USD/MXN resumes decline after failing to reclaim its 50-day average, with downside targets in focus
USD/MXN has started to drop after failing to rise above its 50-day moving average. This signals a return to bearish momentum, especially as it breaks below a key support level. Now, targets are set between 17.85 and 17.60, with any rebounds likely facing resistance around 18.37.
The currency pair has continued to fall after a failed attempt to stabilize above the 50-DMA near 18.37. Breaking below this level indicates that the downward trend is likely to continue.
Eurozone industrial production unexpectedly grows by 0.8% month-on-month, exceeding the 0.1% forecast by economists
Eurozone industrial production rose by 0.8% in October, surprising analysts who expected just a 0.1% increase. This follows a smaller 0.2% rise in September.
Compared to last year, industrial output grew by 2% in October, up from 1.2% previously. This positive data boosted the Euro, with EUR/USD climbing to about 1.1745.
In the currency market, the Euro showed strength, particularly against the New Zealand Dollar. The base currency comes from the left column, while the quote currency is from the top row in the provided heat map.
The Euro rose 0.03% against the US Dollar but fell 0.14% against the British Pound. It also dipped by 0.56% versus the Japanese Yen.
These currency movements highlight changing economic conditions and responses to the latest data. Market attention is now focused on upcoming key data releases and announcements from central banks.
Recall that strong Eurozone industrial production numbers from October marked an unexpected 0.8% rise. However, the most recent data for November, released last week, showed a significant slowdown to just 0.2%, missing forecasts. This suggests that the industrial rebound seen two months ago might be losing steam as we head into the new year.
The European Central Bank is closely monitoring this slowdown. The latest inflation estimate for November came in slightly above expectations at 2.5%. This puts the central bank in a challenging position. Weaker growth combined with persistent inflation complicates the possibility of future interest rate cuts. We believe this will keep the Euro trading within a narrow range, as both buyers and sellers find support for their positions.
For derivative traders, this rising uncertainty is crucial in the coming weeks. Implied volatility on EUR/USD options has increased from around 7% to 7.8% since early December, reflecting market indecision. In this climate, strategies like long straddles or strangles become more attractive since they can profit from significant price movements in either direction without needing to predict the trend accurately.
Looking at the futures market, the EUR/USD contract is currently near 1.1820 and faces resistance at the 1.1900 level, which it failed to break in late November. The market’s response to the upcoming US retail sales data will be vital. A weak US report could spark a breakout, but until then, we expect traders to prefer strategies that operate within defined risk limits.
Eurozone industrial production increased from 1.2% to 2% in October, year-on-year.
Eurozone industrial production grew in October, increasing from 1.2% to 2% year-on-year. This indicates a positive shift in industrial activities within the Eurozone.
Exchange rates show various market trends. The Canadian Dollar held steady against the USD near Friday’s close. Meanwhile, the Pound Sterling weakened due to concerns over UK GDP, while USD/JPY remained stable after survey results from Japan.
Gold And Solana Show Strength
In commodities, gold prices continued to rise, nearing $4,350. This is due to growing expectations for a friendlier Federal Reserve policy. Additionally, Solana has seen strong interest in its spot Exchange-Traded Funds, pushing total assets under management close to $1 billion. The S&P 500 index is on the rise, with the US 2-year yield around 3.50% after a moderately perceived Federal Reserve rate cut. Solana’s price is also poised for a breakout as it sits at the upper edge of a falling wedge pattern. For broker preferences in 2025, recommendations highlight the importance of considering options based on spreads, leverage, and regulation across different areas, tailored to various trading needs and strategies. The increase in Eurozone industrial production to 2.0% is a reassuring indicator as we approach year-end. Recent data shows November inflation steady at 2.3%, suggesting the European Central Bank might be less dovish compared to the Fed this week. We’re looking at short-dated call options on EUR/USD, anticipating a possible rise above 1.1800.Market Strategies And Expectations
The market has absorbed the Federal Reserve’s recent rate cut, with the S&P 500 reaching new highs and the 2-year yield near 3.50%. The U.S. Nonfarm Payrolls report from November showed a cooling but resilient labor market, coming in at 175,000. Selling out-of-the-money put spreads on equity indices could generate premium, as we don’t expect a major sell-off soon. Gold’s rise towards $4,350 results from expectations of a weaker dollar in 2026, following a shift in Fed policy. This rally builds on momentum from gold breaking its previous all-time highs in early 2024. We expect this trend to continue as real yields remain low after the aggressive rate hikes of 2023. In Japan, markets are anticipating a near-certain interest rate hike from the Bank of Japan this week, potentially ending its negative rate policy. However, USD/JPY has stayed high around the 155 level, indicating the market isn’t fully prepared for the change. This presents a good opportunity to buy put options on USD/JPY, anticipating a quick strengthening of the yen post-announcement. For the Pound Sterling, we expect increased volatility as we await the Bank of England’s policy meeting and significant U.S. data releases. Given that Canadian inflation data for November missed expectations at 2.2%, we see greater downside potential for commodity currencies compared to sterling. A straddle on GBP/USD could be an effective strategy to profit from anticipated price swings without committing to a specific direction. Create your live VT Markets account and start trading now.Eurozone industrial production rose by 0.8% month-on-month, surpassing the expected 0.1% growth
Eurozone industrial production increased by 0.8% in October, exceeding the 0.1% prediction. This boost shows strong performance in the manufacturing sector across the region.
