The AUDUSD currency pair faced a setback at an important trendline after the FOMC’s decision and dropped further due to a slightly disappointing Australian jobs report. Now, all eyes are on upcoming economic data from the US. Initially, the USD weakened following the Fed’s decision but later bounced back. This recovery happened as the market absorbed the Fed’s actions, which appeared more aggressive than expected. According to the FOMC dot plot, a slim majority of officials anticipate two more rate cuts in 2025, while some expect only one or none. For 2026, the Fed forecasts just one rate cut, which is fewer than the three cuts the market had been predicting.

Fed Chair Powell’s Remarks

Fed Chair Powell described the rate cut as a way to manage risks amid slowing labor market data. Future job reports will influence expectations around rates. Strong data could help strengthen the dollar, while weak data might keep it under pressure. The RBA recently lowered interest rates by 25 basis points but provided limited guidance on future cuts. Although the jobs report was somewhat weaker, the unemployment rate stayed stable. Market expectations suggest an 82% chance of no rate cut in the next meeting and a 30 basis points cut by year-end. Charts indicate key support and resistance levels, where buyers and sellers are strategizing. We expect the latest US Jobless Claims figures today.

Post Federal Reserve Meeting Analysis

After the Federal Reserve’s meeting on September 17, 2025, the US dollar gained strength as traders processed the new rate projections. The dot plot revealed that a narrow majority of officials expects only two more rate cuts in 2025, fewer than the market anticipated. This indicates a more cautious stance from the Fed, which supports the dollar. This cautious outlook is reasonable, even as the last two Non-Farm Payroll reports showed some weakness—with August’s figure being a modest 160,000. Core inflation remains stubbornly high at 3.1% year-over-year, signaling that the Fed wants to see more cooling before making further cuts. Today’s initial jobless claims data of 225,000 reflects a moderating labor market, not a collapsing one. Meanwhile, the Reserve Bank of Australia is also watching its labor market after cutting rates earlier this month. The latest jobs data showed the unemployment rate steady at 4.0%, which means there’s no immediate urgency for the RBA to cut rates again soon. Current market pricing shows about a 30-basis-point cut anticipated by the end of the year. This difference in policy outlooks is pushing the AUD/USD pair downward from its key trendline resistance, and our focus now shifts to the major upward trendline support. We can expect increased volatility in the coming weeks, especially around upcoming US data releases. Looking back at similar situations in late 2024, surprising US inflation or jobs data triggered sharp moves in this pair. For traders expecting more economic strength in the US, buying AUD/USD put options could be a smart move. A drop below the current trendline support around 0.6580 would likely lead towards the 0.6350 level. Using puts with a strike price near 0.6550 helps limit risk while betting on this downward trend. On the other hand, if we see upcoming US data, like the CPI report, fall short of expectations, the dollar may drop. In that case, the current dip towards trendline support could be a buying opportunity. We might consider purchasing call options or selling put spreads around the 0.6635 support zone to prepare for a rally back towards recent highs. Create your live VT Markets account and start trading now.

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Gold markets are responding to the recent Federal Reserve (Fed) decision, with European traders stepping back from their overnight actions. Currently, investors are holding their positions and waiting for more U.S. economic data, such as the weekly initial jobless claims. Earlier, gold prices fell to $3,634, briefly dropping below the 100 and 200-hour moving averages for the first time in four weeks. However, this decline seems to be just a temporary dip, as prices have climbed back above these averages, showing buyers are back in control.

The Fed Decision and Gold Market Reaction

The Fed’s recent decision wasn’t very dovish but fits well with what the market expected. Unless upcoming U.S. economic reports suggest otherwise, the broader outlook remains steady. Once the Fed starts easing monetary policy, it often keeps going in that direction. This could push gold prices higher, with estimates even suggesting a spike to $4,000. A small price pullback could happen before the stronger months of December and January. After the Fed’s decision on September 17, gold went below its key near-term moving averages, but buyers quickly reversed that trend. This price movement indicates that the market views the dip as a chance to buy, not a sign of a changing trend. The focus now is on how prices react to today’s U.S. weekly jobless claims data. The overall picture remains unchanged since the Fed’s easing policy aligns with recent economic trends. The last Non-Farm Payrolls report for August 2025 noted a slowdown in job growth to 155,000, reinforcing the need for a more supportive monetary policy. This environment should continue to benefit gold, which tends to do well when interest rates are low.

