In the first half of July, Mexico’s core inflation was at 0.15%, lower than the expected 0.21%. This indicates a slower economic environment. The EUR/USD currency pair reacted differently after a recent ECB event, staying around 1.1770. The GBP/USD fell to 1.3520 after three days of gains.

Spotlight on Precious Metals

Gold managed to recover some losses after dropping to $3,350, yet it remains under $3,400. Meanwhile, the crypto market faced pressure, with Bitcoin rising back to $118,000, while Ethereum and XRP showed a cautious mood. During Donald Trump’s second term, the markets have shown strength despite policy changes. His “America First” message, impacting trade, taxes, and national defense, has maintained market resilience. For those trading EUR/USD, many brokers offer competitive spreads and quick transactions, catering to different skill levels in the Forex market. With cooling inflation signals from places like Mexico, we’re updating our view on central bank policies. The recent U.S. Consumer Price Index showed a 3.4% annual rate in April, suggesting easing price pressures. This may lead the Federal Reserve to consider a rate cut later this year, creating opportunities in interest rate futures.

Currency Pair Movements

Current movements in currency pairs reflect different central bank views. The EUR/USD is around 1.085, with the European Central Bank signaling a possible rate cut in June, while the Bank of England remains cautious, keeping the GBP/USD close to 1.27. This gap suggests traders should look for strategies that could benefit from a stronger dollar against the euro shortly. In the precious metals market, gold’s rise above $2,400 an ounce signals underlying anxiety and strong physical demand. Reports show that central banks, especially the People’s Bank of China, have increased their gold reserves for 18 months straight. This is a long-term positive sign and may make gold-related assets attractive for call options. The crypto market appears to be maturing, with Bitcoin stabilizing around $66,000 after its recent halving event. The approval of spot Bitcoin ETFs has brought in more institutional money, with net inflows over $12 billion since their launch. Traders should prepare for volatility and consider options that can profit from big price swings in either direction. Looking at politics, we anticipate more market volatility leading up to the U.S. presidential election. History shows that Trump’s trade policies created significant fluctuations in industrial and technology stocks tied to China. We recommend using options on the VIX index to hedge against potential market uncertainty in the upcoming months. Create your live VT Markets account and start trading now.

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