Market activity saw the USD/JPY stabilize near 155, helped by a positive Tankan survey. At the same time, the USD weakened slightly as focus shifted to upcoming US economic data.
Canada CPI Inflation Steady
Recent data shows that Canada’s annual CPI inflation held steady at 2.2% in November, below the expected rise to 2.4%. The EUR/JPY currency pair declined as traders anticipated a rate change from the Bank of Japan. In the currency markets, EUR/USD moved closer to 1.1750 at the start of the week with low volatility. The GBP/USD climbed toward 1.3400 amid expectations of policy updates from the Bank of England. Gold prices rose to $4,350, continuing last week’s upward trend, driven by expectations of a dovish Federal Reserve policy. In the cryptocurrency space, Solana’s price stabilized at $131, with nearly $1 billion in spot ETF inflows.Market Signals and Strategies
The S&P 500 saw gains as US 2-year yields stayed around 3.50% after the Federal Reserve cut rates. This change particularly benefited sectors outside technology. The October industrial production figure is an important indicator. It signals a shift from negative trends seen in late 2023, suggesting the Eurozone economy is gaining strength. We should consider bullish positions on the Euro, such as call options on EUR/USD, ahead of the European Central Bank meeting this week. The US Dollar remains weak due to the recent Federal Reserve rate cut, confirming the dovish trend we expected for 2024. This situation makes shorting the dollar an appealing strategy in the coming weeks. We could buy puts on the Dollar Index (DXY) to benefit from further declines as US data is released. The market now sees a Bank of Japan rate hike as almost certain, reflecting a significant policy shift that has been developing since 2024. This could lead to a stronger Yen, likely causing the EUR/JPY pair to weaken. We suggest considering long EUR/JPY puts, betting that the Yen will strengthen more quickly than the Euro. Gold’s rise towards $4,350 is due to the weak dollar and ongoing inflation concerns. This price is more than double the breakout level we saw in late 2023, highlighting the strength of this trend. While the momentum is strong, we recommend strategies such as bull call spreads on gold futures to manage the risk of a potential sharp pullback from these record highs. With the EUR/USD pair showing low volatility, there’s potential for a breakout as key US data and central bank announcements approach. This quiet period might be the right time to position for increased market movement. We’re considering buying VIX calls or straddles on major currency pairs to prepare for this possible change. Create your live VT Markets account and start trading now.Standard Chartered reports that actual job growth in 2024 may have fallen short of market expectations.
Labour demand in the US started to decline months before new immigration policies, as reported by Standard Chartered. Economists believe that since April 2024, job growth numbers were likely exaggerated by about 60,000 jobs each month due to adjustments for births and deaths. This means actual job growth was probably weaker than what the market thought.
