In June 2025, US consumer credit increased by $7.37 billion, which is higher than the expected $7.00 billion. The previous month’s number was adjusted to show an increase of $5.13 billion, revised up from $5.10 billion. Total outstanding consumer credit rose from $5,047.3 billion to $5,054.7 billion, an increase of $7.4 billion or 0.15%. However, revolving credit decreased from $1,298.1 billion to $1,297.0 billion, a drop of $1.1 billion or 0.08%.

Nonrevolving Credit Increase

On the other hand, nonrevolving credit grew from $3,749.2 billion to $3,757.6 billion, rising by $8.4 billion or 0.22%. This highlights changes in consumer credit habits, showing a clear distinction between revolving and nonrevolving credit. While the June consumer credit report may seem positive at first glance, the details reveal a more concerning situation. The decline in revolving credit by $1.1 billion, marking the first decrease in six months, is a significant red flag. It suggests that consumers are reducing their credit card spending and becoming more cautious with their finances. This trend aligns with recent retail sales data from July 2025, which showed a surprising 0.2% drop in spending at general merchandise stores. A similar pattern occurred in late 2022 when consumers tightened their budgets in response to high inflation. The increase in nonrevolving credit is primarily due to auto and student loans, which do not fully reflect the overall economic health.

Investment Opportunities Arising

In the coming weeks, this situation presents a chance to purchase puts on consumer discretionary ETFs. The market hasn’t fully accounted for a slowdown in this sector, and implied volatility is reasonable. We should aim for contracts expiring in September and October to take advantage of any potential earnings warnings. This consumer weakness also changes the outlook for Federal Reserve policy. The likelihood of another rate hike in 2025 has dropped significantly, and now the market is starting to expect a higher chance of a rate cut by the second quarter of 2026. This makes it sensible to position in interest rate futures for a more dovish Fed. Overall uncertainty is likely to rise, making broad market hedges a smart strategy. The CBOE Volatility Index (VIX) has been trading close to its 52-week lows, around 13.5. Buying VIX calls or inexpensive, out-of-the-money puts on the S&P 500 can offer affordable protection against a market beginning to react to this consumer slowdown. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Crude oil futures have dropped by $0.47, or -0.73%, settling at $66.43. During the session, prices peaked at $65.11 and dipped to a low of $63.76. Initially, prices climbed above the 100-day moving average of $64.92, but momentum faded, leading to a quick decline. At the lows of the session, prices approached a swing low near $63.61.

Key Support Level

If prices fall below this level, it could allow sellers to push the market down further. Currently, crude oil futures show weakness, with the price settling around $64.43. The price attempted to rise above the 100-day moving average at $64.92 but couldn’t maintain that position, quickly dropping again. This indicates that sellers are still in control. The key level to monitor is the swing low at approximately $63.61. If prices break decisively below this point, it would signal increased selling pressure in the coming weeks and imply that the recent rally attempt has failed. This technical weakness aligns with the latest supply data. The most recent report from the Energy Information Administration revealed an unexpected increase in U.S. crude inventories by 2.1 million barrels, suggesting that demand may be weakening more than expected.

Global Economic Concerns

This situation points to broader worries about a global economic slowdown that have emerged throughout the summer of 2025. Persistently high interest rates from central banks in 2024 seem to be finally affecting business activities and travel demand. As a result, traders are becoming more cautious. For those trading derivatives, this scenario may encourage bearish strategies. Purchasing put options could be a way to profit if prices drop below the support level of $63.61, allowing for downside exposure while limiting risk. We’ve seen similar patterns before, especially after the price spikes in 2022. After that peak, oil prices entered a long period of decline as recession fears took hold throughout 2023. Current price movements feel alike, with failed rallies leading to significant drops. However, if prices can reclaim the 100-day moving average around $64.92, this bearish outlook may need reconsideration. A sustained rise above that level could trap sellers and show that the market has absorbed the negative news. This remains a key threshold for bullish investors. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The AUDUSD market is currently moving within a fluctuating range. Since mid-April, prices have been mainly between 0.6354 and 0.6594. Recently, although buyers pushed prices to new highs, they couldn’t keep up the momentum beyond a key trend line. This allowed sellers to take control, pushing prices back below the 100 and 200-bar moving averages on the 4-hour chart. Last week, the price dipped close to the 100-day moving average at 0.64326, but bounced back after a weak US jobs report. This week, it dropped near the July 17 low at 0.64519. Although the price then rose above the 100-bar and 200-bar moving averages, it stalled near a swing point. Sellers regained control, causing the price to fall below the moving averages again.

