The United States Consumer Price Index (CPI) for July, which is not adjusted for seasonal changes, reached 323.048. This is slightly below the expected 323.17. The CPI is an important measure of changes in consumer prices and offers insight into the US economy. **Trends in Euro and British Pound** The Euro and British Pound are both rising against the US Dollar. The EUR/USD is nearing two-week highs around 1.1700, while the GBP/USD is approaching three-week peaks around 1.3530. The US Dollar is under pressure, affecting both foreign exchange markets and commodities like Gold. After dropping to around $3,330 per troy ounce, Gold rebounded to over $3,350. The Bank of England unexpectedly cut interest rates by 25 basis points to 4%. However, there are still fears about inflation staying above their target for too long. In the world of cryptocurrencies, Pi Network fell below $0.4000 after reaching a high of $0.4661 recently. A drop in trading volume may lead to a potential 10% correction, similar to what happened in July. **Effects of the US Consumer Price Index** The CPI for July 2025 being slightly lower than expected suggests that the Federal Reserve might pause further interest rate increases. Inflation has cooled down a bit, currently at an annual rate of about 2.9%, down from a peak of nearly 9% in mid-2022. Given this situation, we might consider using options on Fed Funds futures to prepare for steady rates rather than further increases. As a result of the weakening US Dollar, we anticipate further declines. The Dollar Index (DXY) has dropped nearly 1.5% over the past two weeks, which is significant. We see potential in buying call options on EUR/USD and GBP/USD to benefit from their upward trends towards 1.1700 and 1.3530, respectively. The weakness of the dollar, coupled with ongoing inflation worries, makes gold a desirable investment. The recent bounce from $3,330 shows strong support, confirming the bullish trend that started when gold surpassed its previous highs from 2024. We are considering buying call options on gold futures or gold-backed ETFs to target a rise towards $3,400 per ounce. The Bank of England’s unexpected rate cut indicates a major policy shift and highlights weaknesses in the UK economy, even though the pound is currently strong against the dollar. UK GDP growth for the second quarter of 2025 was only 0.1%, which supports the Bank’s decision to encourage economic growth. This may be a good time to buy longer-dated put options on GBP/USD, betting that the Bank’s cautious approach will eventually affect the currency negatively. In more speculative areas, we are becoming cautious, as seen by the decline in assets like Pi Network. Total spot trading volume on major crypto exchanges fell 18% in July 2025 compared to the previous month, indicating a decrease in risk appetite. This suggests it may be wise to limit exposure to high-volatility assets or purchase protective puts on broader market indices. Create your live VT Markets account and start trading now.

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