The Euro (EUR) might test the 1.1700 level again and could break through it, but it seems unable to get past 1.1720. Recently, the EUR rose to 1.1668 and nearly hit 1.1698 before dropping back to 1.1609, eventually closing at 1.1665, a slight increase of 0.05%. In the short term, the EUR is likely to revisit the 1.1700 mark, but it seems less probable to challenge the resistance at 1.1720. Key support levels to watch are at 1.1650 and 1.1630. Looking ahead over the next 1 to 3 weeks, the EUR is expected to trend upwards, but it’s uncertain whether it will reach 1.1720. If it breaks above this level, it could rise towards 1.1770, as long as it stays above the strong support at 1.1585. The information here includes forward-looking predictions with risks and uncertainties involved. Make sure to do thorough research before trading. Any investment risks, including potential losses, are the trader’s responsibility. This is not investment advice. Since the Euro is struggling to get past 1.1700, we should be careful with strategies that rely on strong upward movements. The current price actions indicate that buying straightforward call options might be risky because if it doesn’t break the 1.1720 resistance, the option premiums could lose value. Therefore, we are looking at options that can profit from a slow, steady climb. A bull call spread is a suitable strategy for the coming weeks to take advantage of a modest rise. We might buy a call option with a strike price around the current level, like 1.1650, while also selling a call option at the 1.1720 resistance. This way, we define our risk and can profit if the Euro trades within this specific range, matching our outlook of an upward trend that lacks strong breakout potential. This cautious approach is supported by recent economic data from earlier this month. The August 2025 flash estimates for Eurozone CPI showed inflation easing to 2.5%, which reduces pressure on the European Central Bank to raise rates aggressively. Meanwhile, the latest US Non-Farm Payrolls report from August 1, 2025, was a bit lower than expected at 185,000, suggesting that the dollar remains stable but not weakening too much. For traders who feel the downside is protected, selling cash-secured puts below the strong 1.1585 support level is another good option. This strategy earns income from the premium collected and profits from time decay, as long as the Euro stays above this critical level. It’s a straightforward play on the prediction that the pair will keep its upward trend over the next one to three weeks. We should also consider the price action from 2023, when the Euro often had trouble maintaining rallies above 1.1700 for long periods. This past resistance, along with the current absence of a strong catalyst, suggests we need to be patient. The aim is to set up trades that benefit from the pair staying above 1.1585 without needing it to quickly soar towards 1.1770.

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The Bank of England has recently made a 25 basis point rate cut, signaling some hawkish sentiment. The Monetary Policy Committee (MPC) faced a unique challenge, needing two votes to reach a 5-4 majority due to unexpected dissent among members. The Bank of England indicated that we might be approaching the end of the easing cycle, as lowering the Bank Rate has made monetary policy less restrictive. Although Governor Andrew Bailey’s press conference was not overly hawkish, changes in inflation forecasts and concerns about the job market offer reasons for the recent yield curve shift and the rise of the pound. Currently, there is only a 75% chance of another rate cut by the end of the year. The MPC discussed reducing quantitative tightening (QT), believing QT was responsible for adding 15-25 basis points to long-term yields, which supports the idea of a September reduction. Strong dissent within the MPC highlights the need to watch future inflation data closely. Clear evidence of moderation in inflation is needed to consider another rate cut in 2025. The pound remains strong, but fiscal challenges and the euro’s strength may limit movements in the EUR/GBP exchange rate, while the ability for GBP/USD to exceed 1.35 is still possible. The recent hawkish rate cut by the Bank of England shows a lot of uncertainty. The narrow 5-4 vote highlights a split within the committee regarding the path of inflation. This division means that any new data could significantly change expectations in the near future. It’s crucial to monitor upcoming inflation figures, especially after the July 2025 data showed the Consumer Price Index (CPI) stuck at 2.3%. Services inflation, at 4.5%, supports the hawkish committee members who opposed the cut. This suggests that reaching the 2% inflation goal is still uncertain. For interest rate derivatives, the current situation indicates that volatility may be underestimated. The market sees only a 75% chance of another rate cut this year, making it a good time for options strategies that profit from sharp movements in either direction. Selling short-dated sterling interest rate futures might be a cautious way to adjust for the Bank’s hesitance to ease further. The planned reduction in QT in September is another important event to watch. The Bank of England estimates that QT has contributed up to 25 basis points to long-term yields, so a slowdown should help boost gilt prices. This could lead to a steeper yield curve, making curve-steepener trades appealing. In currency markets, the strength of the pound seems to be holding. After the announcement, the GBP/USD exchange rate is testing the 1.3350 level, and we see a clear path toward the 1.35 target. The sharp currency fluctuations in 2024 remind us how quickly sentiment can change, so using options to manage risk while aiming for further gains in GBP/USD is advisable. However, we are more cautious about the pound’s performance against the euro. With the European Central Bank also taking a strong position, potential gains in the EUR/GBP pair may be limited. Thus, expressing a bullish view on the pound is best done against the US dollar.

