Economic Indicators Analysis

Before the July decision, the Bank of Canada considered factors like persistent inflation and strong job growth. The USD/CAD pair must clearly drop below 1.3760 to maintain gains and test support at 1.3720/30, with resistance at 1.3810/15. The article offers forward-looking statements. It advises individuals to do thorough research before making investment choices, highlighting that risks can lead to a total loss of capital. The views expressed belong to the authors and may not reflect any official policy. The author currently holds no positions in the mentioned stocks and has not received compensation from the related companies. The Canadian Dollar is facing challenges, even as the US Dollar weakens. Other currencies have made significant gains, but the loonie’s progress is limited. This indicates a particular challenge for Canada that we should note. Historically, major Canadian pension funds, like OTPP and La Caisse, reduced their US Dollar exposure during 2024. This shift shows a long-term move away from US assets by key players, and it’s essential to consider this context as we assess the current market.

Market Position and Strategies

This weakness is evident in the latest data from July 2025. Canada’s inflation dropped to 2.8%, but the economy lost 15,000 jobs, raising unemployment to 6.4%. Compared to the stronger job market and persistent inflation of mid-2024, the current figures suggest the Bank of Canada might need to lower rates sooner than the US Federal Reserve. Given this difference, we anticipate more volatility in USD/CAD in the coming weeks. Traders should consider strategies that benefit from price fluctuations, such as buying straddles or strangles. This approach can lead to profits whether the pair moves sharply up or down as autumn approaches. For those with a specific outlook, the likely trend is a higher USD/CAD. The previous resistance level near 1.3815 seems like a reasonable short-term target. Buying call options on USD/CAD or utilizing call spreads could be a good way to position for further Canadian Dollar weakness with a defined risk. It’s essential to recognize the underlying risk, as unexpected economic data can quickly change the trend. Using stop-losses on any futures positions is important for managing downside risk. Hedging existing short USD/CAD positions with out-of-the-money call options is also a wise strategy right now. Create your live VT Markets account and start trading now.

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The US Dollar is currently losing value, influenced by a few different factors. A recent report on the US Consumer Price Index showed mixed results, causing the dollar’s value to drop initially. President Trump has criticized Fed Chair Powell and discussed possible lawsuits, further impacting the dollar’s situation. Additionally, Trump’s nominees for key economic positions have commented on inflation and how data is reported.

Treasury Secretary Comments

Treasury Secretary Bessent hinted at a possible 50 basis point interest rate cut in September, based on the latest inflation data. This raises questions about the Federal Reserve’s independence and its future rate decisions, especially with inflation still hovering around 3%. The DXY index saw some sell-offs, confirming its resistance levels. If it falls below the support level of 97.70, it could indicate ongoing losses for the USD, leading attention to Fed rate policy and rate differentials. The US Dollar is weakening as discussions about lowering interest rates increase. The latest inflation report reveals that consumer prices are still up 3.1% from a year ago, which puts the Federal Reserve in a tough spot. This situation reminds us of the pressures the Fed faced in 2019 when its rate policies were openly questioned.

Strategies in the Current Economic Climate

Given the current environment, we should think about buying put options on dollar-tracking funds, betting on further declines. If the Fed hints at a rate cut during its September meeting, despite inflation staying above their 2% target, the dollar could drop sharply. Historically, periods of high political influence over the Fed have led to significant volatility in the dollar. We are paying close attention to the DXY index, which is now testing the 103.50 support level. A strong drop below this level could indicate that the dollar is entering a new downward trend, shifting focus to the interest rate differences between the US and other central banks. This makes strategies like purchasing call options on the Euro against the Dollar (EUR/USD) particularly appealing in the coming weeks. A weaker dollar and the possibility of lower interest rates also benefit commodities priced in dollars. We can expect assets like gold to perform well in this environment, as they become cheaper for foreign buyers and compete less with yielding investments. After the 2008 financial crisis, a similar mix of policies sparked a multi-year bull run in gold prices. Create your live VT Markets account and start trading now.

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The USDJPY currency pair hit a new low during the US session, falling below the 38.2% retracement level of the 2025 trading range from January’s high of 147.13. It stopped just short of the rising 200-bar moving average at 147.04, creating a point of downward pressure. The day’s lowest price was 147.08, lying between these technical indicators. When the USDJPY chart shows these technical levels coming together, traders often use this area to plan their trades and manage risks.