Navigating Key Levels In The Market

Traders wanting to navigate this volatile market should keep an eye on key levels. The low at 0.6354 and high at 0.6594 might indicate a breakout from the current range. Important targets to watch are 0.6436 for the 100-day MA and 0.6452 for weekly lows. On the upside, monitor levels at 0.65109, 0.6526, and 0.6536, which sellers can use to gauge price movements. On August 7, 2025, the AUD/USD shows a familiar pattern, reminiscent of the choppy trading from mid-2024. The price is fluctuating without a clear trend, making it a trader’s market and increasing the risk of big, directional bets. Recent data highlights this uncertainty. The Reserve Bank of Australia kept rates steady at 4.35% this week, noting that inflation is slowing, but still remains high. In the U.S., the latest Non-Farm Payrolls report for July 2025 showed job growth slightly below expectations at 185,000, but not weak enough to change Federal Reserve policy. This tug-of-war is keeping the currency pair in a frustrating range. For derivative traders, this sideways market provides opportunities through volatility and range-bound strategies. One option could be to sell out-of-the-money call and put options to create an iron condor, allowing traders to collect premium while the pair remains volatile. The key is to set strike prices outside the expected trading range.

Key Psychological Levels And Immediate Term Strategies

Looking back to mid-2024, key psychological levels include major support at 0.6350 and resistance at 0.6600. While the current range is slightly higher, these historical points still serve as important psychological barriers. A strong break past these levels would suggest a significant shift in the market. In the short term, traders should observe the moving averages on shorter time frames. Sellers can use the 200-period moving average on the 4-hour chart, near 0.6685, to set their risk. Staying below this level keeps the focus on potential downside targets. If sellers maintain their hold, the first target would be the weekly low around 0.6610. Below that, the swing low from late July at 0.6580 provides a more significant support level. Buyers had an opportunity to push prices higher last week but failed, indicating a lack of strong conviction for a sustained rally. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The Bank of England (BoE) has lowered its policy rate by 25 basis points to 4%. This decision was made after a close vote of 5-4, taking two rounds of voting, marking a first for the Monetary Policy Committee. The BoE predicts that the Consumer Price Index (CPI) will peak at 4.0% in September 2025, while food price inflation is expected to reach 5.5% at the same time. They also forecast GDP growth of 1.25% in 2025, with growth of 0.1% in Q2 and 0.3% in Q3. In one year, the BoE anticipates a CPI of 2.7%, dropping to 2.0% within three years.

Pound Reacts to Rate Cut

After the announcement, GBP/USD increased by 0.4%, hitting 1.3413. The market is expecting more rate cuts, possibly lowering the rate to 3.8% by Q4 2025. BoE officials will need to balance slower growth with rising inflation when making future policy choices. They predict that private-sector wage growth will continue at a moderate pace over the next two years. The BoE faces the challenge of managing a slowing economy alongside rising inflation. The Monetary Policy Committee may have split votes on interest rate decisions moving forward. Governor Andrew Bailey is focused on a downward trend for interest rates while keeping an eye on changing economic conditions. The 5-4 vote to cut rates shows a divided Bank of England, indicating that future policy will be hard to predict. This creates opportunities for trading, with UK assets likely to see more volatility in the weeks ahead. The market appears to be preparing for another rate cut to 3.8% by the year-end, as seen in SONIA futures. Given the aggressive rate hikes of 2022-2023, this change in direction is notable despite the inflation forecast of 4.0%. This could present profitable opportunities, but the divided committee adds some risk.

