The EUR/USD currency pair stayed low around 1.1550 due to a robust US Dollar and widespread uncertainty. Political changes in France also put pressure on the Euro, as people expect new leadership.

British Pound Hits Two-Month Low

The GBP/USD pair dropped to a two-month low, falling below 1.3300. This was driven by ongoing interest in the US Dollar and a cautious market mood. The strong demand for the Greenback has significantly weakened the British Pound. Gold prices fell to $3,950 as demand for the US Dollar remained high. Despite geopolitical tensions and potential interest rate cuts providing some support, the risk-averse environment led to a sell-off in gold. Bitcoin and other cryptocurrencies, like Ethereum and Ripple, saw a decline as investors took profits. The entire cryptocurrency market faced downward pressure, with Bitcoin nearing $121,000. However, Zcash, a privacy-focused cryptocurrency, experienced increased demand and aims to rise above $200. Efforts to improve privacy protocols in the digital asset space are driving interest in Zcash.

Higher-Than-Expected Core Inflation in Mexico

Mexico’s core inflation was higher than anticipated at 0.33% for September. This complicates things for Banxico. Although recent central bank minutes hinted at possible rate cuts from the current 9.75% level, the persistent inflation may force them to keep rates steady. This situation could lead to significant price fluctuations, making USD/MXN straddle or strangle options appealing for trading potential large moves in either direction. The US Dollar remains strong, and Federal Reserve Governor Barr’s warning about inflation risks reflects this. The latest US CPI data shows inflation at 3.5% for September 2025, which is above the Fed’s target. This supports a hawkish Fed and a stronger dollar. Buying out-of-the-money call options on the US Dollar Index (DXY) or put options on pairs like GBP/USD can be an affordable way to take advantage of this trend. The overall risk-averse sentiment is evident in the market’s fear gauge. The VIX index has jumped from a low of 15 to over 22 in the past two weeks, indicating rising investor anxiety. In this situation, purchasing put options on broad market indices like the SPDR S&P 500 ETF (SPY) can act as a hedge or a speculative bet on further declines. Gold’s sharp drop from its recent highs above $4,000 is largely due to the strength of the dollar, despite ongoing geopolitical uncertainties. We saw a similar trend in late 2022 when a rising dollar also capped precious metals before they rebounded. For now, the trend seems to be downward, and a bear put spread on gold futures could capture this momentum while managing risk. Digital assets are behaving like high-risk investments, with Bitcoin dropping toward $121,000. This price action resembles the 2022 market downturn, where cryptocurrencies closely followed tech stocks as institutional investors reduced their exposure. This suggests that as long as the dollar remains strong and sentiment is weak, cryptocurrencies will likely face additional selling pressure, making shorting futures a practical strategy for bearish traders. Create your live VT Markets account and start trading now.

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