Strategizing From Technical Levels

For buyers, the strategy is to set a stop loss just below the break point to limit risks while aiming for a price increase. On the flip side, sellers might look to take profits at these technical points. If the price breaks downward, it could lead to more significant selling pressure. Right now, the USD/JPY pair is testing a key support area between 147.04 and 147.13. This zone is important because a trend line, moving average, and a crucial retracement level all converge here. The bounce from 147.08 shows that buyers are trying to defend this level. For traders who expect the dollar to recover against the yen, now is a good time to consider buying call options. This approach allows you to bet on a price rise while limiting your risk to the cost of the option. If the 147.00 support holds, we could see the price move back toward the 150.00 level we observed earlier this year. The downward pressure on the dollar is backed by recent economic data from the United States. The July 2025 inflation report showed a decrease in price pressures to 2.8%, and the jobs report from early August pointed to slower hiring. This makes it less likely that the Federal Reserve will raise interest rates again this year.

Potential Market Movements

Conversely, if the price breaks below 147.00, it could indicate a much larger drop, and traders should stay alert. In that case, buying put options could allow for direct profits from further declines. A sustained move below this support zone could quickly send the price down to the 145.00 level. The potential strength of the yen is also significant, fueled by new signals from the Bank of Japan. Recent discussions about a possible policy review at the upcoming September meeting have traders speculating about an end to negative interest rates. This speculation is pushing the yen higher against the dollar. Looking back, we saw a similar technical setup in spring 2024 before the pair rallied significantly. However, we also remember sharp declines in late 2022 when fears of intervention were high. This history suggests that whatever direction the price breaks from this 147.00 area, the move could be swift. Create your live VT Markets account and start trading now.

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In June, South Africa’s retail sales growth dropped to 1.6%, down from 4.2% the previous year. This shows a clear decline in retail performance. The Euro remained strong, trading above 1.1700 against the US Dollar, supported by a weak USD and better risk sentiment. The British Pound also rose to multi-week highs, exceeding 1.3550 due to positive market sentiment.

Gold And The Market

Gold slightly increased but stayed above $3,350, bolstered by expectations of a dovish outlook from the Fed. However, the positive risk atmosphere limited its potential for further gains. Artificial Intelligence tokens caught the spotlight after Perplexity’s $34.5 billion bid for Google Chrome, with Bittensor, Near Protocol, and Render leading the way. The Bank of England also reduced rates by 25 basis points, bringing them down to 4%, amid concerns about ongoing inflation. For Forex traders, there are suggestions for the best brokers to trade popular currency pairs and commodities. It is important to find brokers offering competitive spreads and reliable platforms, suitable for both beginners and experienced traders. Looking back, South Africa’s retail sales slowing to 1.6% growth in June served as an early warning. Recent data from Statistics South Africa shows a year-on-year contraction of 0.5% for July 2025, confirming this negative trend. This makes put options on South African retail ETFs or shorting the ZAR against the dollar intriguing opportunities for the coming weeks.

Currency And Economic Trends

We recall when the Euro was robust above 1.1700 and the Pound over 1.3550, supported by a weak dollar. As of today, August 13, 2025, the Euro is around 1.1250, and the Pound is near 1.3100, showing a strong return of the dollar. Traders might consider buying call options on the USD index (DXY) or setting up bearish option spreads on these pairs if they expect this trend to persist. The Bank of England’s rate cut to 4% last year feels like a distant past. With UK rates now at 4.5% to combat stubborn service-sector inflation that reached 5.8% last month, there is high policy uncertainty. This scenario is ripe for volatility trades on the Pound, such as long straddles, to profit from significant price movements in either direction. Gold was steady above $3,350, supported by a dovish Fed outlook. Today, it is closer to $3,280, as higher global interest rates create challenges for this non-yielding asset. We are likely dealing with a range-bound market, making strategies like selling covered calls on physical holdings appealing for generating income. The massive Perplexity offer for Google Chrome sparked interest in AI tokens like Bittensor and Render. Since that peak, many of these tokens have corrected by 40%, reflecting the volatile boom-and-bust cycles seen in the crypto markets during 2023 and 2024. Given this high implied volatility, buying long-dated protective put options could be a sensible way to hedge existing positions. Create your live VT Markets account and start trading now.

