials could disrupt the current stability. The biggest risk now is a breakout from the established range. An unexpected economic event could cause a spike in volatility, leading to substantial losses for option sellers. Therefore, manage any positions with strict risk controls, keeping in mind that margin trading can result in losses beyond the initial investment. Create your live VT Markets account and start trading now.

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