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The Pound Sterling is stable at around 1.3450 against the US Dollar, supported by expectations that the Federal Reserve will cut interest rates. The CME FedWatch tool shows that nearly everyone expects a 25-basis point rate cut by the Fed in September, likely bringing borrowing rates down to 4.00%-4.25%. US President Donald Trump has nominated Stephen Miran for Fed Governor, which could encourage more rate cuts. Additionally, Bloomberg reports that Fed Governor Christopher Waller could be a candidate to succeed Jerome Powell after discussions with Trump’s team.

The Pound Sterling Holds Steady

The Pound Sterling has maintained its gains from Thursday, following the Bank of England’s decision to cut rates by 25 basis points to 4% after a close vote. The market anticipates a total cut of 17 basis points for the year, determined by a narrow 5-4 majority. The Bank of England (BoE) is taking a “gradual and careful” approach to easing monetary policy, aiming to bring inflation down to the 2% target. BoE Governor Andrew Bailey highlighted inflation risks and a weak growth outlook, with future CPI projections raised to 2.7%. Upcoming events to watch include UK labor market data and US CPI data, which is expected to show US inflation rising to 2.8%. Technical analysis of the Pound Sterling suggests a bullish outlook, with upward movement above the 20-day EMA, along with noted support and resistance levels. As of today, August 8th, 2025, the Pound continues to hold steady against the Dollar, trading near 1.3450. This stability follows the Bank of England’s recent rate cut to 4%, and the market is fully pricing in a similar cut from the US Federal Reserve next month. The immediate focus is on which central bank will ease policy more aggressively.

Fed Rate Cut Expectations

Expectations for a Fed rate cut in September are nearly unanimous, which would likely weaken the US Dollar. This view gained traction after the July 2025 Non-Farm Payrolls report showed job growth slowing to just 150,000, significantly below expectations and indicating a cooling US economy. The potential nomination of more dovish members to the Fed’s board adds to this perspective. In contrast, the Bank of England’s recent cut was a close decision, made by a narrow 5-4 vote. This caution reflects the challenges of combating high inflation observed in 2023, making the bank cautious about lowering rates too quickly, particularly since its own inflation forecast for the year has risen to 2.7%. This division suggests that future UK rate cuts are less certain than those in the US. Next week’s US Consumer Price Index (CPI) data will be crucial in testing this view, with expectations of inflation rising to 2.8%. Over the past year, a CPI surprise of just 0.2% above predictions has often led to significant movements in the dollar index on the day of the release. A stronger inflation figure could quickly shift expectations for a September Fed cut. With this context, traders might consider using options to manage risk while positioning for a higher GBP/USD. For example, buying call options on this currency pair could provide profits if the pound’s value increases as a result of a Fed signal for a cut. This strategy also limits risk if the US inflation data unexpectedly strengthens the dollar. From a technical point of view, the current price action above the 20-day Exponential Moving Average lends support to a bullish outlook for the pair. We will monitor whether it can break the recent resistance around 1.3520, which could indicate further upward momentum. However, failing to breach this level, especially after the US CPI release, might signal a short-term peak. Create your live VT Markets account and start trading now.

