The Consumer Price Index (CPI) in the United States for July showed a year-on-year rate of 2.7%. This was a bit lower than the expected 2.8%. This data helps us understand inflation trends in the US economy. In the currency markets, the EUR/USD pair neared a two-week high of about 1.1700, thanks to a weaker US Dollar and expectations of possible Federal Reserve rate cuts. Likewise, GBP/USD hit a three-week high around 1.3530 due to similar pressures on the dollar.

Commodities Sector Overview

In commodities, gold prices bounced back, rising above $3,350 per troy ounce. This increase was driven by the falling US Dollar and changes in US yield rates. Meanwhile, Pi Network slipped below $0.4000, suggesting a negative outlook as trading volume dropped and a further 10% decline seems possible. In a notable change, the Bank of England reduced interest rates by 25 basis points to 4%. They expressed worries about inflation staying above target levels. Traders and analysts are now closely evaluating how this will affect the economy moving forward. With the latest US inflation data for July 2025 being softer than expected at 2.7%, we believe the Federal Reserve now has a clearer path to lower interest rates. This supports our view that the US Dollar may weaken in the coming weeks. Market data indicates that the chances of a rate cut at the September Fed meeting have increased to over 75%. This is a significant change from just a month ago.

Analysis of Currency Trends

The rise of EUR/USD toward 1.1700 is seen as the start of a larger trend, influenced by differing central bank policies. The European Central Bank held its policy rate steady at 3.5% in its last meeting, which creates a favorable interest rate advantage for the euro. We are considering buying call options on EUR/USD with a target strike price of 1.1850, set to expire in October. The situation with the British Pound is more complicated since the Bank of England just lowered its rate to 4% to help a sluggish economy. However, the weakness of the US Dollar is currently driving GBP/USD to recent highs around 1.3530. We think this rally is weak because UK core inflation remains high at 3.8%, and we need to use options wisely to manage our risk. Gold’s jump above $3,350 per ounce is linked to falling US yields and a weaker dollar, similar to trends we observed during the late 2023 policy shift. Historically, gold does well when real yields turn negative, and we are entering that environment. We are positioning ourselves by increasing our long positions in gold futures contracts. For riskier assets, the bearish outlook for Pi Network below $0.4000 is reinforced by its low trading volume. On-chain data shows a drop in active wallets, indicating that retail interest is declining quickly. This technical weakness suggests we should consider buying put options or shorting positions, as a further drop to $0.3500 seems likely. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now