Currency Strategies Amidst Uncertainty

The pound’s rise to 1.3413 following the announcement shows that the rate cut was less aggressive than some anticipated. It may be useful to employ currency options like straddles or strangles to take advantage of potential swings in GBP/USD. This strategy can benefit from significant price movements in either direction, which seems likely given the uncertain outlook. The BoE faces a challenging situation, needing to cut rates even with an inflation peak forecast of 4.0%. This situation echoes the stagflationary issues seen worldwide in the early 2020s. Recent data, such as the S&P Global/CIPS UK Manufacturing PMI dropping to 48.5 in July 2025, supports this sentiment of slowing growth and aligns with the bank’s easing stance, even amid price pressures. Governor Bailey’s focus on reducing rates suggests a clear long-term strategy, although the timing remains uncertain. As a result, we should consider longer-term interest rate swaps to prepare for a lower-rate environment over the next two to three years. In the meantime, we need to stay alert to upcoming wage growth and CPI data, as these may influence the next 5-4 vote. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The Bank of England (BoE) has lowered its Bank Rate by 25 basis points to 4%, causing an increase in the Pound’s value. However, this decision sparked disagreement within the monetary policy committee, where four members wanted to keep rates steady. The BoE mentioned that inflation might rise temporarily due to energy and food prices, with potential further increases expected next month. Still, they believe long-term pressures will align with their 2% inflation target. Even with high US tariffs, reduced trade uncertainties should slightly improve global demand.

Sterling’s Broad Appreciation

Following the BoE’s decision, the value of the Pound rose broadly, pushing the EUR/GBP lower from 0.8740 to below 0.8700. Overall, the pair remains volatile, fluctuating between 0.8600 and 0.8750 after increasing from a low of 0.8355 in May. The BoE reviews its interest rate at each of its eight annual meetings, typically resulting in a hawkish stance that strengthens the Pound. The nine-member Monetary Policy Committee sets the interest rate to meet the BoE’s inflation goals. The current rate is 4%, which matches the Consensus but is lower than the Previous rate of 4.25%. Considering the Bank of England’s decision, we view the rate cut to 4% as a “hawkish cut,” given the significant dissent. The Pound’s immediate strength indicates that the market recognizes the uncertainty around future rate cuts, as four out of nine members wanted to keep rates unchanged. This division suggests that upcoming policy decisions will be debated and depend heavily on data. Recent inflation data further supports the dissenters’ caution and complicates our outlook. The Office for National Statistics reported that the Consumer Price Index (CPI) for July 2025 unexpectedly rose to 3.2%, driven by ongoing core service price pressures. This persistence in inflation, significantly above the 2% target, makes short-term rate cuts less likely and could support the Pound.

Strategies for Traders

For traders focusing on currency pairs, the EUR/GBP decline below 0.8700 is noteworthy. The pair has been unpredictable since it climbed from a low of 0.8355 in May 2025. With the BoE appearing more hawkish compared to the European Central Bank, we expect a possible test of the lower end of the recent 0.8600-0.8750 range. This uncertainty in policy signals likely increased volatility in the upcoming weeks. We anticipate that implied volatility on sterling options will rise as the market speculates on the BoE’s next move before their September meeting. Traders should prepare for larger price fluctuations in the Pound. Given this situation, we recommend considering strategies that capitalize on this expected movement. Buying option straddles or strangles on the Pound could be a smart way to trade the uncertainty without committing to a specific direction. This strategy allows you to make gains whether the Pound rises due to hawkish news or falls if economic data weakens unexpectedly. For those already invested, protecting against downside risk is essential. Even with optimism around reduced trade friction with the US, global demand remains delicate. We suggest using put options to safeguard long sterling positions from an abrupt downturn. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