Revisions Show True Employment Growth
In December 2024, Federal Reserve Chair Powell noted that the nonfarm payroll (NFP) data was overstated by 60,000 jobs each month. Standard Chartered estimates this overstatement to be 70,000 jobs but aligns with Powell’s figure for their report. After revisions, it appears that employment growth in 2024 was not as strong as initially believed. They argue that immigration was not the main factor behind employment growth in 2024, despite common belief. Labour demand had already started to fall before the Trump administration’s immigration policies were put in place. Once adjustments are made, nonfarm payroll is likely to show an average of 70,000 jobs per month from April to December 2024, compared to the original report of 150,000. Other data sources, like QCEW, suggest even larger downward adjustments for that time. We are now witnessing the real effects of the labour market slowdown that began in 2024. The inflated job growth numbers from that time help explain why the recent November 2025 jobs report showed a weak increase of just +50,000 jobs. This weakness is now a confirmed trend, rather than a sudden issue. This economic weakness is changing expectations for Federal Reserve policy, as inflation dropped to 2.8% last month. There’s an increasing chance of a rate cut in the first quarter of 2026, a major shift from just a few months earlier. Traders may want to position themselves for lower rates, for example, by trading options on SOFR futures to bet on a shift towards a more lenient Fed.Market Protective Strategies
The underlying weakness in job growth poses risks to corporate profits and consumer spending, which have supported equity markets. The S&P 500’s forward P/E ratio is currently around 20, which seems high given that Q3 2025 GDP growth was only 0.5%. We think that buying protective put options on major indices like the SPX could be a smart strategy to guard against a possible market correction in the near future. The disparity between last year’s data and this year’s economic situation creates considerable uncertainty, which is a key factor driving market volatility. The CBOE Volatility Index (VIX) has been around 18, a level that appears too low considering the questions surrounding the economy’s real strength. We believe that long volatility positions, such as purchasing VIX call options, provide an inexpensive way to protect against a surge in market instability. A dovish Federal Reserve, together with a slowing US economy, makes the US dollar less appealing compared to other currencies. Historically, similar periods of Fed easing, such as the one beginning in 2019, have often resulted in dollar weakness. Therefore, strategies that anticipate a declining dollar, like buying call options on the EUR/USD or GBP/USD currency pairs, could perform well into early 2026. Create your live VT Markets account and start trading now.Silver value rises to $63.83 per troy ounce with a 3.19% increase
Silver prices have risen to $63.83 per troy ounce, marking a 3.19% increase from $61.85 on Friday. So far this year, Silver prices have skyrocketed by 120.91%. On Monday, the Gold/Silver ratio was 68.08, down from 69.51 last Friday.
Silver’s Role in Investment Portfolios
Silver is a precious metal that many investors use to diversify their portfolios because of its inherent value and ability to serve as a hedge during inflation. Investors can buy Silver as physical coins or bars or invest through Exchange Traded Funds that track its global price. Many factors can affect Silver prices. Geopolitical issues and fears of recession often make Silver more appealing as a safe-haven asset. Interest rates and the value of the US Dollar also play a role. Additionally, prices are influenced by investment demand, mining output, and recycling rates. Silver is highly conductive and vital in industries like electronics and solar energy. Economic factors in the US, China, and India, especially in industrial sectors and jewelry demand, also drive Silver price changes. Generally, Silver prices trend alongside Gold prices, and shifts in the Gold/Silver ratio can indicate changes in the value between the two metals. With Silver increasing over 120% since the start of 2025, the market momentum is strong. The recent 3.19% rise suggests that this upward trend is likely to continue for now. Traders should be ready for volatility in the coming weeks, as sharp gains often lead to sharp corrections.Impact of Economic Outlook on Silver Prices
This price rally seems tied to the overall economic outlook, as markets expect the Federal Reserve to cut interest rates in the first half of 2026. During 2023-2024, stubborn inflation sparked initial interest in precious metals. The latest U.S. Consumer Price Index from November 2025 shows inflation steady at 3.4%, keeping Silver appealing as a hedge. It’s also important to consider the significant industrial demand for Silver, which is a key factor in 2025. Global needs for Silver in solar panels and electric vehicles have grown by about 9% this year, according to recent reports. This demand wasn’t nearly as prominent during the last major price peak in 2011. The Gold/Silver ratio has been decreasing, now at 68.08 after starting above 80 earlier this year, indicating that Silver is outperforming Gold. This suggests that Silver is being influenced by its own supply and demand factors, especially its industrial use. We are closely monitoring this trend to see if Silver can continue to close the gap in value with Gold. Given the sharp increase, implied volatility on Silver options is likely high, which makes buying simple calls or puts more expensive. Traders may want to use credit spreads to take advantage of price stability or slight pullbacks. For those expecting further increases, bull put spreads could provide a way to gain long exposure with a specified risk. Create your live VT Markets account and start trading now.The Japanese yen strengthens, causing GBP/JPY to fall to around 207.30 due to selling pressure.