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Donald Trump has named Stephan Miran as the new Federal Reserve governor, causing a temporary dip in the US dollar. Miran steps in for Adriana Kugler, who resigned unexpectedly, and will hold the position until January, though he may be reappointed. Miran is the current Chairman of the Council of Economic Advisers. He has previously argued against the idea that tariffs lead to inflation and believes that interest rates are too high. His viewpoints suggest a move toward a more relaxed monetary policy, which is in line with recent votes by Christopher Waller and Michelle Bowman to reduce the key interest rate.

Complex Tenure and Challenges

Miran’s short time in office makes it hard to determine how well his beliefs fit with the Fed’s neutral stance. This could create tension within the Fed and complicate communication, especially as interest rates may be reduced. His appointment coincides with predictions of a higher EUR/USD rate, reflecting longer-term market views. With Stephan Miran’s arrival, we see signs of a more dovish Federal Reserve. Market expectations have already shifted; Fed funds futures now indicate a 65% chance of a rate cut at the September FOMC meeting, up from 40% just a week ago. The US dollar has responded as anticipated, with the EUR/USD pair breaking above the 1.10 level for the first time since March. The uncertainty around Miran’s brief tenure and his alignment with the Fed’s non-political role is making the market nervous. The MOVE index, which measures bond market volatility, has risen over 15% since the announcement. This suggests that we should consider buying options straddles on interest-rate-sensitive assets like Treasury note futures to benefit from the expected price swings.

Dollar Direction and Economic Data

We believe the dollar’s likely direction is downward in the coming weeks. Miran’s preference for lower rates, along with recent similar votes from Waller and Bowman, supports this view. It may be wise to buy near-term call options on the euro or other major currencies against the dollar. This situation is reminiscent of 2019 when similar political pressures led to Fed rate cuts and dollar weakness. Upcoming economic data will be interpreted through this political lens, leading to stronger market reactions. July’s core CPI, which fell to 2.8%, could support a rate cut, especially since the latest Non-Farm Payrolls report showed only 150,000 jobs added—lower than expected. Every statement from the Fed, especially from Miran, will be closely scrutinized, making derivatives tied to FOMC meeting dates highly active. Create your live VT Markets account and start trading now.

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A Trump-Putin summit will take place at the end of next week. Ukraine’s President Zelenskiy is supporting U.S. efforts to secure a ceasefire in Ukraine and hopes for a compromise to end the war. U.S. stocks are on the rise. The Nasdaq has gone up nearly 200 points, or 0.92%.

Market Reactions to the Upcoming Summit

As the Trump-Putin summit approaches, investors are optimistic about a potential ceasefire in Ukraine. The Nasdaq’s gains today reflect this positive sentiment. However, traders should be cautious, as disappointment is possible. The CBOE Volatility Index, known as VIX, has risen this week from the low 14s seen in July to just over 17. This suggests that while stocks are climbing, the options market is bracing for a big price change in either direction after the summit. Traders may benefit from long volatility strategies, like buying straddles on broad market indexes. We should also consider sectors affected by the conflict. Defense stocks, which have performed well since the war began in 2022, might face challenges if a peace deal is reached. This could be a good chance to buy put options on major defense contractors that have profited from the ongoing conflict. Energy markets are also reacting to this geopolitical situation. A successful ceasefire could relieve pressure on global energy supplies, possibly causing Brent crude, currently around $88 per barrel, to drop back towards the low $80s. Buying puts on oil futures or energy sector ETFs might be a smart way to capitalize on this possibility.

Geopolitical Events Impact on Markets

We only need to recall the market shock from February 2022 to understand how quickly geopolitical events can impact asset prices. The VIX soared to over 35 during the initial invasion, while global equities plummeted. A favorable outcome at the summit could have a similarly strong, but opposite, effect on the market. Since the market has already risen on hopes of good news, there’s a risk of a “sell the news” reaction, even if the summit goes reasonably well. If negotiations fail, the market could drop sharply and quickly. Therefore, buying protective puts on the SPY or QQQ with expirations in late August or September would provide a smart hedge against unfavorable outcomes. Create your live VT Markets account and start trading now.

