The US Dollar is on a downward path, with the US Dollar Index dropping to a new five-week low below 99.00. Attention is now on US employment data, which includes Challenger Job Cuts, Initial Jobless Claims, and Balance of Trade figures.

Euro and British Pound Performance

The EUR/USD reached two-month highs close to 1.1680 and is looking towards the 1.1700 mark. Key upcoming indicators include the German Construction PMI and eurozone Retail Sales. Meanwhile, the GBP/USD briefly surged above 1.3300, boosted by the weakness of the US Dollar. Upcoming indicators from the UK include the S&P Global Construction PMI. The USD/JPY showed volatility as it faced resistance at the 156.00 level. Attention is on Japan’s Foreign Bond Investment readings. The AUD/USD held its gains, testing the 0.6600 level, with Balance of Trade and Household Spending data slated for release. WTI crude oil prices are recovering, nearing $60.00 per barrel due to renewed geopolitical tensions affecting markets. Gold prices have surged, crossing the $4,200 mark per troy ounce, while silver is just below $59.00 per ounce, both benefiting from the weaker US Dollar. Given the ongoing weakness of the US Dollar, there are opportunities for further declines leading into next week’s Federal Reserve meeting. The market is anticipating over an 85% chance of a rate cut, especially after last month’s Non-Farm Payrolls indicated job growth slowed to a modest 190,000. This suggests that traders might consider strategies that benefit from a falling dollar, such as buying puts on the US Dollar Index (DXY), which is hovering around 101.50. The Euro’s strength stems directly from the softness of the dollar, pushing EUR/USD towards the 1.1100 mark. Recent Eurozone retail sales have shown a slight increase of 0.3%, indicating some economic resilience. Traders might want to look into buying short-term EUR/USD call options to take advantage of a possible breakout above this important psychological level.

Japanese Yen and Australian Dollar Updates

The GBP/USD has also risen towards 1.3000 as the Bank of England continues a more hawkish stance compared to the Federal Reserve. This divergence makes long-sterling positions appealing against the dollar. We believe this trend has further potential, especially if forthcoming UK data continues to show persistent inflation. The USD/JPY situation remains delicate, with the pair now testing the 150.00 support level. The widespread weakness of the dollar is further fueled by speculation that the Bank of Japan might soon end its negative interest rate policy. Caution is advised, as any official statement could lead to a rapid decline in the pair. Risk-sensitive currencies like the Australian dollar are gaining momentum, with the AUD/USD breaking above 0.6800. This movement is supported by a recent Australian trade surplus that exceeded A$10 billion, highlighting strong commodity exports. This backdrop makes selling USD/AUD puts an attractive strategy to benefit from both the Aussie’s strength and high option premiums. In commodities, the weaker dollar and ongoing geopolitical risks are keeping WTI crude oil prices steady above $85 per barrel. The latest EIA report showed a bigger-than-expected draw in US inventories, tightening the supply situation. This creates a favorable environment for energy-linked assets. This climate has been extremely positive for precious metals, with Gold soaring past $2,300 per troy ounce. As traders anticipate a shift to easier monetary policy from the Fed, the appeal of non-yielding assets is clear. Silver has followed suit, trading near $28 an ounce, with potential for further gains as industrial demand remains strong. Create your live VT Markets account and start trading now.

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