Market Strategies and Seasonal Trends

Remember, when the Fed starts easing, it often continues for a while. Looking back at the cycle that began in mid-2019, the Fed cut rates three times in a row, significantly boosting gold prices over the next year. History indicates this current easing cycle still has room to grow. With many analysts targeting $4,000, traders might consider buying call options that expire in December 2025 or January 2026 to take advantage of this anticipated rise. An alternative strategy could be selling out-of-the-money put options below the recent low of $3,634, allowing traders to collect premiums while betting that solid support will hold during any dips. However, it’s wise to prepare for a possible short-term pullback before the market enters its stronger seasonal phase. A smart move would be to buy some cheaper, shorter-dated put options with October or November expirations to guard against unexpected price moves. This creates a safety net for long positions without sacrificing too much potential upside. Historically, the seasonal trend for gold is strong in December and January, with data from the last 15 years showing positive average returns during this period. Therefore, any market weakness in the coming weeks could be a chance to strategize. Traders might see dips towards the mid-$3,600s as a final opportunity to build positions before this busy season. Create your live VT Markets account and start trading now.

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US futures are on the rise today, with S&P 500 futures up by 0.8%. Even though the Federal Reserve was not as dovish as expected, market predictions still indicate around 45 basis points of rate cuts by year-end. Initially, the dollar was strong but then fell back, causing the EUR/USD to rise from 1.1780 to 1.1825. Gold prices are steady at $3,660, recovering from an earlier dip to $3,634. Equity markets are rallying, improving since Asia’s trading opened.

Market Volatility After the Fed Decision

The market has been volatile since the Federal Reserve’s decision, yet stock prices have been steadily climbing. The current mood among investors seems to support buying now and dealing with risks later. Today’s economic reports, such as weekly jobless claims, will likely affect how the market feels. However, more detailed insights are expected with the non-farm payrolls report on October 3rd, which may shift market expectations about Federal Reserve actions. The Federal Reserve didn’t introduce any surprising hawkish tones, allowing equities to trend higher for now. The market continues to price in about 45 basis points of rate cuts by the end of the year. This “buy now, worry later” mentality is fueling the stock market futures. This rally now hinges on US economic data supporting the Fed’s potential move to cut rates. Today’s initial jobless claims data came in at 225,000 for the week ending September 13th, slightly above the expected 220,000, adding to market momentum. However, the true test will be the non-farm payrolls report set for October 3rd.

Trading Opportunities in Volatility

The CBOE Volatility Index (VIX) is currently low at 14, indicating a rising sense of complacency. This situation creates an opportunity for traders to consider purchasing volatility ahead of the important jobs report. Buying VIX calls or SPX straddles that expire after the report could be a smart move for those anticipating price swings. This scenario feels similar to the market conditions we experienced in late 2023, where weaker economic reports were seen as positive since they boosted the chances of policy easing. After the August jobs report showed only a gain of 150,000 jobs, we should anticipate a similar reaction. A weak October report could lead to a significant market rally, while a strong report might trigger a sharp downturn. The recent drop of the US dollar from its highs also suggests that traders are preparing for a more dovish stance from the Fed. We expect an uptick in activity with options on currency futures, especially for the Euro, as we approach the first week of October. A weak payrolls report would likely further weaken the dollar, pushing the EUR/USD pair closer to the 1.2000 level. Create your live VT Markets account and start trading now.

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The Bank of England (BOE) is expected to keep the bank rate steady at 4.00% today. Although the labor market has weakened a little, there’s no sign of a sharp downturn, which lessens the need for quick rate cuts. July’s inflation numbers and medium-term price risks suggest that consecutive rate cuts aren’t necessary.

