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In June, Brazil’s retail sales declined by 0.1%, missing the expected increase of 0.7%
Brazil’s retail sales data for June shows a slight decline of 0.1% compared to the previous month. This is lower than the expected growth of 0.7%.
The EUR/USD remains stable above 1.1700, supported by a weaker USD and a positive risk mood following July’s inflation reports. The GBP/USD has climbed to multi-week highs, exceeding 1.3550, driven by shifting risk sentiments and anticipated remarks from Federal Reserve officials.
Gold is experiencing modest gains, trading above $3,350, but is struggling to gain momentum. While there is optimism about a dovish stance from the Federal Reserve, improving risk sentiment limits these potential gains.
EUR/USD holds gains above 1.1700 after a two-day rally ahead of the US session opening
The EUR/USD rate is currently above 1.1700, reaching a two-week high of 1.1730 just before the US session begins. This rise is supported by moderate US Consumer Price Index (CPI) figures and expectations of a Federal Reserve rate cut in September.
In July, consumer inflation stayed stable, showing little impact from tariffs while the job market softens, which may lead to the Fed easing its monetary policy. Concerns exist regarding President Trump’s choices for central bank officials and how they might influence monetary policy, putting additional pressure on the US Dollar.
Euro Performance Against Major Currencies
With reduced expectations for rate cuts, market risk appetite has improved, likely affecting currency movements. Anticipated comments from Fed officials should provide more insight. The Euro has gained strength against several currencies, with significant gains against the US Dollar. Data shows the Euro’s performance against other major currencies. The recent US CPI data indicates that tariffs aren’t heavily impacting the economy, offering the Fed some flexibility in policy adjustments. Despite steady inflation figures, the market is leaning towards a Fed rate cut. Fed officials currently differ on inflation and rate policies, with the probability of a September rate cut climbing to 95%. German price indices show minimal effects on the Euro. The upward trend for EUR/USD continues, but resistance levels may influence its direction. With a 95% chance of a Federal Reserve rate cut in September, the outlook for the US Dollar appears bearish. This weakness is primarily driving the strength of EUR/USD, creating a clear trend to follow. It’s important to position ourselves for this anticipated policy shift in the coming weeks. Given this situation, buying September EUR/USD call options seems like a solid strategy. Targeting strike prices around 1.1800 or 1.1850 enables us to profit if the upward trend continues through the September 17th FOMC meeting. This strategy lets us participate in potential gains while limiting risks to the premium paid.Strategies for Trading EUR/USD with Fed Movements in Mind
This trade is backed by recent economic data that reflects familiar patterns. The July Non-Farm Payrolls report disappointed at 160,000, reinforcing the idea of a “softening labor market.” This reminds us of mid-2019 when the Fed began easing despite inflation not being critically low, which helped boost risk assets and currencies like the Euro against the Dollar. For traders seeking to lower the upfront cost of options, a bull call spread can be a smart choice. Buying a 1.1750 strike call while simultaneously selling a 1.1900 strike call, both with September expirations, caps potential profits but significantly reduces initial spending, making it an efficient way to express a moderately bullish outlook. However, we must stay alert to risks posed by divided Fed officials and technical resistance levels. To hedge against a surprise hawkish stance, we could allocate some capital to buy out-of-the-money puts with a strike around 1.1600. This acts as a safety net if market sentiment changes unexpectedly before the Fed meeting. Currently, implied volatility on EUR/USD options is high ahead of the Fed’s expected decision. This creates opportunities for traders who think the rate cut is already priced in. Selling a short-dated straddle or strangle right before the announcement might be profitable if the pair’s movement after the decision is less volatile than anticipated. Create your live VT Markets account and start trading now.Pound Sterling outperforms US Dollar as investors await UK Q2 GDP data
The Pound Sterling has strengthened against major currencies as investors await the UK’s Q2 GDP data. Forecasts predict economic growth of just 0.1%, a drop from last quarter’s 0.7%. Yearly growth is estimated at 1%, which is below the Bank of England’s prediction of 1.25%. In Q1, the annual growth was 1.3%.
With GDP slowing down, the Bank of England may face increased pressure, especially with soaring inflation concerns. Recently, the Bank raised its Consumer Price Index (CPI) forecast from 2.4% to 2.7%. Furthermore, the labor market is cooling, with job vacancies falling by 44,000 to 718,000 from May to July. July also witnessed a decrease of 8,000 in payrolled employees.