The GBP/JPY pair has dropped to around 207.30 due to strong selling pressure on the British Pound. This drop follows Japan’s Tankan survey for the fourth quarter, which revealed an increase in the Large Manufacturing Index to 15, the highest in four years.
This week, the Bank of Japan is likely to raise interest rates by 25 basis points to 0.75%. This expectation has boosted the Japanese Yen, overshadowing the British Pound, which is waiting for UK labor market data.
UK Employment Predictions
Forecasts for the UK’s employment figures indicate that the unemployment rate may rise to 5.1%, with average earnings growth—excluding bonuses—at 4.5%. These figures could lead the Bank of England to lower interest rates by 25 basis points to 3.75%. The anticipated rate cut from the Bank of England would respond to weak labor demand and decreasing inflation. This situation sets the stage for possible shifts in monetary policy in both Japan and the UK. With GBP/JPY trending downward near 207.00, our focus is on the differing monetary policies expected this week. The strong data from Japan’s Tankan survey reinforces our view that the Bank of Japan is poised to raise rates to 0.75%. This decision continues the normalization of policy that began when the BoJ ended its negative interest rate policy in March 2024. Japan’s stance is supported by inflation data that has remained above the central bank’s 2% target for much of the past two years. In contrast, the Bank of England is set to lower its rate to 3.75% on Thursday, reflecting a notable slowdown in the UK economy and reduced price pressures from earlier highs in 2023, when inflation peaked over 11%.Strategic Considerations For Traders
We are observing a classic setup for ongoing weakness in the GBP/JPY pair as we approach the new year. Traders should consider strategies that benefit from a further decline, such as buying GBP/JPY put options to hedge or speculate on a drop below 207.00. The upcoming UK labor market data is crucial, as unemployment is expected to rise to 5.1%, up from just 4.2% in late 2023. This increase highlights a weakening job market, giving the BoE more room to cut rates, strengthening the case for a weaker Pound Sterling against a stronger Yen. With both central bank meetings happening this week, we anticipate significant volatility for the currency pair. Options traders should be aware that the price of puts may rise due to increased implied volatility. Therefore, establishing positions before these announcements could be beneficial, while managing risk appropriately. Create your live VT Markets account and start trading now.Switzerland’s inflation forecast: 0.2% for 2025 and 2026, increasing to 0.5% in 2027
The Swiss Government expects inflation to average 0.2% in 2025 and 2026, rising to 0.5% by 2027. GDP growth predictions are 1.4% in 2025, 1.1% in 2026, and 1.7% in 2027.
The Swiss Franc (CHF) is unlikely to be greatly impacted by these figures. Currently, the USD/CHF is trading 0.06% higher at 0.7965. Switzerland is the ninth-largest economy in Europe by GDP and is known for its high living standards.
