The Chicago Fed National Activity Index in the United States rose to -0.1 in June, up from -0.28. This index measures overall economic activity and inflationary pressure. EUR/USD stayed around 1.1770 as traders assessed recent ECB announcements and mixed data from Europe and the US. Discussions about a possible US-EU trade deal continue.

GBP to USD Pullback

GBP/USD pulled back to 1.3520, influenced by several days of gains and disappointing UK data. Mixed economic signals put pressure on the British currency. Gold prices recovered from their lows, climbing back from below $3,350 but remaining under the $3,400 mark. This recovery was hindered by a stronger US dollar, rising US yields, and fewer trade worries. Cryptocurrencies, especially Ethereum and Ripple, struggled as Bitcoin hit $118,000 again. Ethereum fell by 6% from its recent peak, settling around $3,630. The first six months of Trump’s second term saw major talks and policy changes, focusing on areas like trade and national defense. While these changes have had an impact, the markets have remained resilient.

Chicago Fed National Activity Index

The rise in the Chicago Fed National Activity Index is a slight positive sign, but it isn’t enough to indicate strong economic growth. Given the unpredictable policies of the current administration, we expect continued market volatility. Historically, markets have bounced back after initial policy shocks, but derivative traders should consider options to protect against sudden changes in sentiment. The Euro and the Pound face pressure mainly due to the strong US dollar. This trend is reinforced by the real-world Dollar Index (DXY) recently reaching a 20-year high above 106. Weak data from the UK leaves the British currency open to further declines against the dollar. We suggest either selling futures or buying puts on the GBP/USD pair to position for continued weakness. Gold’s struggle to climb higher is closely linked to the strong dollar and rising government bond yields. With the US 10-year Treasury yield above 4.2%, the appeal of holding non-yielding assets decreases, creating a limit on gold prices. Thus, we recommend bearish strategies, like selling out-of-the-money call options to gather premiums amid these economic pressures. In the crypto market, traders are moving towards Bitcoin for stability. Recent data shows Bitcoin’s market share has risen above 54%, its highest in over two years, while alternative coins lag. One strategy to consider is trading pairs, taking a long position in Bitcoin futures while shorting Ethereum futures to capitalize on this clear difference. Create your live VT Markets account and start trading now.

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