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**Mortgage Applications Surge** The EUR/USD pair stayed above 1.1700, while the GBP/USD rose past 1.3550 for the first time since late July. This boost in market confidence made it harder for the US Dollar to gain traction midweek. Gold prices remained steady above $3,350, showing only slight gains despite expectations of a more relaxed Federal Reserve policy. In the cryptocurrency world, AI tokens saw growth, with Bittensor, Near Protocol, and Render leading the way. The Bank of England cut interest rates by 25 basis points, bringing them down to 4%. This decision comes amid ongoing inflation concerns, despite signals suggesting that the easing of policies may have ended. For those trading EUR/USD, we compiled a list of top brokers offering competitive spreads, quick execution, and strong platforms. These brokers support traders of all experience levels, guiding them through the ever-changing Forex market. We see the remarkable 10.9% increase in mortgage applications as a strong sign of recovery in the US housing market, a shift not observed since the turbulence of 2024. Coupled with the July consumer price index, which was slightly lower than expected at 2.8%, we believe the Federal Reserve will keep its dovish approach. This hints at ongoing US dollar weakness in the weeks ahead. **Currency and Commodity Outlook** Given the dollar’s weakness, we expect further gains in the EUR/USD and GBP/USD pairs. The Bank of England’s rate cut to 4% was widely anticipated, which is why the sterling actually gained strength. This move, combined with unexpectedly strong UK services data from July, supports our bullish outlook on these currencies through call options or futures. Gold’s position above $3,350 is notable; this represents a significant increase from last year’s $2,300, primarily driven by continuous central bank purchases. However, its current price stagnation, despite a favorable Fed outlook, suggests the rally may be losing momentum. We believe it’s wise to consider hedging long positions using put options or selling some out-of-the-money calls. The impressive gains in AI-focused cryptocurrencies such as Bittensor, Near Protocol, and Render indicate that specific trends are driving the digital asset market. This momentum continues the upward trend seen in late 2024. Due to the high volatility, we’re adopting defined-risk strategies like buying call spreads to manage our initial costs. Create your live VT Markets account and start trading now.

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Pathward Financial announced a quarterly earnings report of $1.81 per share, beating expectations of $1.57 per share. This is an increase from $1.66 per share a year earlier, not counting one-time items. This is a positive surprise of 15.29%. In the last quarter, Pathward predicted earnings of $2.71 per share but instead made $3.11, an unexpected increase of 14.76%. The company has exceeded expected earnings for the last four quarters. For the quarter ending in June 2025, it earned $195.76 million, surpassing the expected $176.73 million by 5.08%. The impact of these results on Pathward’s stock price will depend on what management says during the earnings call. Since the beginning of the year, Pathward shares have increased by about 9%, slightly better than the S&P 500’s gain of 8.6%. Pathward has a Zacks Rank of #3 (Hold), indicating that its performance is expected to align with the market. The consensus EPS estimate for the next quarter is $1.62, along with expected revenues of $183.3 million. The Banks – Northeast industry is among the top 15% of over 250 industries. Another competitor, Citizens & Northern, is expecting quarterly earnings of $0.47 per share, a 17.5% increase from the previous year. Pathward has shown strong earnings once again, beating analysts’ expectations for the quarter ending in June 2025. This consistent success might encourage traders to buy call options, betting on a further increase in stock price. However, it might also be wise to consider selling some out-of-the-money puts to benefit from the high uncertainty before earnings. Looking at the stock’s performance earlier this year, we see a trend. After a big earnings surprise in April 2025, the stock briefly jumped but then traded sideways, indicating that good news can be quickly reflected in the stock price. This suggests that a significant upward move isn’t guaranteed, making straightforward call buying a bit risky. The implied volatility for Pathward options was high leading up to the announcement on August 13. Now that the earnings report is out, we expect this volatility to decrease sharply in the following trading sessions. This “volatility crush” could be an opportunity for those who sold options before the report. We should also consider the broader economic situation as of mid-August 2025. The Federal Reserve’s decision to keep interest rates steady is beneficial for banks like Pathward. However, the recent rise in the national unemployment rate to 4.1% may raise concerns about loan repayments later this year. Given the neutral #3 (Hold) rating and these mixed economic signals, a defined-risk strategy such as a bull call spread could be a smart choice. This strategy allows us to profit from a modest increase in the stock price over the coming weeks while minimizing risk. It allows us to remain optimistic while acknowledging that the biggest gains might already be behind us.

