The Atlanta Fed’s sticky-price consumer price index (CPI) rose by 4.6 percent on an annualized basis in July, up from 4.3 percent in June. Comparing year-over-year, this index shows a 3.4 percent increase. When we exclude food and energy, the core sticky-price index increased by 4.8 percent annually in July, consistent with a 3.4 percent gain over the past year. Meanwhile, the flexible segment of the CPI dropped by 3.8 percent in July compared to last year but still reveals a 0.8 percent increase year-over-year.

Ongoing Inflationary Pressures

The sticky-price index highlights ongoing inflation concerns, which economists are closely watching. The changes in both sticky and flexible price indices illustrate different inflation trends in the economy. Underlying inflation remains stubborn, with sticky prices rising at a 4.6% annual rate in July. This contrasts with declining flexible prices, making monetary policy decisions more complicated. The fight against inflation is not over, even with some signs of improvement. The Federal Reserve is likely worried about the 4.8% annual increase in core sticky prices. Along with the July 2025 jobs report, which showed nonfarm payrolls exceed expectations at 215,000, there’s a strong case for a continued hawkish approach. Policymakers will likely stress the need for persistent inflation to decline before considering any easing of policies. In light of this, interest rate markets are adjusting their expectations for future policies. The chance of a 25-basis-point rate hike in the September 2025 meeting has risen to over 40%, according to CME FedWatch data, increasing from just 15% two weeks ago. Traders are moving away from bets on rate cuts and preparing for a prolonged higher interest rate environment.

Historically Low Inflation Periods

We recall the inflation spike in 2022, where persistent services inflation led to a more aggressive Fed response. This historical context shows that waiting for sticky inflation to decrease naturally can lead to sharper policy changes later. It warns us not to underestimate the Fed’s determination this time. Given this outlook, we should look for strategies that take advantage of sustained or rising short-term interest rates and increased market volatility. Options on interest rate futures, like those linked to SOFR, could be valuable in positioning for a hawkish Fed. Volatility indexes may also rise as policy uncertainty escalates in the coming weeks. Create your live VT Markets account and start trading now.

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In July, Brazil’s IPCA inflation was 0.26%, which was lower than the expected 0.37%. Data released on December 8, 2025, shows that inflation rates are still not meeting expectations. In the foreign exchange market, the EUR/USD approached a two-week high near 1.1700. Meanwhile, the GBP/USD almost reached a three-week high close to 1.3530 due to a weakening US Dollar.

Price Movements in the Precious Metals Market

Gold prices, which had recently fallen to around $3,330, climbed back above $3,350 as pressure mounted on the US Dollar. At the same time, the value of the Pi Network dropped below $0.4000 on Tuesday after peaking at $0.4661. The Bank of England reduced interest rates by 25 basis points to 4%, indicating that the easing cycle might soon be over. Inflation remains a concern, as it is still above the target, causing worry among policymakers. Many broker analyses for 2025 highlight top brokers offering low spreads, high leverage, and regulated trading environments. These platforms are designed for both new and experienced traders looking to navigate the forex and financial markets effectively. Current market signals indicate that the weakening US Dollar is a key trend for the upcoming weeks. The dollar’s decline has led the EUR/USD to approach 1.1700 and the GBP/USD to near 1.3530, its highest in nearly three weeks. This trend aligns with recent US economic data, like the July 2025 jobs report, which showed a hiring slowdown. This has reinforced expectations that the Federal Reserve might have finished its tightening cycle.

Impact of Rates on Market Behavior

The softness of the dollar is a major reason why gold has rebounded above $3,350 per ounce. As the dollar weakens, gold becomes a more appealing store of value and hedge against inflation. Traders should consider long positions on gold derivatives, as this trend with the dollar is likely to continue through the third quarter. The Bank of England’s recent interest rate cut to 4% has created significant volatility for the Pound. Although the cut aims to stimulate a slow economy, UK inflation remains persistently high, with July 2025 figures showing it at 3.5%, much higher than the 2% target. This conflicting policy suggests potential erratic movements in GBP pairs, which may best be navigated with options strategies that benefit from increased volatility. We are closely monitoring Brazil after July’s inflation came in lower than expected. This trend may allow the Central Bank of Brazil to lower its Selic rate from 10.5%, possibly boosting economic activity, though it might also weaken the Brazilian Real. We expect this disinflationary trend to be confirmed by data expected on December 8, 2025, opening opportunities in BRL currency derivatives. Finally, we notice a decrease in risk appetite in more speculative areas of the market. The sharp decline in assets like the Pi Network indicates that traders are moving away from high-risk investments. This supports our strategy to concentrate on major currency pairs and commodities, where trends are more clearly influenced by macroeconomic data. Create your live VT Markets account and start trading now.

