The Eurozone’s Harmonized Index of Consumer Prices dropped from a 0.2% rise to a -0.3% decline in November. However, the year-on-year inflation rate still stands at 2.4%. The EUR/USD pair showed minimal movement and stayed above 1.1600. The GBP/USD pair fell closer to 1.3200, as there is speculation about a possible interest rate cut by the Bank of England. At the same time, the US dollar gained strength, putting more pressure on the Pound. Gold prices held steady above $4,200, while rising equity markets reduced the demand for safe-haven assets.

Bitcoin Surges Past $87,000

Bitcoin surpassed $87,000, bouncing back after a tough start in December. This rebound was influenced by a drop in US manufacturing and possible interest rate changes from the Bank of Japan. Although there are potential legal challenges to US tariffs, expectations are that they will remain in place, with the White House preparing new policies. The price of Pi Network saw a small increase of 2% after four days of declines, but it continues to show overall market volatility. With month-over-month prices in the Eurozone sliding to -0.3%, we see signs of cooling demand. Yet, the annual inflation rate from Eurostat is still at 2.4%. This situation keeps the EUR/USD pair confined within a narrow range, creating a chance for us to take advantage of volatility through options strategies like iron condors. We anticipate this lack of direction to persist as trading volumes decrease toward the end of the year. The pressure on the British Pound is clear, with markets now fully expecting a Bank of England rate cut this month. The latest report from the Office for National Statistics revealed that the UK economy shrank by 0.1% in the third quarter of 2025, giving the central bank strong motivation to act. We see potential in buying GBP/USD put options to prepare for a possible drop below the 1.3200 level.

Gold Prices Remain Steady

Gold’s struggle to rise above $4,200, despite its role as an inflation hedge, indicates that money is currently flowing into equities. The S&P 500 closed above 6,200 last week, attracting capital away from non-yielding assets like gold. This trend suggests that traders might consider using bearish call spreads, betting that gold won’t break significantly higher soon. Bitcoin’s price is reacting sharply to traditional economic news, such as weak US manufacturing data and potential interest rate changes in Japan. The Institute for Supply Management (ISM) reported that its manufacturing index fell to 48.5 for November, marking its second month of contraction, which has led to market nervousness. The high volatility indicates that traders might look into buying Bitcoin straddles, a strategy that profits from significant price movements in either direction. The ongoing risk of US tariffs continues to create uncertainty in trade, regardless of any court outcomes. We saw similar situations during the trade disputes from 2018 to 2020, which caused sudden market shocks and heightened volatility. Therefore, holding long positions in VIX futures could be an effective way to hedge our portfolios against unexpected policy changes. Create your live VT Markets account and start trading now.

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