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The Japanese Yen is gaining strength against the US Dollar as the Dollar has dropped due to moderate inflation rates in the US. This has led to increased expectations for interest rate cuts by the Federal Reserve, which has further weakened the Dollar. In July, the Consumer Prices Index showed that annual inflation held steady at 2.7%, which was unexpected. Meanwhile, the Core CPI rose to a 3.1% yearly rate, exceeding the expected 3.0%. This has pushed the odds of a rate cut in September to 95%.

Technical Analysis Insights

Technical analysis indicates that the USD/JPY is trading within a corrective channel around the 147.05 level. If it breaks below this point, it could confirm a bearish flag pattern, targeting levels like the July 25 low of 145.85 and the 78.6% Fibonacci retracement level at 144.50. The Federal Reserve meets eight times a year to set monetary policy, which affects the value of the US Dollar through interest rate adjustments. Quantitative Easing (QE) tends to weaken the Dollar, while Quantitative Tightening (QT) strengthens it. These policies are key factors in the Dollar’s global value. As we enter August 2025, the US Dollar continues to weaken against the Japanese Yen, thanks to lower-than-expected inflation figures. The likelihood of the Federal Reserve cutting interest rates at their September meeting is now very high. This optimism was reinforced by the recent job report from the Bureau of Labor Statistics, released on August 1st. It showed a modest increase of 180,000 jobs in non-farm payrolls, slightly below expectations. This aligns with the July Consumer Price Index, which remained at 2.7%, giving the Fed the flexibility to adjust its policies.

Considerations for Traders

Given this outlook, we are thinking about purchasing put options on the USD/JPY pair. A critical level to watch is 147.05; if the pair decisively falls below this, it would signal us to take action. This could confirm a bearish trend that has been developing for weeks. We recall a similar scenario in late 2023 when Fed expectations weakened the Dollar significantly. During that time, from October to December 2023, the USD/JPY fell from over 151 to below 141. This history suggests that a quick decline could happen once the rate cut cycle begins. Our first target for this bearish move is the recent low of 145.85. If the momentum keeps going, we will look towards the 144.50 level, which coincides with a major Fibonacci retracement. Traders can also consider using futures contracts to short the pair and aim for these levels. However, we should stay alert for any unexpected hawkish comments from Fed officials leading up to the September meeting. Buying some inexpensive, short-term call options could be a good strategy to protect against an unforeseen rally in the Dollar. This would safeguard us if the market has jumped the gun on rate cut expectations. Create your live VT Markets account and start trading now.

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**James Bullard’s Balanced Leadership** As we approach the Federal Reserve’s September meeting, it’s time to reassess the chances of a significant 50 basis point rate cut. James Bullard’s recent comments indicate that a smaller 25 basis point cut is now more likely, which softens the market’s expectations for a big change. This perspective comes even with recent signs of a slowing economy. For example, July’s jobs report revealed only 150,000 new jobs and an increase in unemployment to 4.2%. While these figures might support a rate cut, Bullard’s stance suggests that the Fed does not see the situation as dire enough to justify drastic measures. This creates uncertainty about the Fed’s future decisions. **Implications for Traders** For traders dealing in derivatives, this uncertainty likely means that implied volatility will rise as the September meeting nears. We can expect that options on major indices and interest rate futures will become pricier. In this environment, strategies that benefit from price swings, like long straddles, may become more attractive. The Fed Funds futures market will adjust to incorporate this new information. Already, the odds of a 50 basis point cut have dropped from over 60% to about 35% within hours of Bullard’s remarks. This shift indicates that traders are leaning toward a more gradual rate easing throughout 2025. This cautious approach is similar to the Fed’s gradual rate cuts in 2019, in contrast to the emergency measures taken in 2008. The market was originally expecting a more aggressive response, so a smaller cut could lead to short-term declines in bonds and stocks. Traders should be ready for this possible disappointment. In light of this, it makes sense to hedge long positions in the coming weeks. Buying put options on bond ETFs could provide protection if the rate cut is smaller than anticipated. This strategy allows traders to still benefit from any upside while limiting potential losses if the Fed opts for a more cautious approach. Create your live VT Markets account and start trading now.

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The USDCAD currency pair is currently trading in a narrow range as the market looks for direction. Momentum has slowed down, and traders are waiting for a clear signal to guide the next move. Support is noted at the 100-bar moving average on the 4-hour chart, close to 1.37414. If the price falls below this level, it could weaken the short-term trend and lead to further price corrections.