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The Pound Sterling rose on Tuesday after positive UK job market data for the second quarter. The economy added 239,000 jobs, beating the previous month’s total of 134,000. The unemployment rate remained steady at 4.7%, and there was an unexpected drop of 6,200 in the Claimant Count Change. Earnings data showed a slight slowdown, with average earnings excluding bonuses rising by 5%, as predicted. Including bonuses, the growth was 4.6%, just below the forecast of 4.7%. The strong job growth could support the Bank of England’s cautious approach to monetary policy after a recent 25 basis point interest rate cut.

Pound Sterling Performance

The Pound traded around 1.3440 against the US Dollar, staying above key support levels. The GBP/USD pair remains above the 20-day Exponential Moving Average of 1.3408. Meanwhile, the US Dollar Index approached a two-day high of 98.50 before US inflation data is released, which is expected to show increases in both overall and core CPI rates. Economists anticipate that US headline inflation will rise to 2.8% and core inflation will reach 3% year-over-year. Market participants are watching how these inflationary pressures may influence Federal Reserve interest rate policy, as well as ongoing US-China trade negotiations and tariff discussions. The strong UK job numbers suggest that the Bank of England might need to reconsider its recent interest rate cut. With 239,000 jobs added, the UK economy appears stronger than the Bank’s recent decision indicated. This boosts our outlook on the Pound Sterling for the upcoming weeks. The jobs report adds to other recent data showing unexpected economic strength. For instance, the UK CPI for July 2025 increased to 2.4%, exceeding the Bank’s target and putting pressure on them to maintain current rates. Markets reflect this change, with overnight index swaps indicating no further rate cuts from the Bank of England for the rest of 2025.

US Inflation Data and Market Impact

Across the Atlantic, US inflation data has been released, and it came in higher than expected, with Core CPI at 3.1% year-over-year. This supports the Federal Reserve’s “higher for longer” interest rate stance, boosting the US Dollar. The US Dollar Index is now testing the 99.00 level, the highest it’s been since May of this year. This sets up a classic tug-of-war for traders, as both the UK and US show strong reasons for their currencies to rise. We expect this tension in the GBP/USD pair to increase volatility, making options strategies appealing. The pair’s struggle to break decisively above 1.3500 indicates market uncertainty. With technical support for GBP/USD just above 1.3400, buying short-dated call options seems a good way to prepare for a potential breakout. However, given the dollar’s strength, purchasing put options with a strike price below 1.3400 can offer protection against a hawkish Fed overshadowing the positive UK news. In the spring of 2025, market sentiment was more pessimistic about the UK economy, with many expecting a significant slowdown. The recent turnaround in data may have caught many traders off guard. Therefore, we should be ready for sharp movements as older positions are adjusted. Create your live VT Markets account and start trading now.

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European Market Analysis

European markets show a clear divide, creating a trading opportunity. The German DAX is underperforming, likely due to recent PMI data from late July 2025, indicating a continued decline in manufacturing. Meanwhile, France and Italy are gaining ground. This pattern suggests a pairs trade: consider buying CAC 40 call options and simultaneously purchasing puts on the DAX to capitalize on this divergence. In the United States, a broad market rally is underway, and confidence is rising, particularly with the Russell 2000 small caps jumping over 2%. This surge is driven by the early August 2025 CPI report, which came in at a manageable 2.8%, easing worries about central bank actions. It may be wise to buy call options on the S&P 500 or Russell 2000 to benefit from this positive market sentiment through the month’s end.

Volatility and Hedge Strategy

We need to keep a close eye on volatility as we approach the typically stormy month of September. The CBOE Volatility Index (VIX) is currently around 14, which is low compared to the spikes seen during the 2024 election cycle. Investing in VIX futures or long-dated call options could be an inexpensive way to hedge against potential surprises in the autumn market. Given the impressive rise in U.S. indices, with the Dow surpassing 44,000, caution is important. We should consider adding some downside protection. Buying protective puts on major indices like the SPX for the fourth quarter can help secure the significant gains we’ve achieved this year. Create your live VT Markets account and start trading now.

