**Gold and Cryptocurrencies** The EUR/USD pair is around 1.1600, influenced by a weaker US Dollar but limited by cautious risk sentiment. The GBP/USD remains below 1.3250, as budget relief in the UK does not provide the needed boost amid careful trading conditions. In the larger economic picture, a sharp drop in cryptocurrencies has changed investor feelings, leading to lower stock prices in the US and Europe. Investors are paying close attention to economic reports from the US and Eurozone moving forward. **Risk Sentiment and Market Strategies** As December begins, the earlier risk-on attitude from November is fading. The sudden fall in cryptocurrencies seems to be the cause, pushing investors away from riskier assets. This shift may mean it’s time to consider strategies that profit from increased market volatility. Markets expect the US Federal Reserve to cut rates this month, with futures showing over a 70% chance of this happening. Recent data indicates core inflation dropped to 2.8% in October 2025—its lowest in over two years—which adds pressure on the US Dollar against other major currencies. With the dollar weakening and uncertainty high, gold is becoming a safe haven. It’s nearing its highest price in six weeks, and this trend may continue. Buying call options on gold futures or related ETFs is a way to potentially gain from more price increases. In India, the situation is concerning. The manufacturing PMI did not meet expectations, and foreign institutional investors are pulling out funds. In November 2025, they sold over $2.5 billion in Indian stocks, pushing the USD/INR to a record high. Considering call options on USD/INR could help hedge against or speculate on further depreciation of the Rupee. The Japanese Yen is gaining strength due to risk-averse sentiment, similar to reactions during early 2020’s global uncertainty. This makes shorting the USD/JPY pair an appealing trade. Using put options on USD/JPY could be a smart move for those betting on a further decline. European currencies are currently more stable, so a cautious approach is needed with bets on the Euro and Pound. Important economic data from the Eurozone and the US is expected this week, which might end the current stalemate. In the meantime, strategies like selling option strangles could help capture premium if these pairs stay within a tight range. With futures for stocks turning negative, we anticipate increased volatility in equity markets over the next few weeks. The VIX index has already risen over 15%, trading above 19 and breaking its November lows. We believe buying put options on major indices like the S&P 500 is a smart approach to safeguard portfolios from a potential market drop. Create your live VT Markets account and start trading now.

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