Approach to Inflationary Pressures

The BOE should take a careful and gradual approach while addressing ongoing inflation issues. The voting outcome on the bank rate is likely to be 7-2, with Dhingra and Taylor supporting a rate cut. Ramsden might join them, which could lead to a 6-3 vote. This voting scenario is intriguing, especially after last month’s split vote that required a second round. Some hawkish views were present in August, which could affect the BOE’s September approach, especially with slightly rising inflation. The central bank is expected to announce its decision cautiously. We expect the Bank of England to keep rates at 4.00% today, which aligns with market expectations. The latest inflation data for August 2025 showed a rise to 3.1%, giving the central bank reason to be careful and avoid premature rate cuts. This slight increase from July highlights that returning to the 2% target won’t be straightforward. The split in the vote will send significant signals for future policy. A 7-2 vote to hold rates is our baseline, but a 6-3 vote would indicate a dovish shift, likely leading markets to expect a higher chance of a rate cut before year-end. This would make betting on lower rates in November, such as options on SONIA futures, more appealing.

Inflationary Concerns Amid Economic Slowdown

Inflation is a concern right now, even as the economy slows. Recent data shows the unemployment rate rising to 4.5%, and GDP growth is stagnant at just 0.1%. This creates uncertainty, as traders evaluate the risk of ongoing inflation against the possibility of a recession. The current situation offers opportunities for traders dealing with volatility in sterling-denominated assets. Reflecting on the aggressive rate hikes of 2022 and 2023, which aimed to combat high inflation, the Bank is cautious about easing policy too soon, even with a weak economy. This means that the threshold for a rate cut remains high, and any hawkish wording in today’s statement may delay market expectations for a cut until early 2026. In the coming weeks, we should focus not on the decision to hold rates but on the details surrounding it. A more divided vote could steepen the yield curve as the market anticipates future cuts. We should be ready to act on any changes in tone, as this could shape UK rates for the rest of the year. Create your live VT Markets account and start trading now.

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The European Central Bank’s (ECB) current policy is considered suitable, according to Vice President Luis de Guindos. He recommends a cautious approach because the economic situation is uncertain. Growth for the second half of the year is anticipated to be similar to that of the second quarter. Risks from fiscal policy are becoming clearer and are balancing growth risks.

Market Valuations

Market valuations are quite high, which requires close attention. The current economic conditions call for a careful and cautious strategy going forward. Right now, the European Central Bank’s policy suggests no major changes are coming soon. The ECB is in a wait-and-see mode, having kept the main deposit rate steady at 3.00% earlier this month. This strategy reflects the uncertain economic climate. The growth outlook is not strong. The second half of 2025 is expected to show the same weak growth of 0.1% we saw in the second quarter. With inflation in August still at 2.2%, the bank has no reason to cut rates, which could cause prices to rise again. This keeps short-term interest rates in a tight range. For traders, this indicates that the implied volatility in front-month EURIBOR options might be too high. It creates a chance for premium-selling strategies. Selling strangles or straddles could lead to profits as long as the ECB stays cautious. We don’t expect any major policy changes until at least spring 2026.

Market Vulnerability

There are also concerns about elevated equity market valuations. The STOXX 600 index is near its all-time high of 530, which seems out of sync with the sluggish economy. This gap makes the market weak and prone to corrections with any bad news. Given this risk, buying protective put options on major European indices like the Euro STOXX 50 is a smart move. The cost of this protection is low since the VSTOXX volatility index is at a subdued level of 19. The potential for downside protection is becoming more appealing. Additionally, fiscal policy risks are becoming more apparent, especially with budget concerns arising in Italy and France. This could lead to conflicts between national spending plans and the ECB’s inflation goals in the future. We experienced a similar period of central bank pauses and economic uncertainty in late 2023, which caused uneven market conditions before a clear trend began to emerge. Create your live VT Markets account and start trading now.

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The Eurozone’s current account surplus for July was €27.7 billion, down from €35.8 billion in June. This drop mainly came from a lower surplus in primary income.