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The USD/JPY rose sharply to almost 148.50 before the US released its July inflation data. Traders are closely monitoring the situation as many believe the Federal Reserve will cut interest rates next month. The Consumer Price Index (CPI) is crucial since it reflects the cost pressures from recent US tariffs.

Economic Predictions

Economists predict that US headline inflation will rise to an annual rate of 2.8%, slightly up from June’s 2.7%. The core CPI, which excludes food and energy, is expected to increase to 3.0% from last month’s 2.9%. If inflation goes up more than expected, it could change how the Federal Reserve decides on interest rates. Meanwhile, the Japanese Yen is struggling, and there are doubts about the Bank of Japan increasing rates this year. The upcoming Japanese GDP data is another important event to watch. The US Dollar is the most traded currency in the world, making up over 88% of global forex transactions, with an average of $6.6 trillion traded daily in 2022. The Federal Reserve influences the dollar’s value by adjusting interest rates to ensure price stability and job growth. As we watch the USD/JPY at 148.50, the forecast for the US inflation report is crucial. The market is betting on a Federal Reserve rate cut, which usually weakens the dollar. Therefore, this week’s CPI data is the most significant event. If the inflation numbers exceed the expected 2.8% for the headline and 3.0% for the core figures, it could change the outlook for a rate cut. A surprising increase might strengthen the dollar, pushing USD/JPY higher. Traders might want to consider buying call options on this pair to profit if it moves toward 150. This situation is reminiscent of the sharp reactions seen in late 2023 and early 2024 when unexpected inflation data forced rapid shifts in Fed policy. At that time, a single surprising CPI report could change market sentiment and cause the dollar to rise. We should be ready for similar volatility in the upcoming days.

Investment Strategies

Conversely, if the CPI data meets or falls short of expectations, it would support the idea that the Fed can go ahead with its rate cut. This could lead to a quick sell-off in the USD/JPY as the dollar weakens. In this case, buying put options might be a smart move to profit from a potential drop to the 145-146 range. The yen’s current weakness complicates these movements. With concerns about the Bank of Japan’s ability to raise rates this year, especially after disappointing GDP data earlier in the summer, the yen lacks strength. Even if the dollar weakens, the yen’s drop might not be as significant. Currently, the CME FedWatch Tool indicates a 68% chance of a 25-basis-point rate cut in September. This high probability means that any data contradicting this expectation could lead to major market adjustments. We are also seeing an increase in currency volatility indexes, indicating the market is preparing for a big change. Given the uncertain nature of this event, strategies that profit from increased volatility, regardless of direction, are worth considering. Using options straddles or strangles on the USD/JPY could effectively capture significant price movements. For those with a specific market direction in mind, it’s essential to set tight stop-loss orders, as initial reactions to the CPI data can be swift and sharp. Create your live VT Markets account and start trading now.

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The Euro is currently trading just above the 1.1600 support level after falling from 1.1700 in recent days. Recent German economic sentiment data shows a weak outlook for the Eurozone’s largest economy. All eyes are now on the upcoming US Consumer Price Index (CPI) report, which is expected to show rising price pressures. EUR/USD has stabilized during the European session, but bearish momentum is strong due to a disappointing ZEW Economic Sentiment Index report. Comments about US inflation and the meeting between Trump and Putin regarding the conflict in Ukraine are also shaping market sentiment.

German ZEW Institute Update

The German ZEW institute has confirmed a weaker economic outlook, affecting key sectors like chemicals, pharmaceuticals, mechanical engineering, and metals. Meanwhile, a potential peace deal between Putin and Trump could influence market expectations, although past proposals have been turned down by Ukraine. The upcoming US CPI data is expected to show an increase to a 2.8% annual rate. This will be closely watched for its impact on future monetary policy. The response of the US Dollar to this data, along with ongoing trade negotiations between the US and China, is influencing market activity. EUR/USD has found support near 1.1595, with immediate resistance at 1.1630. Technical indicators suggest a bearish trend, and if the price cannot rise above 1.1630, further declines are likely. Potential targets for the pair include the lows of August 5 and July 31, which are 1.1530 and 1.1460, respectively.

