Eurozone retail sales fell from 2.2% to 1% year-on-year in August. This decline highlights the economic difficulties facing the region amid changing market conditions. The EUR/CHF currency pair is influenced by increasing political tensions in France after a significant resignation. At the same time, gold prices have risen above $3,900 as investors seek safe-haven assets due to uncertainties in US politics.

Currency Market Dynamics

In the currency markets, the GBP/USD pair is struggling and remains below the mid-1.3400s, largely due to a stronger US Dollar. The EUR is also weak against most G10 currencies because of ongoing political and economic pressures. Gold prices are nearing record highs, trading around $3,950 per ounce due to a rising demand for safe havens. In contrast, Bitcoin has performed poorly compared to gold in Q3, with only modest returns. In Japan, a leadership change may bring both opportunities and risks, with a stable policy direction expected. For cryptocurrencies, the Pi Network has stabilized above $0.2565 but has seen limited interest from investors since its DeFi launch.

Eurozone Retail Sales Decline

The drop in Eurozone retail sales to 1.0% year-over-year in August shows decreasing consumer demand across the continent. Coupled with the political crisis in France, this creates a bearish outlook for the Euro. We should consider strategies that can profit from a weakening Euro, such as buying put options on the EUR/USD or creating bear put spreads to manage risk. Despite a possible US government shutdown, the US Dollar remains strong, a trend we’ve seen before. During the 35-day shutdown in late 2018 and early 2019, the dollar index (DXY) actually increased as global uncertainty led to investment in US assets. This suggests we should avoid shorting the dollar and instead look for pairs where it can continue to perform well, like against the Euro or Pound Sterling. Gold continues to rise towards $3,950 an ounce, serving as a key safe haven amid political instability in the US and Europe. This upward trend is expected to persist as long as the uncertainties remain. Buying call options on gold futures or gold-backed ETFs is a way to engage in potential gains while clearly limiting our maximum loss. The political crisis in France is affecting regional trades, with the Euro underperforming the Swiss Franc. The EUR/CHF cross is a focused bet on this European risk, separating it from the dynamics of the strong US dollar. We see potential for further downside here, making short positions in this pair appealing. With Japan’s new leadership likely to continue its ultra-easy monetary policy, the Japanese Yen is expected to stay weak. This creates a clear contrast with other central banks and could offer opportunities in pairs like USD/JPY and GBP/JPY. We should keep an eye on these pairs for entry points, utilizing derivatives to control volatility. Create your live VT Markets account and start trading now.

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