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    European stock markets increase as investors react to the Fed’s recent decision and US futures

    by VT Markets
    /
    Sep 18, 2025

    Market Reaction

    Markets are responding well to the Fed’s recent decision. Indices like the DAX and Eurostoxx are showing strong gains. We see this as a temporary uptick since the central bank avoided any surprises. This clarity now shifts the market’s attention to the upcoming major US economic data. With the key risk now behind us, implied volatility has decreased. The VIX has fallen below 15 from its highs before the meeting. This drop gives traders a chance to sell options, like short-dated credit spreads on the S&P 500. However, low volatility might be misleading ahead of the important inflation and jobs data set to be released in early October.

    Market Patterns and Strategy

    The market’s current outlook for the rest of the year will soon be tested, especially with the last core CPI reading sticking at 3.1%. Additionally, the job market showed strength, adding 190,000 jobs in August. This gives the Fed little reason to act quickly on rate cuts. Traders might want to buy inexpensive out-of-the-money puts on indices as protection against any data that surprises on the upside. We should keep in mind the market trends from 2023. After Fed meetings, rallies often didn’t last long and reversed quickly when strong economic data emerged. These periods remind us that initial positivity can disappear once the data forces a rethink of the Fed’s policies. Therefore, while we can enjoy the current upward trend, it’s wise to keep protective positions in place over the next few weeks. Create your live VT Markets account and start trading now.

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