USDCAD is currently showing indecision, trading between important moving averages as it stays within a certain range. Traders are waiting for a clear breakout. On the 4-hour chart, the price is fluctuating between crucial moving average levels. On Tuesday, the price reached a high of 1.37954 at the 100-day moving average, where sellers created resistance. Today, it briefly dipped below the 100-bar moving average at 1.37305, but buyers quickly stepped in to prevent further drops. The price range from 1.3749 to 1.3758 has been attracting buying and selling interest consistently.

Key Technical Levels

The key technical levels are support at the 100-bar moving average on the 4-hour chart at 1.37305 and resistance at the 100-day moving average at 1.37954. The important swing zone is between 1.3749 and 1.3758. USDCAD is stuck between these moving averages, indicating a tussle between buyers and sellers. A shift in momentum isn’t likely until there’s a breakout above or below the 100-day or 100-bar moving averages. Without clear movement, traders should focus on tactical trades within this range. As of today, August 7, 2025, USDCAD finds itself in a narrow channel, showcasing market uncertainty. The pair is trapped between the resistance at the 100-day moving average near 1.3795 and the support at the 100-bar moving average around 1.3730. This tight range indicates a period of consolidation before the next big move.

Economic Data and Trading Opportunities

This stagnation comes as recent economic data presents mixed signals. Last week’s US Non-Farm Payrolls report for July 2025 showed an increase of 210,000 jobs, giving the US dollar some support. However, this wasn’t enough to trigger a breakout as the market also considers the Bank of Canada’s next actions. On the Canadian side, WTI crude oil prices are steady at around $85 per barrel, providing support. July’s inflation reading in Canada was 2.9%, slightly above target, but it continues the cooling trend observed since the highs of 2024. This economic context helps explain why sellers haven’t broken the 1.3730 support level. For derivative traders, this low-volatility environment offers unique opportunities in the coming weeks. With one-month implied volatility on USDCAD options dropping to just 5.8%, strategies like short strangles or iron condors could be beneficial. These positions would profit if the pair remains within the 1.3730 to 1.3795 range as we head into September. We have seen similar range-bound behavior before, especially during the fourth quarter of 2024, preceding a sharp trend. A catalyst, likely from upcoming central bank meetings next month, will probably be required to trigger a breakout. Until then, expect range-trading strategies to prevail. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The USDJPY is currently trading in a range defined by moving averages. The market looks uncertain, with no clear direction. Throughout the week, prices have moved between significant technical levels on the 4-hour chart.

Price Action Analysis

Earlier this week, the pair started below the 100-bar moving average, tried to break through, but encountered selling pressure. This caused a drop to the 200-bar moving average at 146.725, where buyers stepped in and prices bounced back, a pattern that has repeated several times this week. Yesterday, the pair climbed but again could not surpass the 100-bar moving average at 147.944 and pulled back. Today, it tested the 200-bar MA for the second time this week, finding support and rising to 147.44, which is between the 200-bar support and 100-bar resistance. Traders are operating within this range, respecting the limits set by moving averages but not making strong commitments beyond them. A breakout above 147.944 or below 146.725—with momentum—could start a new trend in one direction. Until then, we can expect ongoing two-way flows and tactical trading in this range. The USDJPY pair is moving sideways, stuck between its key moving averages. This indecisiveness reflects uncertainty in the market about future actions from central banks. Traders are buying near the 200-bar support at 146.725 and selling near the 100-bar resistance at 147.944.