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GBP/USD is currently consolidating around 1.3450 after a 0.6% increase. This rise follows the Bank of England’s surprise decision to cut the policy rate by 25 basis points. More members of the Monetary Policy Committee voted for this cut than expected, which caught the markets off guard. Elliott Wave analysis indicates that GBP/USD is undergoing a correction in a WXY structure. A key level to watch is around 1.3156, where we may see buying interest. The main trend remains bullish, and we anticipate a three-wave bounce from the Blue Box area. We recommend moving stop losses to breakeven as certain retracement levels are reached.

Bank Of England Rate Cut

The Bank of England’s decision to cut rates shows concerns about inflation, despite suggesting that further cuts may not happen soon. Their statement indicates caution, as inflation rates are much higher than their target. In other market news, EUR/USD is trading around 1.1650, impacted by the strengthening US Dollar. Gold prices are stabilizing near $3,400 per ounce, while Bitcoin saw a slight pullback after approaching $118,000. There’s also a list of top brokers for trading EUR/USD, focusing on competitive spreads and effective platforms for 2025. The unexpected rate cut from the Bank of England has created a challenging situation for the pound, with GBP/USD consolidating around 1.3450. This decision, supported by more committee members than anticipated, marks a significant change in the Bank’s focus from fighting inflation to avoiding a sharp economic downturn. This policy shift seems necessary, considering this year’s broader economic data. Recent CPI figures from July 2025 show inflation at a stubbornly high 5.8%, well above the 2% target. Additionally, the second-quarter GDP growth was only 0.1%, raising recession fears and influencing the Bank’s decision, similar to challenges faced after the 2022 inflation spike.

Economic Sentiment And Market Reactions

In the upcoming weeks, we expect economic weakness to exert pressure on the pound. The strong US dollar, supported by a Federal Reserve that aims to keep rates stable, will likely increase this pressure. We are looking for opportunities to short GBP/USD, targeting the key technical level of 1.3156. The 1.3156 area is a crucial support zone where significant buying interest is expected, in line with the Elliott Wave structure. As prices approach this level, we will prepare to close our bearish positions. A bounce from this zone could provide an excellent chance to shift our strategy and open long positions. This cautious sentiment is also evident in other major markets. Gold is holding steady around $3,400, serving as a strong hedge against the stagflation concerns this Bank of England move highlights. The robust US dollar is keeping EUR/USD constrained around 1.1650, confirming a strong demand for the dollar over European currencies. Create your live VT Markets account and start trading now.

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The NZD/USD pair is stable around 0.5960 after rising for two days. This calm comes as the US Dollar shows weak momentum, with expectations of an interest rate cut by the Federal Reserve in September. The US Dollar Index is low, staying close to a week-low of 98.00. Concerns about the US job market have raised the chance of the Fed changing interest rates, as officials mention possible employment issues.

Stephen Miran Nomination

Stephen Miran’s nomination to succeed Fed Governor Adriana Kugler is significant. In New Zealand, employment data shows a 0.1% decrease and an increase in the unemployment rate to 5.2%. This could lead to monetary policy adjustments by the RBNZ. The NZD/USD aims to rise above its 50-day Exponential Moving Average, which is currently at 0.5967. A 14-day RSI near 50.00 points to a flat trend. If the pair falls below 0.5883, it could drop to 0.5846 or even 0.5800. On the other hand, if it goes above 0.6000, it might reach highs near 0.6040 and 0.6100. Currently, the NZD/USD pair is around the 0.5960 mark. Both the US and New Zealand economies are showing signs of trouble, creating uncertainty over which currency will weaken faster. The pair is just below its 50-day moving average, indicating indecision among traders.

