The main refinancing operations rate in the Eurozone is now at 2.15%, which is in line with expectations. This change reflects similar actions seen in worldwide markets, where the US Federal Reserve has recently lowered interest rates. In currency markets, the EUR/USD pair is feeling pressure, trading below 1.1600. At the same time, GBP/USD is at multi-month lows, sitting around 1.3100 as the US dollar remains strong. Gold prices have climbed above $4,000 per troy ounce, bouncing back from recent drops despite the strong dollar.

Cryptocurrency Market Gains

The cryptocurrency market is experiencing gains due to easing US-China trade tensions. Bitcoin, Ethereum, and XRP have all risen by about 1%. Zcash continues its upward trend, trading near $360 and targeting $400. US-China trade relations are improving after the Trump-Xi meeting, with trade barriers lowering and no unexpected outcomes. As global economic shifts unfold, market dynamics are changing. The interest rate environment has changed dramatically compared to when the ECB’s main rate was 2.15%. The European Central Bank has kept its rate at 3.75% to tackle the latest core inflation figure of 3.9% from Eurostat, leading to a completely new landscape. The Federal Reserve also maintains a strict stance, keeping its key rate at 4.50%, contrasting with earlier rate cuts. This difference in policies is putting a lot of pressure on the EUR/USD, which is far different from the 1.1560 level seen before. Currently, this pair is trading around 1.0500. The ongoing interest rate gap in favor of the dollar suggests this trend could continue. Traders might consider using options to prepare for further declines, especially since the CBOE Volatility Index (VIX) is around 19, showing underlying market uncertainty.

Evolving Gold Market

The gold market has changed significantly since it surpassed the $4,000 mark. Today, with high real yields making non-yielding assets less attractive, gold has dropped to about $3,550 per ounce. The high-rate environment from central banks indicates that challenges for precious metals will likely continue for the foreseeable future. We’ve moved beyond basic trade truces between leaders like Trump and Xi. Our attention has shifted to broader issues around strategic technology sectors and the ongoing global supply chain realignment. This brings a different kind of volatility that affects specific industries more than general market trends. That old target of 1.3100 for GBP/USD seems far away due to the strong dollar. The pound is facing challenges similar to the euro’s, as the Bank of England tries to manage inflation, which is proving tougher to control than in 2022-2023. We are closely monitoring for any signs of policy changes, but for now, the trend seems to be downward. Create your live VT Markets account and start trading now.

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