### The Dollar Weakness Story Continues Recent news shows slight losses for USD/JPY, a drop in NZD/USD due to risk sentiment, and a rise in EUR/USD as US-China trade tensions ease. At the same time, gold remains around $4,000 per troy ounce, facing challenges due to positive expectations surrounding the US-China trade deal. Many investors are losing faith in the US Dollar and turning to alternatives like gold and Bitcoin. This shift is reflected in the Great Debasement Trade. Notably, American Bitcoin has gained $160 million, boosting Trump memecoin by over 20%. ### Investment Risks and Opportunities Investing always involves risks and uncertainties. It’s essential to do thorough research before making any investment decisions, as investing in open markets can lead to losses. Opinions expressed here may not reflect FXStreet’s official views. With the Federal Reserve’s decision coming up this week, the market seems to expect a rate cut following a moderate US CPI report. Recent data shows core inflation has dropped to 2.8% year-over-year, which adds to expectations of looser monetary policy. Derivative traders should look for opportunities in volatility since significant price changes are likely if there is any shift from the current bearish outlook. The Pound Sterling is strong due to solid domestic data, but the GBP/USD pair appears stuck around the 1.3300 level. If global risk sentiment worsens, we think the easier path will be downwards, similar to trends observed in 2023 when strong UK data couldn’t stop a decline. Purchasing put options on GBP/USD could be a smart move to brace for a potential drop while limiting risk. Gold is in a tricky situation, struggling at the $4,000 mark as hopes for a US-China trade deal reduce its safe-haven appeal. Recent figures show over $2 billion in net outflows from major gold ETFs last week, confirming short-term bearish sentiment. One strategy could be selling out-of-the-money call options, given the expectation that gold will have limited upside in the near future. ### Currency Market Dynamics The overall weakness of the US Dollar is a key theme, even overpowering the typical risk-on sentiment that would usually weaken the Japanese Yen. This is evident in USD/JPY’s inability to rise, indicating that bets against the dollar are driving currency markets. In this context, exploring put options on the US Dollar Index (DXY) could be a direct strategy to benefit from ongoing Fed-induced depreciation. Create your live VT Markets account and start trading now.

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