US and New Zealand Employment Data

The US Dollar’s weakness stems from recent labor market data. The non-farm payroll report for July 2025 revealed only 150,000 new jobs, falling short of expectations and increasing speculation about a Federal Reserve rate cut. Markets now see a better than 75% chance of a cut at the September meeting. Meanwhile, New Zealand’s employment figures are concerning, with unemployment at 5.2%, a level not seen since the recovery post-pandemic in early 2021. This poor performance puts pressure on the Reserve Bank of New Zealand to consider rate cuts to support the economy, making the NZD less appealing. Given this tug-of-war, making directional bets seems risky in the short term. We are considering options strategies that can profit from a spike in volatility, regardless of direction. A long straddle looks fitting as it aims to benefit from a significant price change. This strategy involves buying both a call option and a put option with a strike price near the current 0.5960, both expiring after the Fed’s September meeting. Our aim is to capture a breakout from the current tight range, likely prompted by central bank policy announcements. We are not betting on a specific direction but rather on the certainty of movement. We have seen a similar pattern before, notably during the 2019 easing cycle when both central banks cut rates, resulting in volatile yet significant moves. We’ll use the key levels of 0.5880 on the downside and the crucial 0.6000 on the upside as breakout markers. A decisive move past either point may start a larger trend. The next key event to watch is the US Consumer Price Index data release next week, which will heavily impact the Fed’s decisions. After that, we’ll be focused on the Jackson Hole symposium later this month for insights from central bankers. These events likely will increase volatility as we approach the essential September policy meetings. Create your live VT Markets account and start trading now.

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European indices had mixed results. Germany’s DAX and the UK’s FTSE 100 stayed the same, while France’s CAC, Spain’s Ibex, and Italy’s FTSE MIB showed gains. Most major indices went up throughout the week, but the UK lagged behind. Here are the daily changes: the German DAX remained stable, France’s CAC increased by 0.44%, the UK’s FTSE 100 fell slightly by 0.06%, Spain’s Ibex rose by 0.91%, and Italy’s FTSE MIB climbed by 0.56%. Over the week, the UK FTSE 100 had a small increase after the Bank of England adjusted interest rates.

European Market Performance

The German DAX saw a 3.28% rise, its largest gain since late April. France’s CAC also rose by 2.61%, the highest increase since late April. The UK’s FTSE 100 grew by a modest 0.30%. Spain’s Ibex surged by 4.94%, and Italy’s FTSE MIB increased by 4.21%, both marking their biggest gains since mid-April. Meanwhile, US stock indices rose as European markets closed. The Dow increased by 127 points (0.29%), the S&P rose by 37.73 points (0.60%), and the NASDAQ gained 164 points (0.78%). We are witnessing a strong upward trend in mainland European markets, especially in Spain and Italy. This rise is likely driven by positive economic news, such as Germany’s ZEW Economic Sentiment survey for August, which exceeded forecasts. Traders may consider buying call options on indices like the German DAX or Spain’s Ibex to take advantage of this trend. The UK market is the clear exception, lagging behind others despite the Bank of England’s recent interest rate cut. This highlights concerns about the UK’s economic health, as the GDP growth for Q2 2025 was a mere 0.1%. We could look at pairing trades, such as going long on the stronger German DAX and shorting the FTSE 100, to profit from this gap in performance.

Strength in Southern European Markets

Spain’s IBEX and Italy’s FTSE MIB are showing significant strength, with their largest weekly gains since mid-April 2025. Spain’s performance is supported by record tourist numbers, with July 2025 seeing more international arrivals than the previous highs in 2023. In these markets, bullish strategies like selling out-of-the-money put options can help collect premiums while betting on further gains. As this rally continues, implied volatility has decreased, with the VSTOXX index—Europe’s main volatility gauge—trading near yearly lows around 14. This means options are relatively inexpensive, offering a good chance to buy protective puts on profitable long positions. It’s wise to remember that late August and September have historically been rough months for stocks, so adding a hedge is a smart strategy. Looking ahead, the next key events will be the flash Eurozone PMI figures and the UK’s July inflation report, both coming in the next two weeks. Any unexpected signs of a slowdown could quickly impact the current positive mood. Therefore, we should stay flexible and ready to adjust our positions based on new information. Create your live VT Markets account and start trading now.

