The Euro is slightly down today but has gained overall for the week. To rise above its peak of 1.17, the Euro may need a new market driver. If the US Federal Reserve pushes for a more relaxed monetary policy, it could weaken the USD and benefit the Euro, especially as investors move away from the USD. Right now, the Euro is trading between 1.16 and 1.17, indicating a possible pause in gains. Although there are positive momentum signals, extended losses seem unlikely, with support levels around 1.1590 to 1.1600. The EUR/USD pair is facing pressure near 1.1650 due to a modest recovery in the USD, likely caused by adjustments ahead of next week’s US inflation data. In the UK, GBP/USD has slipped below 1.3450 after earlier gains related to announcements from the Bank of England. Gold prices are struggling to stay above $3,400, affected by the strong US Dollar. In Canada, the unemployment rate is likely to rise, which counters the surprising job growth seen in June. The Bank of England has lowered rates, indicating that its easing cycle may soon end due to ongoing concerns about inflation. Since the Euro is trading in a narrow range, we see this as a time for consolidation before a significant movement. The market is waiting for next week’s US inflation data. Last month, the US CPI for July 2025 was slightly above expectations at 3.1%. We’re considering options strategies, such as a long strangle, to profit from the expected price swings, regardless of direction. This holding pattern reminds us of market behavior during the 2022-2023 rate hike cycle, when currencies traded sideways before key inflation reports, followed by breakout moves. With the EUR/USD caught between support at 1.1600 and resistance at 1.1700, a similar breakout seems likely. We view this calm as an opportunity to prepare for upcoming volatility. For the British Pound, the recent rate cut by the Bank of England has soured market sentiment. Last week’s decision stemmed from UK GDP data for the second quarter of 2025, which showed a slight contraction of 0.1%. We are considering buying put options on GBP/USD as protection against a further decline, especially if the pair drops convincingly below 1.3400. Gold’s struggle to stay above $3,400 is linked to the strong US Dollar and rising bond yields. With the US 10-year Treasury yield around 4.5%, positive real yields are dampening enthusiasm for gold. We are looking to sell covered calls on our gold positions to generate income while the price remains stable. In Canada, we anticipate weakness in the Canadian dollar. Following a surprising gain of 40,000 jobs in June 2025, forecasts for July predict small job losses. This expectation leads us to consider strategies that would benefit from a higher USD/CAD exchange rate in the coming weeks.

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