Sterling Gains Amid USD Selling Pressure
The Pound rose to about 1.3565 against the US Dollar as the USD faced selling pressure linked to possible Federal Reserve rate cuts in September. The US Dollar Index dropped to 97.70, marking a two-week low. The chances of a rate cut in September have increased to 94% after a modest CPI increase was reported. From a technical perspective, the Pound shows bullish potential against the USD, staying near 1.3570. Indicators suggest more upward movement ahead, with crucial support at 1.3140 and resistance around 1.3790. Upcoming speeches from Fed officials may shed light on future US monetary policy. Today, the Pound Sterling appears strong against the US Dollar, but this could be misleading for the weeks ahead. Official Q2 GDP figures released this morning indicate the UK economy stalled at 0.0% growth, a sharp decline from the 0.7% growth seen in Q1. This stagnation, along with a cooling labor market, raises concerns about the UK’s economic health. The Bank of England finds itself in a tough position, reminiscent of the challenges in 2022 and 2023. The latest CPI data for July 2025 showed a surprising 2.9%, exceeding the Bank’s own forecast of 2.7%. This puts them in a tough spot: raise rates to combat stubborn inflation or support a stagnant economy.Volatility and Trading Strategies
The clash between slowing growth and high inflation leads to volatility for the Pound. For traders dealing in derivatives, there are opportunities to profit from sudden price changes by using strategies like buying straddles or strangles on GBP currency pairs. The economic data is sending mixed signals, making it hard for a clear trend to develop. Much of the Pound’s current strength comes from the weakness of the US Dollar rather than solid confidence in the UK economy. The market now anticipates a 94% chance of a Federal Reserve rate cut in September, a sentiment reinforced by Fed Chair Powell’s recent dovish comments at the Jackson Hole symposium. The US Dollar Index continues to fall, recently reaching a low of 97.55. Considering the negative UK economic data, the GBP/USD exchange rate nearing resistance around 1.3790 presents a chance to prepare for a potential decline. We believe breaking this level will be challenging as the realities of the UK’s economic condition may outweigh the influence of a weak dollar. Buying put options on the Pound or selling futures near this resistance could be wise. Looking ahead, all attention will be on the Bank of England’s next monetary policy meeting. Their statement will be key in signaling whether they will focus on inflation or growth. Any dovish wording that hints at a pause or concern for the economy could quickly reverse the Pound’s recent gains. Create your live VT Markets account and start trading now.Crude oil futures drop to $62.65, staying below key moving averages and showing seller dominance
Recent Oil Inventory Data
Recent oil inventory data shows a big increase in crude oil stocks. U.S. crude oil inventories rose by 3.036 million barrels, while a drop of 0.275 million barrels was expected. Crude oil prices have reached their lowest level since early June 2025. Sellers are clearly in control of the market, with prices sitting at $62.65. This is significantly below key technical levels like the 100-day average, indicating that further price declines are likely. Traders should view this as a strong sign of ongoing bearish momentum. The unexpected rise of over 3 million barrels in U.S. inventories is a major bearish factor, especially since the market had anticipated a decrease. This is unusual for mid-August, a time when summer driving typically reduces stockpiles. Last year in 2023 and 2024, we saw significant inventory draws during the same period. This shift suggests that demand might be weaker than previously thought.Key Levels to Watch
On a global scale, concerns about slowing economic activity in China are impacting demand expectations. Recent data shows that China’s manufacturing sector is still struggling, which lowers forecasts for oil consumption. This broader economic weakness is contributing to the current price drop. In the coming weeks, buying put options with strike prices around the $60 level could be a smart strategy. This allows traders to benefit from further price declines while managing risk. Bear put spreads may also be a good option to reduce the initial cost. A crucial level to observe is $65.27, the recent swing high. If prices break above this level, it would suggest that buyers are gaining control, signaling a good time to exit bearish positions. Until then, any rallies toward the $64 mark should be seen as chances to sell. We should also keep an eye on the Atlantic hurricane season, which has been calm so far this year. Any major storm that threatens production in the Gulf of Mexico could lead to a quick price surge, posing a risk to short positions. Monitoring weather forecasts is vital for effective risk management. Create your live VT Markets account and start trading now.GBP/USD bulls surge, nearing key resistance levels of 1.3588 and 1.3618
The GBP/USD currency pair is on the rise, getting close to important levels at 1.3588 and 1.3618. This upward movement is fueled by a weaker US dollar and UK job data that doesn’t push the Bank of England to cut interest rates soon.
After breaking the key 1.3500 level, GBP/USD rose about 0.5% on Tuesday and stayed above 1.3550. Even with signs that the currency might be overbought, a drop could be pushed back if market sentiment remains strong.
