The Japan Jibun Bank Manufacturing PMI for July was expected to reach 50.2 but instead came in at 48.8. This number is below the level needed for growth, indicating a downturn in the manufacturing sector. In the foreign exchange market, the EUR/USD pair is trading at about 1.1775, driven by hopes for a possible trade deal between the EU and the US. Meanwhile, GBP/USD is holding steady near a two-week high of 1.3580, buoyed by positive sentiment ahead of UK PMI data.

Gold and Crypto Market Updates

Gold prices are struggling below $3,400 due to optimism about a potential US-EU tariff agreement. In the cryptocurrency market, there was a major sell-off that wiped out over $737 million in leveraged positions, with 85.3% of these being long positions. During the first six months of Trump’s second presidency, policy changes have been chaotic, yet markets have remained resilient. This volatility highlights the unpredictable nature of financial markets during his time in office. For traders looking ahead to 2025, choosing the best brokers for EUR/USD is key to navigating market changes. It’s wise to assess brokers based on spreads, speed of execution, and platform features, suitable for all trading levels.

Japanese Yen and Trade Strategies

The unexpected drop in the manufacturing sector indicates potential weakness for the Japanese Yen. We suggest strategies like buying USD/JPY call options to take advantage of a possible currency drop. With the Bank of Japan’s interest rate around 0.1%, the Yen is particularly sensitive to negative economic news. Optimism about a US-EU trade deal is likely to bolster the Euro. Traders can benefit from this momentum by purchasing EUR/USD call spreads, which can help manage costs while capturing upside potential near the 1.1775 mark. A similar strategy can be applied to the pound, which is also reacting well ahead of upcoming economic reports. As gold prices retreat due to trade deal optimism, we see an opportunity to position for further declines if this positive sentiment continues. Buying put options on gold below the $3,400 level presents a way to speculate on this trend with defined risks. A similar situation occurred in late 2019 when easing US-China trade tensions led to a temporary drop in gold prices. The massive liquidation of long positions in the crypto market suggests that the recent sell-off could be excessive. With over $630 million in long positions cleared out, we see this as a potential entry point for cash-secured puts or conservative call options. Historically, such “long squeezes,” like the one in May 2021, often lead to price stabilization as forced selling eases. The unpredictable policies during Trump’s administration highlight the importance of managing volatility. We recommend using derivatives for hedging, like buying VIX call options, which tend to increase in value when market fear increases. During his first term, the CBOE Volatility Index rose over 40% on single days following unexpected policy announcements, underscoring the necessity for protective positions. Create your live VT Markets account and start trading now.

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