Forex Market Trends

As economic and geopolitical events unfold, traders and investors are keeping a close watch on the markets for any major changes. The combination of economic indicators and geopolitical tensions continues to add complexity to market predictions. Create your live VT Markets account and start trading now.

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The EURUSD has been trending upwards after reacting to the US CPI report. It initially rose but faced resistance at a downward slope and the 61.8% retracement level. This caused a pullback to the 50% midpoint at 1.16098, where it found support at 1.1617. Buyers came back, pushing the price up again. The 100-hour moving average at 1.16435 became an important point. When the price broke above this average, the outlook shifted toward the bulls, helping the currency pair gain even more. The EURUSD is nearing the top of its recent trading ranges, reaching a high of 1.1696 today, just below last week’s peak of 1.1698.

Important Resistance Level

Traders are focused on the 1.1700 resistance level. If it breaks above this, the next target could be the July 24 high of 1.1787. Short-term momentum looks good for further gains, but there is resistance nearby. Sellers may defend the 1.1700 level, especially after the recent rise. Key support levels are the 61.8% retracement at 1.16615 and the 100-hour moving average. Staying above these levels is crucial for buyers. As of August 12th, 2025, we are seeing the EURUSD test the important 1.1700 resistance level. This comes after the US inflation data released last week, showing the July Consumer Price Index at 3.1%, slightly below the expected 3.2%. This indicates a slowing US economy, putting pressure on the dollar and benefiting the euro. The technical outlook also gets support from European fundamentals. Recent comments from European Central Bank officials emphasize their plan to keep rates high, as Eurozone inflation remains at 2.8%. This difference in policy, along with a Federal Reserve that may pause, supports the euro’s strength and explains the bounce from the 100-hour moving average, currently at 1.1643. We’ve seen similar situations before, especially in late 2024 around the 1.12 level, where the pair consolidated for weeks before a shift in central bank guidance led to a sharp breakout. This history suggests we should look for a catalyst to push the pair out of the tight range near 1.1700.

Trading Strategies

In the upcoming weeks, traders should consider a daily close above 1.1700 as a strong bullish signal. This could be a cue to buy call options, aiming for the next major resistance at 1.1787. It is essential to wait for confirmation of the breakout instead of trying to predict it. On the other hand, if the pair fails at the 1.1700 level, we may see a quick decline. In that case, buying short-term put options on a rejection would target a move back to the 100-hour MA at 1.1643. The 100-hour moving average is the critical level to monitor; a break below it would indicate that buying pressure has weakened. Create your live VT Markets account and start trading now.

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The Japanese Yen has dropped by 0.2% against the US Dollar, falling behind most G10 currencies, including the Australian and New Zealand Dollars. There are few domestic news releases and steady yield spreads, providing no strong market influences. Recent CFTC data shows a steady decline in bullish JPY positions, which have been falling since April. The upcoming Q2 GDP and industrial production data could pose near-term risks for the Yen.

Investment Advisory

Forward-looking statements involve risks and uncertainties and should not be interpreted as buy or sell recommendations. It’s important to do thorough research before making investment decisions, as investing carries risks, including the potential total loss of principal and emotional stress. This article is for general informational purposes and should not be viewed as personal advice. The author and source are not liable for any inaccuracies, omissions, or losses related to the information. They also do not take responsibility for the content of external links, nor can they guarantee the timeliness or accuracy of the data provided. The Japanese Yen is weakening against the US Dollar and is trailing behind most major currencies. There are no substantial local events or changes in bond yields driving this trend, indicating that the market’s movement is more about global trends than local factors.

Market Sentiment

Recent data reveals that Japan’s national Core CPI for July 2025 was 2.1%, which is slightly lower than expected. This leaves the Bank of Japan with little reason to shift from its loose monetary policy. Last week, the central bank’s governor emphasized the need for patience, reinforcing this cautious approach. Trader positioning shows a consistent decline in bets for a stronger Yen since April of this year, suggesting that major speculators believe the currency will continue to drop. This sentiment is mainly driven by the large interest rate gap between the United States and Japan. Create your live VT Markets account and start trading now.

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The Pound Sterling has risen by 0.2% against the US Dollar, performing better than other major currencies. This increase follows employment data that exceeded expectations, showing the highest job changes over the last three months since September.