The US Dollar and Inflation Data
The decline of the US Dollar has helped GBP/USD to climb. Recent US inflation data matched market expectations that the Federal Reserve will take a softer approach to policy for the rest of the year. It’s important for users to do their own research before trading foreign currencies, as it can be risky. Leverage can increase both potential gains and losses. If needed, seek financial advice. All risks, losses, and investment costs, including total loss of principal, are the responsibility of the user. The Pound Sterling is gaining strength against the US Dollar, now testing levels above 1.3550. This rise is due to a weaker dollar and positive UK economic data. The latest UK jobs report from early August 2025 shows unemployment steady at a low 3.8%, giving the Bank of England little reason to cut rates anytime soon.Strategic Considerations for Traders
The US Dollar’s drop is driven by market expectations of a more cautious Federal Reserve. This was confirmed when the US inflation rate for July 2025 fell to 2.9%, solidifying the view that the Fed will likely keep rates steady for the rest of the year. This vibe is boosting currencies like the Pound. Since the pair is technically overbought, a simple long position could be risky because of a potential sharp pullback. Instead, traders may want to consider buying call options. This can help limit losses while still allowing participation in any further gains toward the 1.3618 resistance level. This strategy lets traders profit if the bullish trend continues while also keeping risks in check if prices fall. Caution is advised because this type of policy divergence can lead to market volatility. For example, in late 2021, similar expectations for the Fed and the Bank of England caused erratic price movements before a clear trend emerged. So, any positions should be managed with protective stops or defined-risk options. Create your live VT Markets account and start trading now.Bostic suggests a potential policy adjustment delay because of a strong labor market, despite ongoing challenges.
Atlanta Fed President Rafael Bostic is discussing the economy. Even though many expect a rate cut in September, Fed members are wary due to the strong job market. Bostic points out that lower to middle-income consumers are feeling stressed, which is starting to impact higher-income groups. However, those with higher incomes seem to be doing well.
Current Economic Insights
Smaller businesses are facing more challenges than larger ones, and there’s a rise in credit card usage, showing how consumers are behaving. The Atlanta Fed’s GDPNow forecasts a 2.5% growth for the third quarter, with a revision due on Friday. The sticky-price consumer price index, which tracks items with slower price changes, increased by 4.6% annually in July, up from 4.3% in June. From last year, the index is up 3.4%. Excluding food and energy, the core sticky-price index rose 4.8% annually in July, with a 12-month increase of 3.4%. While the market is betting on a rate cut in September, there are hints of caution from the Fed. The main worry is persistent inflation, which jumped to a 4.6% annual rate in July. This indicates that underlying price pressures are hard to manage, suggesting the Fed might hold off. The weaker jobs report for July revealed only 155,000 payroll increases versus expected 190,000, boosting rate cut speculation. However, new Consumer Price Index data shows headline inflation at 3.3% year-over-year, slightly above predictions. This mix of slowing job growth and ongoing inflation leads to uncertainty that the market may be overlooking.Investment Strategies Amid Economic Uncertainty
We’re noticing increased stress among consumers and small businesses, a vital sign for the economy’s future. Total household credit card debt just hit a record $1.25 trillion in Q2 2025, with delinquency rates rising to their highest since 2012. This growing reliance on credit indicates that consumer strength is weakening. Considering this situation, traders in derivatives might want to set up positions that could benefit if the Fed surprises everyone by keeping rates steady in September. This could include options on short-term interest rate futures linked to SOFR, which currently don’t factor in the risk of a hawkish pause. A cost-effective way to prepare for this is by buying out-of-the-money put options on December 2025 SOFR futures. If the Fed does not cut rates, we might see increased market volatility and a drop in stock prices. Traders could buy VIX call options, which are currently priced for low volatility, to take advantage of a potential market shock. Additionally, purchasing put options on major indices like the S&P 500 or Nasdaq 100 provides a direct way to bet on a market downturn. We’ve witnessed similar scenarios before, like in late 2018 when the Fed raised rates against market expectations, leading to a significant drop in equity prices. The present situation, with high persistent inflation and a Fed that says it can wait, reminds us of that time. This historical context suggests the risk of a hawkish surprise is greater than the market thinks. Create your live VT Markets account and start trading now.Gold price (XAU/USD) hovers around $3,360 during European trading, showing a slight increase
Gold prices (XAU/USD) are on the rise, reaching nearly $3,360 during the European session. This increase comes as US Treasury yields drop 1.2% to about 4.26% due to heightened expectations for a Federal Reserve interest rate cut.