Breakdown Of The Eurozone Surplus

Here’s how the surpluses break down: – Goods: €25 billion – Services: €12 billion – Primary income: €7 billion However, these surpluses were partly offset by a €16 billion deficit in secondary income. The European Central Bank (ECB) released this data with a slight delay. The smaller current account surplus in July 2025 shows the Eurozone’s weakening external position. This hints at less demand for the Euro. Therefore, it’s wise to prepare for a potential drop in the currency in the coming weeks. Consider short positions on EUR/USD through futures or CFDs to reflect this view.

Strategies For Trading The Euro

If you’re using options, buying EUR/USD put options that expire in October 2025 provides a clear, risk-defined way to trade this expected decline. The Cboe EuroCurrency Volatility Index (EVZ) increased to 8.5 this month, up from a low of 7.2 in August 2025, indicating that the market expects more volatility. Selling out-of-the-money call spreads could also be a good strategy to earn premium while keeping a bearish outlook. This data comes at a challenging time for the European Central Bank, also dealing with the August 2025 inflation rate of a persistent 2.6%. Meanwhile, the US Federal Reserve is likely to keep rates steady due to a strong labor market. This creates a clear difference in policy favoring the US dollar. As a result, the case for a lower EUR/USD exchange rate strengthens, with the rate already having dropped 1.2% in the past month. Additionally, other recent data confirms a slowdown. For instance, German factory orders fell for the third consecutive month in July 2025, according to the latest figures from Destatis. This situation resembles the period of 2014-2015 when differing central bank policies caused the Euro to weaken significantly against the dollar. Therefore, it’s essential to keep an eye on upcoming sentiment indicators, such as the ZEW Economic Sentiment survey, for further confirmation of this trend. Create your live VT Markets account and start trading now.

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The Federal Reserve’s recent decision met expectations by acknowledging weaknesses in the labor market but still expressed worries about inflation and uncertainty. Surprisingly, only one member voted against the choice to cut rates by 50 basis points, as many anticipated two or three cuts. This led to a slightly more aggressive stance. The Fed’s dot plot projections were more assertive than what the market expected. Market participants thought there would be 68 basis points of easing by the end of 2025 and a total of 148 basis points by the end of 2026. However, the Fed indicated three cuts in 2025 and just one in 2026.

Fed Decision Divisions

In 2025, only a small majority supported the three cuts. Ten members expected two or more cuts, while nine projected one or fewer. This shows a range of opinions within the Fed on future rate cuts. Chair Powell, in line with his Jackson Hole speech, highlighted the labor market’s struggles linked to weak job reports, mainly due to changes in immigration. He called rate cuts “risk management” actions, suggesting there might be fewer cuts if data improves. Powell aimed to balance various economic factors, leaving future monetary decisions up to new economic data. This week’s Federal Reserve decision seems neutral to slightly hawkish, despite the announced rate cut. While the market anticipated three more cuts for 2026, the Fed forecasts only one more. This disconnect is something traders should monitor closely in the coming weeks. The Fed is responding to clear signs of a weakening labor market. Recent Non-Farm Payroll reports fell short of expectations, with the August 2025 report showing only a gain of 140,000 jobs. Initial jobless claims have also risen, remaining around 245,000. However, Powell views this as a manageable slowdown rather than a crisis requiring drastic cuts.

Inflation Concerns Remain

The central bank’s caution makes sense, given that core inflation, while lower than before, is still stubbornly high at 3.1% year-over-year according to the latest CPI data. After aggressive rate hikes throughout 2023 to control rising prices, the Fed is reluctant to ease policies too quickly. This suggests they can tolerate a weaker labor market better than a surge in inflation. This situation offers opportunities for derivative traders, with an uncertain path ahead influenced by the next few data reports. The rate cut was described as a “risk management” move, which means strong NFP or high inflation numbers in October could quickly shift the current soft stance. Therefore, strategies like straddles or strangles on interest rate futures, which profit from increased volatility, may be appealing. We should also remember the committee’s divisions, as a narrow 10-9 majority supports the three cuts proposed for 2025. This fragile agreement means the median dot plot could change quickly if just one or two members alter their views. Thus, planning for a smooth and predictable series of rate cuts may be premature. Create your live VT Markets account and start trading now.

