The Federal Open Market Committee (FOMC) shared its latest dot plot on December 10, 2025. It predicts that interest rates will average 3.4% by the end of 2026, consistent with earlier forecasts. The Federal Reserve also cut interest rates for the third time in a row, impacting several markets. The EUR/USD pair rose to multi-week highs near 1.1700. This increase happened due to the Fed’s careful approach and a big sell-off of the US Dollar. After four days of declines, the currency pair is now close to challenging the 1.1700 resistance level. Following the Federal Reserve’s announcement, GBP/USD bounced back to around 1.3400. This change was in response to the expected rate cut and the Fed Chair’s cautious outlook on future monetary policy. Gold prices increased, surpassing $4,200. This rise was driven by the Fed’s decision, with prices hitting $4,235 in early trading on December 11. Traders are watching for upcoming US jobless claims data. In the cryptocurrency world, American Bitcoin acquired 416 BTC as prices started to recover, boosting corporate purchases. The Fed indicated that only 50 basis points of rate cuts may occur between 2026 and 2027, alongside improved GDP forecasts. The fluctuating market reflects the Fed’s recent moves and expected labor reports. With the Federal Reserve confirming its third consecutive rate cut to 3.75%, the US Dollar continues to weaken, a clear trend. This dovish policy is increasing market volatility, creating an ideal setting for options strategies. We should consider derivatives like straddles to profit from the large price swings expected as economic data releases approach. The EUR/USD has surged to multi-week highs near 1.1700, and this positive trend is likely to continue. We think buying call options on the euro is a smart move, targeting a rise toward the 1.1850 level, last seen in the second quarter of 2025. This trade is supported by the growing interest rate gap between a dovish Fed and a more neutral European Central Bank. We are also seeing strength in the British pound, with GBP/USD now around 1.3400. Utilizing futures contracts to establish long positions in sterling could capture further gains. Recent UK inflation data from November 2025 showed core prices remained stubbornly high, indicating that the Bank of England is unlikely to follow the Fed’s path of rate cuts. Gold has jumped above $4,200 an ounce, and we expect this rally to continue. We should increase long positions through gold futures, as lower interest rates make non-yielding assets like gold more appealing. The U.S. 10-year Treasury yield fell to a six-month low of 3.48% after the announcement, which is a historically optimistic sign for precious metals. Given the cautious tone from the Fed and the major labor market report due this week, we should brace for possible turbulence in the stock market. The Volatility Index (VIX) has risen to 19, up from an average of 16 over the last quarter. Buying VIX call options offers a cost-effective way to hedge against unexpected bad news that might disrupt current market sentiment.

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