Understanding Current Market Expectations

This data has impacted what people think about the Bank of England’s interest rates. There are mixed opinions on whether there will be more easing. Yield spreads remain stable, and options markets show lower premiums against GBP weakness. The Relative Strength Index is above 50, indicating neutrality, and the 50-day moving average stands at 1.3502, which could act as resistance. We expect resistance near the upper 1.35 range, while support is likely around 1.3350 and resistance around 1.3580. This information is not investment advice. It’s crucial to do thorough research before making financial choices. The information involves risks, and the mentioned entities are not responsible for any errors or omissions. There is no guarantee that the information is accurate or current. Past performance does not predict future results. Always consider your financial situation before investing. With today’s strong UK jobs report, the best in almost a year, the case for a Bank of England rate cut looks weaker. This supports a stronger Pound Sterling against the US Dollar. We are looking into strategies that could benefit from a rising or stable GBP/USD in the short term.

Possible Trading Strategies for GBP/USD

Last week’s UK Consumer Price Index showed July inflation holding at 2.3%, which is still above the Bank’s 2% target. This stubborn inflation, together with a solid labor market, suggests rates will likely remain unchanged through autumn. In contrast, recent softer US inflation data is putting some downward pressure on the dollar. In the options market, the lower premium for protection against a falling Pound makes selling put options on GBP/USD an attractive move. We are considering selling puts with a strike price close to the important support level of 1.3350. This lets us gain premium while betting that the currency won’t drop significantly in the upcoming weeks. Given the expected trading range of 1.3350 to 1.3580, a range-bound strategy seems suitable. We see potential in trades like short strangles or iron condors that can profit as long as the GBP/USD stays within these levels. It will be important to manage positions around the 50-day moving average near 1.3502, which could serve as a pivot. Looking back, the market has been anticipating easing from the Bank of England for months after the rate-hiking cycle that wrapped up in late 2024. Today’s data reminds us that the journey to lower rates isn’t straightforward. We need to stay alert for any changes in central bank messages that could quickly change these expectations. Create your live VT Markets account and start trading now.

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Major stock indices are close to setting new records. The S&P index hit a high of 6408.05 on July 31 and is currently at 6422.93, up 49.47 points (0.78%). The NASDAQ index reached 21523.43 on August 11 and is now at 21553.10, topping the earlier intraday high of 21549.73 from yesterday.

Airlines Perform Well

Airlines are having a good day, fueled by Delta’s strong earnings. Delta reported earnings per share of $2.10, which exceeded the expected $2.06. Revenue also rose to $15.5 billion, beating expectations of $15.46 billion. As a result, Delta’s shares jumped 9.09% to $58.35, close to its previous high of $58.33. The key trading range between $56.52 and $58.33 suggests that breaking above could strengthen its upward trend. Other airlines are benefiting too: American Airlines is up 9.72%, United Airlines increased by 8.87%, and Southwest Airlines rose by 4.3%. Apple’s shares recovered after a prior decline. They are trading at $230, and increased by $2.75, or 1.2%, reaching a high of $230.59 today. Following a dip and a positive earnings report earlier this month, Apple’s price has surged by 14.10%. Although it’s down 8.35% for the year and closed 2024 at $250.42, it is still approaching its all-time high of $260.10. With the S&P 500 and NASDAQ nearing records, the outlook remains positive for the next few weeks. This could be a good time to consider call options or bull call spreads on broad market ETFs to capitalize on this momentum. The market has improved significantly since the volatility caused by rate hikes in 2023, showing strong investor confidence.

Delta’s Positive Influence

Delta’s impressive earnings represent a positive signal for the airline industry, making call options on DAL, AAL, and UAL appealing. We are paying close attention to Delta at the $58.33 resistance level, as a breakout here could lead to a significant upward movement. This strength continues to build on the post-pandemic recovery, with global air traffic surpassing 2019 levels according to IATA reports from 2024. For Apple, its recovery this month reflects renewed interest after struggling during the AI-driven rally late last year and early this year. There’s an opportunity to use call options to join this rally, aiming for late 2024 highs around the $250 mark. However, we should monitor for resistance as the price approaches this important level. Despite this optimism, it’s crucial to safeguard our gains, especially with indices at record levels. Buying out-of-the-money put options on the SPX or call options on the VIX can serve as affordable insurance against sudden market shifts. The market hasn’t faced a significant correction over 10% since a brief downturn in spring 2024, so exercising caution is advisable. Create your live VT Markets account and start trading now.

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