Technical Levels to Watch

On the upside, the 100-day moving average has been a strong resistance after being tested multiple times this week. Sellers continue to push prices down at this level. A clear breakout above the 100-day moving average would suggest a bullish trend, potentially lifting momentum. The video included explains these technical levels in detail and highlights what traders should track in upcoming sessions. For real-time market data and analysis essential for decision-making, visit investingLive.com. The USDCAD pair is currently stuck in a narrow range as the market digests recent economic data. This was evident after the US July inflation report showed a slight dip to 2.9%, which hasn’t prompted the Federal Reserve to change its steady interest rate policy. As a result, the pair lacks strong fundamental forces at this time. For those anticipating a breakdown, keep an eye on the key support level around 1.37414. A drop below this could be triggered by unexpected increases in WTI crude oil prices, which have been around $85 per barrel, or surprisingly strong Canadian employment numbers expected next week. Traders might consider buying puts with strike prices near 1.3700 in case of this movement.

Strategic Approaches for Traders

On the flip side, sellers remain active around the 100-day moving average, limiting any upward price movements. For a bullish shift to occur, a strong catalyst is needed, such as unexpectedly hawkish comments from Fed minutes or indications of Canadian economic weakness. Purchasing call options with strike prices just above the 100-day moving average could be an effective trade for this potential bullish trend. Given the lack of momentum and the overall uncertainty, implied volatility for USDCAD options has been decreasing. This scenario makes strategies like a long strangle appealing, where traders buy both an out-of-the-money call and put option. This position would profit if there is a significant price move in either direction, which could occur after the next Bank of Canada policy meeting. If you think this tight range will remain, similar to the low-volatility environment seen in spring 2024, selling options premium could be a good strategy. An iron condor allows traders to profit as long as the pair stays between key support and resistance levels. This strategy leverages time decay, which erodes option values while the market awaits its next significant move. Create your live VT Markets account and start trading now.

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The Australian Dollar to US Dollar exchange rate has risen to about 0.6560, reaching a two-week high. This increase is due to a decline in the US Dollar, driven by heightened expectations for interest rate cuts by the Federal Reserve after the July US Consumer Price Index report. The US Dollar Index, which compares the dollar’s value against six major currencies, has fallen to around 97.60. The New Zealand Dollar has gained the most strength versus the US Dollar, which has dropped by 0.61% against the Australian Dollar.

Federal Reserve Rate Expectations

The likelihood of a Federal Reserve rate cut in September has climbed to 94%, up from 86% on Monday, according to CME FedWatch. Also, Australian employment data is set to be released on Thursday, predicting an addition of 25,000 jobs in July, compared to just 2,000 in June, with the unemployment rate expected to decrease from 4.3% to 4.2%. The unemployment rate, available from the Australian Bureau of Statistics, is key for gauging economic health and can influence the Reserve Bank of Australia’s decisions. Typically, a falling unemployment rate supports a stronger Australian Dollar. This data will be released on August 14, 2025. The Australian Dollar has climbed to its highest point in two weeks against the US Dollar, hovering around 0.6560. This trend arises as markets increasingly anticipate that the US Federal Reserve will lower interest rates next month. Eyes are now on the upcoming Australian employment figures. The US Dollar Index has dropped to 97.60, a level not often seen since early 2023, as the market processes the latest US inflation report for July, which showed a rate of 2.8%. This softer reading suggests that the Fed’s aggressive rate hikes from 2022 to 2024 are now behind us. This shift in outlook has caused expectations for a September rate cut to soar to 94%.

Australian Employment Report

With this momentum, we are looking into buying call options on the AUD/USD pair. These options would allow us to profit if the Australian Dollar continues to strengthen past its current level. This strategy is well-timed ahead of tomorrow’s Australian employment report, which could boost the exchange rate even further. The market anticipates that the Australian economy will add 25,000 jobs and that the unemployment rate will drop to 4.2%. If the actual figures exceed these predictions, we could see the exchange rate quickly approach the 0.6650 resistance level. However, if the jobs data falls short, we might see a reversal of the recent gains, which would lessen the value of our call options. The Reserve Bank of Australia has closely monitored the tight labor market during 2023 and 2024 when making decisions on interest rates. A strong jobs report tomorrow would signal ongoing economic strength, reducing the likelihood of the RBA considering rate cuts anytime soon. This difference in policy— with the US preparing to cut rates while Australia remains steady— has historically supported a stronger AUD/USD. Create your live VT Markets account and start trading now.

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