Trading Strategies and Market Outlook

The US dollar is finding support from recent economic data, which helps explain the bounces from the lower end of the range. For example, last week’s July inflation report came in slightly above expectations at 2.8%, making a Federal Reserve rate cut less likely. This fundamental strength is providing support for the pair for now. However, the risk of intervention from Japan limits any significant upward movement. We are nearing levels that triggered major action from the Bank of Japan in late 2022. Officials have already warned against rapid yen depreciation, keeping sellers active near the 147.944 resistance level. For derivative traders, the narrow range suggests that selling volatility could be a good strategy right now. Selling strangles—where you sell both an out-of-the-money call option and an out-of-the-money put option—allows traders to earn premium as long as the pair stays within those limits. Given the current indecision, this can be an appealing short-term strategy. Alternatively, traders anticipating an end to this quiet period can prepare for a breakout. Buying a straddle or strangle positions traders for a significant price swing in either direction, which might follow a decisive break from the current range. This strategy keeps initial costs clear while offering good potential upside if momentum picks up. Looking ahead, we’re watching for the late August central bank symposium, which could provide the catalyst needed to break the current stalemate. Until a sustained move above resistance or below support occurs, expect the choppy two-way flows to persist. Be ready for increased volatility if any of those critical moving average levels breaks. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The Canadian Dollar has risen slightly, gaining 0.1% today, but it still lags behind the Australian Dollar and New Zealand Dollar, both of which have increased by about 0.4%. Crude oil prices have steadied, but recent drops could weigh down the Canadian Dollar. The fair value of USD/CAD has dipped to 1.3618, although ongoing trading uncertainties might affect its path toward stability. The July Ivey PMI numbers are coming out soon, following June’s figure of 53.3. Since the end of July, the USD/CAD has given back about half of its previous gains. The current trading is hovering around the 50% Fibonacci retracement support level at 1.3728, indicating possible short-term stability. However, recent weakness in the USD could lead to further declines, with resistance expected between 1.3775 and 1.3800. The Canadian Dollar is struggling compared to other commodity currencies, which is expected given recent market conditions. West Texas Intermediate crude oil prices fell below $75 a barrel this week due to worries about slowing global demand. This situation pressures the Loonie, making it less attractive than other currencies. Canadian economic data is not proving to be very supportive either. The latest Ivey PMI for July was just released at 51.5, a significant drop from June’s 53.3 and below what analysts expected. This follows last week’s jobs report for July, which revealed weaker-than-expected job growth, suggesting a slowing Canadian economy. Looking back at late July 2024, the USD/CAD pair had a strong rally before losing about half of those gains. While it is finding temporary support around the 1.3728 level, the overall economic outlook indicates the US dollar may be stronger. The different economic growth rates between the US and Canada could push this pair higher. For those trading derivatives, this climate suggests that betting on further Canadian Dollar weakness in the next few weeks is a smart move. One strategy could be to buy USD/CAD call options with strike prices just above 1.3800. This would let us take advantage of a potential breakout while keeping our risk limited to the premium we pay. Another option would be to consider the volatility and sell out-of-the-money USD/CAD put options. For example, selling puts with a strike price near 1.3650 would indicate a belief that the pair won’t drop below that level soon. This approach allows us to earn premium income, reflecting confidence that support will hold.