The latest US Consumer Price Index (CPI) data shows tariffs have little impact, strengthening predictions for a rate cut in September. The CME FedWatch tool now suggests a 94% likelihood of a rate cut, up from 86% earlier this week.
Symmetrical Triangle Pattern
A weaker US Dollar is also lifting gold prices, which are fluctuating within a Symmetrical Triangle pattern. This pattern indicates possible volatility, with resistance levels at $3,500, $3,550, and $3,600, and support levels at $3,200 and $3,121. Gold has always been seen as a store of value and a safe haven for investors. Central banks, especially in emerging markets like China and India, have boosted their gold reserves, adding 1,136 tonnes in 2022. Gold prices often move in the opposite direction of the US Dollar and Treasuries. Prices rise when the Dollar weakens and fall when risk assets do well. Gold’s value is also swayed by geopolitical events, interest rates, and the strength of the US Dollar. As gold approaches $3,360, we have a clear opportunity driven by decreasing US Treasury yields. The market is largely anticipating a Federal Reserve rate cut in September, creating a favorable environment for non-yielding assets. Our focus should be on strategies benefiting from this expected monetary easing. With a 94% chance of a rate cut, it’s wise to prepare for more upside in gold. Buying call options with strike prices near the $3,500 resistance level could be a leveraged way to profit if a breakout occurs. This strategy positions us to gain if gold continues its rise in the upcoming weeks.Bullish Outlook and Trading Strategies
This optimistic outlook is supported by recent economic data. Last week, the US Bureau of Labor Statistics reported nonfarm payrolls grew by only 145,000, below expectations. This suggests a slowing labor market, putting pressure on the Fed to make a move. Additionally, the World Gold Council’s Q2 2025 report confirmed that central banks have been active buyers, adding another 220 tonnes to global reserves. However, we must remain cautious about the Symmetrical Triangle pattern gold is trading in. This pattern often signals high volatility and significant price movement in either direction. Therefore, it’s wise to prepare for a major price swing. To trade this potential volatility, we could use a long straddle strategy, which involves buying both a call and put option at the same strike price and expiration date. This allows us to profit from large moves, regardless of whether gold climbs toward $3,600 or falls below support. This strategy directly plays off the triangle pattern that may resolve around the September Fed meeting. Historically, we saw a similar situation in summer 2019 when the Fed began cutting rates after a period of increases. Gold surged more than 15% in the months after that first rate cut, indicating that the start of a Fed easing cycle can significantly boost gold prices. To manage risk, we should keep an eye on key support levels at $3,200 and the crucial level at $3,121. A clear drop below these levels would indicate our bullish outlook may be incorrect, prompting us to exit our long positions. Allocating some capital to buy protective put options below these levels can offer valuable insurance against unexpected downturns. Create your live VT Markets account and start trading now.Bullish sentiment in Asia-Pacific markets drives record intraday highs for Nikkei 225 and S&P/ASX200
Japan’s Nikkei 225 and Australia’s S&P/ASX 200 hit new intraday highs, thanks to positive market feelings across the Asia-Pacific region. In Tokyo, excitement is growing as top Japanese companies raise their earnings forecasts, expecting less impact from U.S. tariffs than they first thought.
In Sydney, the Australian stock market continued its upward trend, marking its second straight session of all-time highs. This surge comes just before a Reserve Bank of Australia meeting, which could influence both local stocks and the Australian dollar.
