Market Movements

The EUR/USD pair barely moved, staying just above 1.1550, as traders awaited important data from Germany. The GBP/USD dropped to 1.3333 as the dollar strengthened during the Asian session. In cryptocurrencies, tokens like Story, Ethena, and Bittensor saw gains, with Ethena and Bittensor recovering due to specific movements in a USDtb stablecoin and related funds. US stock markets began the week positively, with eased trade tensions helping to restore normalcy. However, the Pi Network’s recovery faced challenges from potential supply pressures due to changes in its core team wallets. Singapore’s GDP growth of 1.3%, much higher than the expected 0.3%, shows the economy’s strength. This gives the Monetary Authority of Singapore no reason to change its policy for a strong currency, making the Singapore Dollar more appealing against currencies with greater economic uncertainty. Despite this good news, the market remains anxious. Gold has surpassed $2,650 per ounce as buying continues, driven by record central bank purchases in the first half of 2025. This indicates a strong demand for safe investments, suggesting that any positive news is met with skepticism, leading traders to hedge their positions.

US Federal Reserve Policy

Much of this uncertainty focuses on US Federal Reserve policy, as the market seeks clarity on interest rates. In 2022-2023, aggressive rate hikes helped reduce inflation, but now there are fears that these actions may have slowed the economy too much. The CME FedWatch tool indicates that traders have lowered their expectations for rate cuts, now seeing only a 30% chance before April 2026, which supports the US Dollar. Signs of a fragile global economy are also visible in the energy markets. WTI crude oil struggles to maintain the $60 level, which is historically low, even with easing geopolitical tensions. This is a sign of weak demand, as global manufacturing PMI data showed only slight expansion in the last quarter. In the coming weeks, we should brace for ongoing volatility due to central bank statements. We recommend strategies that leverage regional strengths, like favoring the Singapore Dollar against currencies with dovish central banks, such as the Australian Dollar. Using options to manage risk is sensible until we receive clearer signals from the Fed. Create your live VT Markets account and start trading now.

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