The Michigan Consumer Sentiment Index for July in the United States was lower than expected, coming in at 61.7 instead of the predicted 62. This index indicates how confident consumers feel and can influence economic activity and forecasts. The EUR/USD currency pair rose above 1.1550 due to weak US job data, showing increased momentum. Similarly, GBP/USD climbed above 1.3250 after a six-day losing streak caused by disappointing US employment figures.

Gold Prices Surge

Gold prices jumped to around $3,350 at the end of the week, mainly because US Treasury bond yields fell sharply. This shift occurred as the market adjusted its expectations regarding the Federal Reserve’s interest rate policies after disappointing Nonfarm Payroll data. In the cryptocurrency market, Bitcoin dropped below $115,000, with sellers aiming for support at $112,000 due to rising liquidations. Overall, the euro area is showing strength thanks to recent EU-US agreements and increased spending in Germany, although there could be risks later this year. Given the recent weak US economic data, we should pay close attention to the decline of the US dollar. The Nonfarm Payrolls for July 2025 were disappointing at just 95,000, compared to the expected 180,000, which reflects lower consumer sentiment. As a result, the market now sees less than a 15% chance of a Federal Reserve rate hike in September, a sharp drop from over 70% just a week ago.

Currency and Investment Strategies

This situation signals a good opportunity to favor currencies against the dollar, particularly the Euro and British Pound. The EUR/USD pair is gaining momentum above 1.1550, and we expect this trend to continue as the European Central Bank appears more assertive than the Fed. Consider buying call options on EUR/USD or GBP/USD to benefit from this trend, which comes with defined risk. Gold’s rise to $3,350 is part of a flight to safety, strongly driven by a drop in US 10-year Treasury yields to under 3.5%. This movement is not just about a weak dollar; it points to concerns over a potential economic slowdown. We should look to increase our long positions through gold futures contracts or buy call options on gold ETFs to protect against instability. On the other hand, the risk-off sentiment is hurting speculative assets like Bitcoin, which has fallen below $115,000. More than $300 million in leveraged long positions were liquidated in the past 48 hours, adding to the downward pressure. We can take advantage of this by purchasing put options on Bitcoin, targeting support levels at $112,000 or lower. This market environment reminds us of late 2023, when early signs of a pause in Fed tightening led to significant rallies in bonds and gold. Back then, anticipating policy changes was essential, and the current weak labor and sentiment data suggest we may be at a similar turning point. In the coming weeks, our strategies should account for a longer period of US dollar weakness and ongoing market volatility. Create your live VT Markets account and start trading now.

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