Nikkei 225 and Yen Impact
Japan’s Nikkei 225 reached a new intraday record as concerns about trade eased, thanks to positive earnings updates from Japanese companies. These updates follow the U.S. decision to delay increasing tariffs on China, allowing Japan to save ¥10 trillion from reduced tariff rates. Sony and Honda raised their forecasts positively. They benefited from a 4.5% drop in the yen against the U.S. dollar since April, which increased their export earnings. The Nikkei has jumped over 35% during this time due to currency shifts. The S&P/ASX 200 also reached new heights, driven by hopes for better global trade after President Trump postponed the tariff deadline for China. This is vital for Australia, as China is its top export market. Still, potential future U.S. tariffs could threaten Australian exporters. For now, positive expectations for U.S.-China relations and a stable tariff situation are boosting Australian stocks to record levels.Australia Market Strategies
With the strong market in Japan, we should note that the conditions from the late 2010s still persist. The yen has slid further against the dollar, recently trading around the 155 mark, creating a big advantage for Japanese exporters. This trend makes it sensible to consider bullish positions on the Nikkei 225, likely using call options, in the upcoming weeks. Looking back, the 4.5% drop in the yen following the 2019 U.S. tariff deadline extensions was a sign of a longer-term change. Today, we can utilize derivatives to trade this weakness directly, such as by buying USD/JPY call options. This strategy takes advantage of the dollar’s strength against the yen, a trend that has supported corporate earnings for years. In Australia, the S&P/ASX 200 is still testing record highs near 8,100, propelled by trade optimism that has been building for years. However, the situation has changed domestically, as the Reserve Bank of Australia has raised its cash rate to 4.50% to fight inflation. High rates usually pressure stock valuations, creating tension. This context makes the next RBA meeting crucial for market trends. We should brace for more volatility by exploring strategies like long straddles on the S&P/ASX 200 index (XJO). This strategy could be rewarding if the market moves sharply in either direction after the RBA’s announcement. The positive earnings updates from companies like Sony and Honda during Trump’s presidency show how sensitive these markets can be to global trade. While previous tariff worries have eased, new risks involving geopolitical supply chains have surfaced. Thus, balancing our bullish positions with protective put options on key industrial or tech indices could serve as a wise hedge. Create your live VT Markets account and start trading now.Bank of Canada members emphasize the need for clearer guidance before making monetary policy decisions
Before the Bank of Canada’s rate decision on July 30, the Governing Council had mixed opinions about needing more monetary support. Some members thought existing measures were enough, while others felt additional aid might be necessary.
The Council chose to delay their decision, looking for clearer signs that inflation expectations were stable. They noted concerns that changes in the global trading landscape could lead to lasting inflation.
Underlying Inflation Factors
The strength of underlying inflation played a key role in their rate decision. The Council found that the impact of reduced export demand on business investment, jobs, and household spending was minimal. In currency markets, USDCAD is trading between the 100-bar moving average on the 4-hour chart (1.37433) and the 100-day moving average (1.3778). Traders are observing these levels for any potential shifts. Following the mixed opinions from the Bank of Canada’s July 30 meeting, the central bank appears to be at a standstill, creating a buildup of pressure for the Canadian dollar. While some members felt current monetary policy was adequate, others anticipated a need for more support, prompting them to wait for clearer economic signals. This uncertainty is why USDCAD has stayed within a narrow range. This wait-and-see stance means that upcoming economic data will significantly influence the market. The July Consumer Price Index report, released on August 11, 2025, showed inflation rising to 3.1% year-over-year, slightly above expectations and reinforcing the Bank’s worries about strong underlying inflation. This unexpected rise supports those cautious about easing policy, putting upward pressure on the Canadian dollar in the near term.Resilience of the Domestic Economy
The domestic economy also seems strong. The latest Labour Force Survey for July reported the unemployment rate steady at 6.2%, with an increase of 28,000 jobs. The limited negative effects from weaker export demand, mentioned in the minutes, align with this stable employment situation. This reduces the urgency for the Bank of Canada to consider rate cuts compared to other central banks around the world. For derivative traders, this period of low realized volatility but high potential for movement suggests that selling options may be risky. Instead, buying volatility through strategies like long straddles or strangles on USDCAD should be considered, especially with major data releases or the September 10 Bank of Canada meeting approaching. These strategies can profit from significant price changes in either direction when the Bank is forced to make a decision. The key technical levels to watch are the 100-bar moving average on the 4-hour chart around 1.3743 and the 100-day moving average near 1.3778. A clear break and close outside this range, likely triggered by the next inflation or employment report, will indicate the market’s next direction. We are prepared for this potential breakout, as this uncertainty cannot last indefinitely. On the other side of the exchange rate, comments from US Federal Reserve officials have raised concerns about softening consumer demand, indicating a possible policy divergence. If the Fed leans towards a more cautious approach while the Bank of Canada remains focused on data and inflation, it could lead to a significant drop in USDCAD. This divergence forms a crucial part of our trading strategy for the upcoming weeks. Create your live VT Markets account and start trading now.The 1.1700 area is crucial for buyers, impacting short-term momentum and price direction.
The EURUSD experienced a dip in the early U.S. session, briefly falling below the support level of 1.1698–1.1703. It dropped to 1.1692 before bouncing back above 1.1703, reaching a high of 1.1723 during the session.
Even with this recovery, the momentum has slowed, and the price is starting to decline again. The 1.1698–1.1703 range remains a crucial short-term level. Support in this zone suggests upward potential, but if the price falls below this level, it could lessen its attractiveness to buyers.
