Eurostoxx futures rose by 0.3% during early European trading, showing a small recovery after a day of heavy selling. German DAX futures also increased by 0.3%, French CAC 40 futures went up by 0.2%, and UK FTSE futures stayed flat. European markets faced a tough session yesterday, with significant selling as everyone awaited the Federal Open Market Committee (FOMC) meeting decision. In the US, Wall Street saw slight losses, and today’s futures suggest a cautious market.

Fragile Rise in European Futures

The small rise in European futures this morning feels shaky after yesterday’s sharp sell-off. The market is holding its breath for the Federal Reserve’s decision later today, creating a nervous atmosphere for short-term trading. Volatility will be the key theme in the coming weeks, with the FOMC announcement acting as a catalyst. The CBOE Volatility Index (VIX) has already jumped over 20% in the past month to around 22, showing how anxious traders are. This hints that traders should brace for significant price changes following the Fed’s statement. Given the uncertainty, strategies that can profit from big market moves, no matter the direction, are worth exploring. Buying straddles or strangles on indices like the Eurostoxx 50 allows traders to take advantage of the expected increase in volatility. The higher premiums for these options serve as insurance against major market events.

Strategies Against Volatility Crush

However, we must also consider the risk of “volatility crush” if the Fed’s announcement is predictable. If the FOMC gives the market exactly what it expects, implied volatility could drop sharply, causing options’ values to decline quickly. Traders who expect a calm outcome might consider selling premiums through strategies like iron condors. The situation in Europe is complicated by ongoing inflation, which was 3.1% for August 2025, still above the European Central Bank’s (ECB) target. A hawkish U.S. Federal Reserve might push the ECB to keep its tight policy, making European indices like the DAX particularly sensitive to the Fed’s message. We’ve seen this pattern before, especially during the challenging rate hikes of 2022 and 2023. The initial market reaction to the headline decision can often be misleading. The true, sustained movement usually occurs during the press conference when the market absorbs the finer details. Looking ahead, we will focus on upcoming economic data, particularly inflation and jobs reports. These numbers will help determine if the post-FOMC market trend can hold. Any surprises will likely spark another wave of volatility in the weeks to come. Create your live VT Markets account and start trading now.

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