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Market Reaction

Markets are responding well to the Fed’s recent decision. Indices like the DAX and Eurostoxx are showing strong gains. We see this as a temporary uptick since the central bank avoided any surprises. This clarity now shifts the market’s attention to the upcoming major US economic data. With the key risk now behind us, implied volatility has decreased. The VIX has fallen below 15 from its highs before the meeting. This drop gives traders a chance to sell options, like short-dated credit spreads on the S&P 500. However, low volatility might be misleading ahead of the important inflation and jobs data set to be released in early October.

Market Patterns and Strategy

The market’s current outlook for the rest of the year will soon be tested, especially with the last core CPI reading sticking at 3.1%. Additionally, the job market showed strength, adding 190,000 jobs in August. This gives the Fed little reason to act quickly on rate cuts. Traders might want to buy inexpensive out-of-the-money puts on indices as protection against any data that surprises on the upside. We should keep in mind the market trends from 2023. After Fed meetings, rallies often didn’t last long and reversed quickly when strong economic data emerged. These periods remind us that initial positivity can disappear once the data forces a rethink of the Fed’s policies. Therefore, while we can enjoy the current upward trend, it’s wise to keep protective positions in place over the next few weeks. Create your live VT Markets account and start trading now.

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The USDJPY initially fell after the Federal Reserve’s decision but then rose sharply as the market realized the Fed’s approach was more cautious than expected. The FOMC now predicts two rate cuts in 2025, while investors were looking for more aggressive cuts. For 2026, only one cut is expected, which is less than the three cuts anticipated prior to the decision. Fed Chair Powell’s focus on the labor market reflects recent weak economic data. The yen is mainly impacted by more dovish views about the Fed, with no significant changes in its fundamentals. The Bank of Japan (BoJ) is likely to keep its current policies, and the market is watching for any changes in guidance. Strong economic data could push interest rate forecasts to be more hawkish, benefiting the USD, while weak data could continue to weigh it down.

Technical Analysis

On the daily chart, USDJPY has dropped below its range to a trendline near 145.60, attracting buyers looking for a rally towards 151.00. Sellers are aiming for a break below this trendline to send it down to 143.00. The 4-hour chart reveals a minor downward trendline that is creating bearish sentiment, with sellers focused on a breakout, while buyers are targeting an upward breach. The 1-hour chart indicates buying interest near minor support at 146.70, alongside selling pressure suggesting a possible downward break. Upcoming events include US Jobless Claims, Japanese Consumer Price Index (CPI), and the BoJ’s policy decision. The market first misinterpreted the Federal Reserve’s message, causing USDJPY to dip before it sharply recovered. The Fed’s new projections were unexpectedly hawkish, showing a slight majority supporting two more rate cuts in 2025. This contrasts with market expectations before the meeting, which showed a nearly 70% chance of three or more cuts, according to the CME FedWatch tool. Looking ahead, the focus is on US economic data. Chairman Powell noted the last two weak Non-Farm Payroll reports, which reported around 150,000 jobs for August 2025, but inflation remains a concern. The most recent Core PCE reading for July 2025 held steady at 3.8%, and strong economic indicators in the coming weeks could reinforce the Fed’s cautious stance, strengthening the dollar.

Japanese Economic Outlook

In Japan, the economic fundamentals remain mostly the same ahead of the BoJ’s decision on September 19th. Policymakers are expected to maintain their current stance, especially with the national CPI forecast around 2.5%, a level that doesn’t require immediate action. The BoJ’s gradual policy normalization, which began in 2024, suggests it will not significantly impact the yen at this time. From a technical perspective, the USDJPY pair has found solid support at the major trendline around 145.60. For derivatives traders, this offers a chance to consider buying call options with strikes aimed at the 151.00 mark, betting on the Fed’s hawkish stance. Implied volatility has likely stabilized after the Fed’s announcement, potentially offering better pricing for these positions. However, risk management is essential. If USDJPY decisively breaks below the 145.60 trendline, the bullish outlook will be invalidated. Traders might consider using put options with strikes below 145.00 as a hedge, or to position for a decline towards 143.00. This bearish scenario could become more likely if upcoming US Jobless Claims or other key data indicate significant weakness in the American economy. Create your live VT Markets account and start trading now.

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