The US Dollar is strong against most G10 currencies as we approach Friday’s North American session. The Swedish Krona is the only G10 currency that has gained against the USD. Meanwhile, the Australian Dollar and Japanese Yen are falling behind, while the British Pound, New Zealand Dollar, and Canadian Dollar have slightly lost value.

Market Overview

In the wider market, equity futures are stable at record highs, with US 10-year yields rising above 4.40%. Oil prices remain steady above $65 per barrel, although copper prices are fluctuating due to tariffs. Gold prices have decreased, returning to their 50-day moving average, as the recent bull trend has flattened. During this session, all eyes will be on the release of durable goods data and the Kansas City Fed services activity index. The Federal Reserve is currently in a communications blackout before their anticipated decision to keep interest rates the same next Wednesday. The upcoming statement and Fed Chair Powell’s press conference are expected to be crucial, especially regarding votes and the possibility of a dovish dissent. We see the current strength of the dollar as an important trend, especially against the struggling Australian Dollar and Japanese Yen. The unexpected addition of 272,000 jobs in the latest US employment report provides solid reasoning for this difference. This situation supports strategies such as buying call options on the USD or put options on currency-specific ETFs. With the central bank not communicating, we expect increased volatility around next week’s interest rate decision. Although recent inflation data has eased to a 3.3% annual rate, the strong labor market creates uncertainty about what comes next. The CBOE Volatility Index (VIX) is currently low at 13, making options strategies like straddles on major indices cost-effective for anticipating sharp moves.

Market Stabilization

The stability of equity futures at record levels suggests a moment of caution rather than a rush to buy. Rising 10-year yields above 4.40% can particularly pressure high-growth sectors, making protective put options on tech-heavy indices a smart move. Historically, when the Fed holds rates steady in a strong economy, the market can become range-bound until a clearer policy direction takes shape. We believe the drop in gold prices is directly due to the stronger dollar and rising bond yields. Its return to the 50-day moving average is a key sign of lost momentum, breaking a strong trend that started in March. This means that bearish positions, like buying puts on gold ETFs, could be profitable if yields continue to rise. Market attention is focused on the upcoming statement and Mr. Powell’s press conference. While CME’s FedWatch Tool indicates a near-zero chance of a rate change, the most important information will be in the updated economic projections and dot plot. Any change in the median forecast for rate cuts this year will likely influence market direction for the rest of the month. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now