The US dollar fell in early trading due to mortgage fraud allegations against FOMC member Lisa Cook. This has raised speculation that President Trump may choose a new nominee for the Federal Reserve. In the EUR/USD market, sellers pushed the price close to a 50% retracement from the July 1 high, but buyers stepped in during the European session. The price rose above the 200 and 100-hour moving averages, which are between 1.1664 and 1.1668, reaching a peak of 1.1673.

Attraction Of Bullish Signals In USD/CHF Trading

In USD/CHF trading, the price dropped to a new session low of 0.8054 after previously being above the moving averages, which are between 0.8066 and 0.8073. The next support is near recent lows and a 50% retracement level at 0.8041. A further drop could increase bearish pressure. For USD/CAD, the price fell below 1.38607 after briefly rising above the August 1 high of 1.38786. To regain upward momentum, the price needs to break through the swing area of 1.3891–1.3904, aiming for the 38.2% retracement level at 1.39229. In the stock market, the S&P is down by 5 points, the Dow is up by 28 points, and the NASDAQ is down by 41.5 points in premarket trading. The new allegations against an FOMC member are creating significant uncertainty about the Fed’s future actions, causing the US dollar to weaken. This is evident in the derivatives market, where implied volatility on major dollar pairs has increased by almost 5% today. With speculation about a new presidential appointment, this uncertainty will likely continue, making long volatility strategies, like straddles on the EUR/USD pair, appealing in the coming weeks.

Potential Opportunities In EUR/USD Market

For the EUR/USD, bouncing from the 50% retracement level and moving above essential hourly moving averages signals a bullish trend. We suggest buying near-the-money call options for September expiration to take advantage of further dollar weakness. Recent data from August 15 showed Eurozone industrial production unexpectedly grew by 0.5%, which supports a potential rally if political challenges for the dollar persist. The drop in USD/CHF below its moving averages indicates a flight to safety, with the Swiss franc gaining from the political chaos in Washington. This situation is similar to the market behavior seen during US banking stress in spring 2023 when the franc strengthened significantly. We plan to buy put options on this pair, targeting a move below the 0.8041 support level in the short term. For USD/CAD, the failed breakout attempt shows that sellers still control the market. The inability to maintain gains is especially bearish, considering that WTI crude oil prices have remained strong, closing above $85 per barrel yesterday for the fifth consecutive session. This combination of a weak dollar and robust oil prices indicates that selling USD/CAD futures or buying put options is the preferred strategy. The mixed opening for US stocks, especially the tech-heavy NASDAQ showing weakness, suggests that investors are feeling anxious. The VIX, a key measure of market fear, has risen above 18 today, a level not seen since early July 2025. This implies a growing demand for portfolio protection. We recommend considering buying put options on major indices like the S&P 500 to safeguard against a potential downturn caused by Fed policy uncertainty. Create your live VT Markets account and start trading now.

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