Switzerland’s Economic Structure
Switzerland’s economy is based on an open, free-market system, mainly focused on services, with the EU as its main trading partner. It has a strong export sector, excelling in watches, clocks, food, chemicals, and pharmaceuticals. Switzerland is also regarded as a tax haven due to its low tax rates. Even though the Swiss economy’s growth rate has slowed, its stability and high living standards still support the Swiss Franc. Commodity prices have limited effects on the CHF, but gold and oil prices do have some influence. The CHF’s safe-haven status ties it to gold, and as Switzerland imports fuel, oil prices can affect its value. With Swiss inflation expected to be just 0.2% and GDP growth dropping to 1.1% next year, there is little reason for the Swiss National Bank (SNB) to raise interest rates. This cautious stance is becoming more entrenched, especially since last month’s CPI was a mere 0.1% year-over-year. The SNB will likely keep its interest rate at 1.00% into 2026, creating a notable yield disadvantage for the franc. This stable policy environment should help keep currency volatility down, making it a good opportunity to consider selling options. With the European Central Bank and the U.S. Federal Reserve maintaining much higher rates, implied volatility on pairs like EUR/CHF and USD/CHF is expected to stay low. We see chances in selling strangles to earn premiums, betting that the franc will remain within a specific range against its major counterparts.Interest Rate and Currency Volatility
The difference in interest rates strongly favors a weaker franc, especially against the U.S. dollar, where the Fed’s rate is above 3.5%. This makes long USD/CHF futures an appealing carry trade, allowing traders to benefit from the interest rate gap and potential price gains. Recent manufacturing data showed a slight contraction, indicating that the fundamentals for the Swiss economy do not support a strong franc. Nonetheless, we need to keep in mind the franc’s safe-haven status, which is its main strength. Any unexpected global financial crisis or geopolitical tension could quickly lead to a stronger CHF as investors seek safety. Buying inexpensive out-of-the-money puts on USD/CHF could be a smart hedge against such unforeseen events in the near future. This situation is reminiscent of the mid-2010s when the SNB actively tried to prevent the franc from becoming too strong, which could hurt its export-driven economy. With exports to the EU already showing signs of weakness in the third quarter of 2025, we expect the central bank will verbally act if the franc becomes too strong. This may create a soft ceiling for the franc’s value and supports our bearish outlook. Create your live VT Markets account and start trading now.Turkey’s budget balance improved dramatically in November, rising from -223.2 billion to 169.5 billion.
Turkey’s budget situation improved in November, shifting from a deficit of -223.2 billion to a surplus of 169.5 billion. This indicates a big change in the country’s financial health.
Exchange rates saw some movement, with the USD losing ground against major currencies. Despite this, the EUR/USD maintained its gains as we enter a busy week. Meanwhile, the GBP/USD stayed steady above 1.3350 as traders awaited data and decisions from the Bank of England.
Activity in Other Markets
In other markets, gold prices climbed to seven-week highs, driven by expectations of a Federal Reserve rate cut and ongoing geopolitical concerns. The Japanese Yen gained strength, with USD/JPY falling close to 155.00, supported by positive Tankan Q4 survey results. In the digital asset market, Solana is seeing consolidation as spot ETF inflows approached $1 billion, indicating growing institutional interest in buying dips. This mixed financial environment shows different trends across various markets and currencies. The recent Turkish budget data highlights a significant move to a surplus. This is a positive sign for the country’s fiscal responsibility. It’s the first surplus in over two years, hinting that a stronger Lira (TRY) may be on its way. We should think about strategies that benefit from a falling USD/TRY exchange rate in the upcoming weeks. This fiscal improvement backs the central bank’s strict monetary policy, which has been consistent throughout 2025. With inflation now decreased to 38% from over 75% seen in 2024, the Lira’s future looks more stable. Less volatility means selling options, like strangles on the USD/TRY pair, could be a good way to earn premiums.Global Currency Trends
Worldwide, the US dollar is continuing to decline against major currencies. The market now sees over a 90% chance of another interest rate cut by the Federal Reserve in the first quarter of 2026, following last month’s initial cut. This perspective suggests we should stay bearish on the dollar, using futures or call options on pairs like EUR/USD to take advantage of this trend. The Japanese Yen has notably benefitted from the weaker dollar. The strong Tankan survey data adds to the positive momentum since the Bank of Japan ended its negative interest rate policy in March 2025. We believe USD/JPY is likely to continue lower, making put options on the pair an appealing strategy for protection or speculation. Gold remains steady below its all-time highs, supported by expectations of lower US interest rates and ongoing geopolitical risks. While it hasn’t yet reached new heights, the climate is favorable for higher prices, especially as real yields in the US have dropped to nearly 0.5% over the last quarter. Using call spreads on gold allows investors to capture potential gains while managing the cost of holding long positions. Create your live VT Markets account and start trading now.Turkey’s budget balance for November is 169.49 billion, compared to -223.2 billion.
The EUR/USD is steady but not moving much, currently below 1.1750 as European trading starts. Traders are waiting for US economic data and decisions from the European Central Bank.
The GBP/USD is still above 1.3350, but it faces challenges as traders prepare for important UK data and a rate decision from the Bank of England. The US dollar is in a recovery phase, which is impacting its performance.