here to set up a live account on VT Markets now

Bank of England Governor Andrew Bailey shared the Monetary Policy Report, announcing a 25 basis point cut to the policy rate in August. He pointed out a decline in wage and price pressures and urged caution regarding rapid rate reductions. Bailey is optimistic that the recent rise in inflation won’t last. He indicated that a slow return to normal pay growth could help lower services price inflation but also warned about the potential risks from rising prices. The Bank of England (BoE) manages monetary policy in the UK and aims to keep inflation at 2%. They adjust lending rates to influence interest rates and the value of the Pound Sterling. When interest rates are high, the UK becomes more attractive to foreign investors, especially if inflation is above target. On the other hand, if inflation is low, the BoE might reduce rates to boost borrowing and investment, which could weaken the Pound. Quantitative Easing (QE) involves the BoE increasing credit flow during economic downturns, which generally weakens the Pound. Quantitative Tightening (QT), the opposite, halts bond purchases and often strengthens the Pound when the economy is improving. The recent decision to cut rates signals a new phase for UK assets. This first cut of 25 basis points was clear but comes with a warning against expecting rapid cuts. This hints at a period of price fluctuations and uncertainty for traders in the upcoming weeks. The economic data backs this cautious stance. Recent numbers show the UK economy is weak, with GDP growth at just 0.1% for the second quarter of 2025. Although inflation is slightly above target at 2.4%, the drop in wage growth to 4.0% gives the Bank some breathing room. For those trading the Pound, we believe the trend might head downwards, but it won’t be a straight path. The cautious outlook may prevent a major drop in the currency, presenting chances to sell if it strengthens around the 1.2450 mark against the dollar. Historical trends show that initial cuts often lead to uneven trading before a clear direction emerges. The uncertainty around future rate cuts encourages trading volatility. The market sees only a small possibility of another cut in September, so options premiums on sterling may rise. We recommend strategies that take advantage of price fluctuations rather than speculating on a specific direction for the coming weeks. In the interest rate markets, the stage is set for lower rates over time. We find opportunities in derivatives tied to the SONIA rate to position for this steady decline. While the short-term outlook is held by the Bank’s cautious approach, futures for early 2026 suggest further easing is likely justified. Looking ahead, we’ll focus on new data, particularly the inflation and employment reports coming in September. Significant weakness in these reports would greatly increase the chances of another rate cut this autumn. Therefore, we must be ready to respond swiftly if the UK economy cools faster than the Bank of England expects.

here to set up a live account on VT Markets now

The U.S. Treasury held an auction for $25 billion in 30-year bonds, with a high yield of 4.813%. The WI level was at 4.792%, resulting in a tail of 2.1 basis points, compared to a six-month average of -0.2 basis points. The auction’s bid-to-cover ratio was 2.27X, lower than the six-month average of 2.38X. Direct bidders made up 23%, and indirect bidders accounted for 59.5%. Both groups were below their averages of 24.2% and 61.9%. Dealers took 17.5%, which is above the six-month average of 13.9%.

Low Demand In The Auction

Overall, demand in the auction was low, with all key metrics falling short of the six-month averages. The performance of the auction received a grade of D. Recent auctions for three-year and 10-year notes had mixed results, with the 10-year auction performing below average. At the same time, U.S. stock indices had mixed results: the NASDAQ gained 0.14%, while the S&P index fell by 0.26%. Today’s 30-year Treasury auction results are disappointing, earning a D grade. Key demand indicators from both domestic and international buyers were below recent averages, forcing dealers to take on a larger share. This shows the market is struggling to manage the supply of government debt at these levels. This weakness aligns with recent broader economic data. The July 2025 CPI report indicated core inflation rose to 3.8%. This rise has stopped the Federal Reserve from hinting at potential rate cuts. Persistent inflation makes long-term bonds less appealing and suggests yields may need to increase to attract buyers.

Strategies For Traders

For derivative traders, this situation calls for a more cautious approach in the upcoming weeks. We should consider buying put options on broad market indices like the S&P 500 as a hedge. Rising long-term rates increase corporate borrowing costs and affect equity valuations, creating challenges for stocks. We witnessed a similar situation in 2022 when rising yields drove the bear market in equities. Today’s weakness in the NASDAQ, even on a quiet day, shows the market has not forgotten this lesson. Technology and growth sectors are especially at risk when long-term interest rates rise. Another tactic is to expect increased market fear by buying call options on the VIX. The VIX is currently at a calm level of 16, but today’s bond auction could trigger volatility. A sharp rise in yields often precedes a spike in the VIX, as equity investors rush to hedge. In the bond market, prices seem to be trending lower. With poor demand noted in both the 10-year and 30-year auctions this week, the momentum favors short positions in Treasury futures like the /ZB. We would need to see a significant uptick in demand metrics before reassessing this stance. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now