The dollar weakens after Waller’s comments, while European markets show mixed performance amid changing yields.

    by VT Markets
    /
    Jul 18, 2025
    The dollar is facing challenges in trading, mainly due to comments from Fed Governor Waller about a possible rate cut in July. The Euro is up 0.4% against the US Dollar, now at 1.1646. The US Dollar is stable against the Japanese Yen, around 148.40-50. The British Pound has risen 0.3% to 1.3450, moving above its 100-hour moving average. Commodity currencies are also making gains, with the US Dollar down 0.2% to 1.3720 against the Canadian Dollar, and the Australian Dollar up 0.5% to 0.6520 against the US Dollar. Although there’s no immediate expectation for a rate cut, Waller’s comments indicate there may be discussions on this topic. Bond yields are lower, with 10-year yields at 4.43% and 30-year yields below 5%. European stocks started the day active but have since calmed, with the DAX and UK FTSE moving back from record highs. US futures remain flat after earlier increases.

    Precious Metals and Cryptocurrencies Update

    Gold has risen 0.5% to $3,355.82, staying within a broader range. Bitcoin is slightly down by 0.3% to $119,062 but remains near record highs. Other cryptocurrencies are showing some momentum. Changes are happening at ForexLive, as team members shift to InvestingLive. Following Waller’s comments, we can expect increased volatility in dollar-related currency pairs. Considering this uncertainty, buying options on the EUR/USD or GBP/USD may be a smart trading strategy. This approach reminds us of late 2023, when the market anticipated the Federal Reserve’s dovish turn, causing a sharp dollar decline before any official rate cut. The drop in US 10-year yields indicates that the bond market is seriously considering the possibility of rate cuts. We can use derivatives on Treasury futures to bet on falling yields. For instance, call options on ZN futures would profit if bond prices keep rising. The MOVE index, which measures bond market volatility, is recently hovering near 100, a historically high level, making options premiums a controlled way to navigate this uncertainty.

    Equity Market Tensions

    Despite flat equity futures, underlying tensions create opportunities. The CBOE Volatility Index (VIX) is near a historically low level of 14, which often indicates upcoming sharp market moves as complacency is disrupted. Setting up a long straddle on the SPX before the next Fed meeting could capture potential breakouts, no matter the direction. Political pressure on Powell and ongoing trade talks with Japan add layers of complexity that could weaken the dollar further. News about Beijing and Nvidia presents targeted opportunities, suggesting that call options on semiconductor ETFs could do well even if the broader market hesitates. The rise in gold prices reflects falling real yields, reinforcing our cautious view on the greenback. Create your live VT Markets account and start trading now.

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