Banxico has lowered interest rates to 7.25%, in line with expectations. This suggests a possible pause in their easing cycle. The Federal Reserve continues its tight policies to keep inflation in check. Meanwhile, the USD/JPY has fallen to around 153.00 due to worries about a potential US government shutdown.

The Canadian Dollar’s Challenges

The Canadian dollar faces difficulties in reversing its downward path. Additionally, the EUR/USD increased after weak US job data, raising hopes for a Federal Reserve rate cut. The Dow Jones Industrial Average dropped by 380 points, primarily due to a decline in AI stocks. On the other hand, GBP/USD rose to almost 1.3140, thanks to a weaker US dollar and a hawkish position from the Bank of England. Gold prices have bounced back, nearing $4,000 per troy ounce, aided by a declining US dollar. Meanwhile, Ethereum fell below $3,300 as selling pressure and low exchange balances persisted. Solana climbed above $160, continuing its upward trend with strong retail interest. This week, all eyes will be on central bank meetings in Australia and the UK as markets look for their next moves.

Investment Research and Disclaimers

FXStreet highlights the importance of thorough research before making investment decisions and disclaims any recommendations or responsibility for financial losses. Investing carries risks and uncertainties, including the potential loss of some or all invested funds. The US Dollar is currently facing major challenges, presenting opportunities for derivative traders in the upcoming weeks. Recent job data has been weak, with the latest Non-Farm Payrolls report for October 2025 showing a mere increase of 85,000 jobs. This is much lower than expected and raises concerns about an economic slowdown. As a result, adopting bearish strategies on the dollar, such as acquiring put options on USD index ETFs, is worth considering. Market sentiment is now heavily leaning towards the Federal Reserve cutting interest rates, a significant change from the restrictive policies seen throughout 2024. The CME FedWatch Tool currently shows a 75% chance of a rate cut in December 2025, which could add further pressure to the dollar. Traders can utilize options on Fed Funds futures to speculate on when and how much rates may be cut. Additionally, fears of a US government shutdown are adding to the dollar’s troubles, with a funding deadline approaching on November 15, 2025. This political uncertainty often increases market volatility and weakens the affected country’s currency. Buying volatility through options, such as straddles on the USD/JPY pair, may be a smart way to navigate this unstable situation. In this environment, other major currencies, especially the British Pound and Euro, are showing relative strength. The Bank of England’s hawkish stance has helped the Pound rise towards the 1.3140 mark. Bullish strategies, like purchasing call options on GBP/USD and EUR/USD, can help capitalize on the dollar’s decline while managing risks. Gold is also gaining from the weaker dollar and falling US Treasury yields, making it more appealing as a non-yielding asset. With gold headed toward the $4,000 mark, buying gold futures or call options offers a clear opportunity to profit from ongoing dollar weakness. This aligns with historical trends where gold prices rise during expected monetary easing by the Fed. Meanwhile, Banxico’s decision to lower its rate to 7.25% while hinting at a potential pause in easing makes the Mexican Peso an attractive option. This creates a favorable interest rate gap against the US Dollar, which is expected to decline. This situation may support trading strategies that go long on the Mexican Peso against the US Dollar. Create your live VT Markets account and start trading now.

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