Market liquidity is low on Monday mornings and stabilizes as more Asian markets open. Current rates show only slight changes from late Friday, with EUR/USD at 1.1735 and USD/JPY at 147.78, among others. Key events to watch include possible US tariffs on EU goods, which could impact EUR/USD rates. The US and China have just held trade talks, and updates are expected. We also provide important analyses and forecasts for S&P 500 futures and major economic events this week.

Risk Warnings

Risk warnings highlight the high-risk nature of foreign exchange trading. Using leverage can increase losses, so it’s important for traders to carefully evaluate their goals, experience, and risk tolerance. It’s recommended not to use money that one cannot afford to lose. InvestingLive suggests consulting independent financial or tax advisors if needed. They clarify that their materials and links are for informational and educational use only and are not a substitute for personalized investment advice. InvestingLive may receive compensation from advertisers based on user interactions. Caution is necessary due to thin liquidity early in the week, as prices can fluctuate wildly. The proposed 15-20% tariff on all EU goods is a significant risk that could lower EUR/USD rates and increase volatility. Traders can hedge this risk by considering put options on the Euro, especially since recent Q2 2025 data showed EU exports to the US are at a five-year high, intensifying the threat.

Central Bank Meetings

An important week of central bank meetings is ahead, including the FOMC, BoE, and BoJ. The latest US Core PCE inflation data from July 2025 remains above 3%, leading the market to expect a hawkish stance from the Fed. This could result in increased activity in derivatives tied to interest rates, such as SOFR futures, as traders prepare for the Fed’s announcement. In equity markets, the S&P 500’s inability to surpass the 6600 mark suggests a possible ceiling. We have noticed a significant 25% rise in open interest for SPX put options with a 6500 strike for October 2025, indicating that many anticipate a market pullback. This situation reminds us of the sharp sell-off that occurred in late 2023 when similar resistance levels faced strong selling. The recent US-China trade talks introduce more uncertainty, especially for commodity currencies like the Australian Dollar. Any negative news could push AUD/USD below its recent support level of 0.6600. Traders are utilizing option straddles to prepare for a significant move in this pair, as any outcome from the talks is likely to prompt a swift reaction. Create your live VT Markets account and start trading now.

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