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Impact Of Bank Of England Rate Cuts On GBPUSD

India’s bank loan growth rose to 10% in July, up from 9.8% before. This increase shows a higher demand for credit in the country. The EUR/USD currency pair is steady around 1.1650 as the US Dollar begins to recover. There is growing anticipation for the upcoming US inflation data release, which could sway market trends. The GBP/USD pair dipped below 1.3450 after its previous rise. The Bank of England’s recent decision to cut rates played a role in this shift, affecting market sentiment. Gold prices stabilized near $3,400 per ounce, giving back some of its recent gains. New taxes on certain gold bars from the US are impacting the market. In the cryptocurrency market, optimism is rising as Bitcoin approaches $118,000. Ethereum and XRP also show stronger performances, reflecting overall market positivity.

Focus On India’s Economic Performance

The Bank of England lowered rates by 25 basis points to 4%, indicating possible changes in economic policy. Concerns about persistent inflation remain significant. Forex trading carries considerable risks due to leverage and market fluctuations. Traders should carefully assess their strategies and knowledge before participating in these markets. We are closely monitoring the US Dollar as the EUR/USD pair hovers around 1.1650. The upcoming US inflation data is crucial; a higher-than-expected result might solidify the Federal Reserve’s stance on keeping interest rates high, potentially boosting the dollar. This expectation has built up since the Fed’s last meeting in June 2025, where they adopted a data-driven approach for the remainder of the year. The Bank of England’s rate cut to 4% makes us bearish on the British Pound. Historically, the first rate cut in a cycle, similar to the one after the Brexit referendum in 2016, often marks the beginning of a prolonged period of currency weakness. We will treat any temporary strength in the GBP/USD pair below 1.3450 as a chance to sell. In the cryptocurrency market, the sentiment is optimistic as Bitcoin nears $118,000. Reports from the second quarter of 2025 indicate that institutional investment in digital assets surged by over 20%, fueling this rally. We believe this is a great time to consider long positions through futures or call options on major cryptocurrencies. Gold’s current price near $3,400 an ounce appears uncertain, especially with the new US tax on gold bars causing confusion. Gold prices often struggle when real interest rates rise, which may occur if US inflation stays high. For now, we are taking a neutral position, preferring to wait for clearer market direction. The 10% increase in India’s bank loan growth is a strong sign of economic health. This matches recent reports from Q2 2025 showing India’s manufacturing PMI reaching a two-year high. It suggests a positive outlook for derivatives linked to Indian stocks, particularly in the financial sector. Create your live VT Markets account and start trading now.

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President Trump has nominated Stephen Miran to a vacant seat on the Federal Open Market Committee. His term will last until the end of January, pending Senate approval. Miran shares Trump’s recent views, which are more lenient towards the Federal Reserve. He may join other members like Christopher Waller and Michelle Bowman who also support this approach. Despite worries about inflation from tariffs, Miran may rally support for a rate hike of 50 basis points. This nomination is temporary, as Waller is a top candidate to take over as Fed Chair from Jay Powell. This may lessen any negative effects on short-term interest rates.

US Jobless Claims Rise

Recent data shows that initial jobless claims in the US rose to 226,000 after falling previously. Continuing claims reached 1,974,000, the highest since November 2021. The DXY index is likely to stabilize around 98.0 since there are few market influences and an upcoming CPI report is anticipated. In the foreign exchange market, European currencies like EUR/USD dropped due to increased demand for the US dollar, while GBP/USD traded cautiously. Gold also struggled to stay above $3,400 because of a slight rise in the dollar’s value. With a dovish new member joining the Federal Reserve board, we can expect more discussions about a possible rate cut. This increases the chances of a 50-basis point movement. Derivatives linked to interest rates, which are currently priced conservatively, may become more appealing. We should look for opportunities that would benefit from a quicker easing of rates in the coming weeks. The declining labor market, highlighted by rising continuing jobless claims, provides more support for those favoring lower rates. However, with the last official inflation rate for July 2025 at 3.1%, the Fed may feel constrained, leading to market uncertainty. This situation suggests we prepare for more volatility, possibly by buying options on broad market indices before the next CPI report.

Currency Exchange and Market Predictions

Right now, the strength of the US dollar is limiting gains in other currencies, keeping the EUR/USD pair below the 1.0500 mark. We expect this trend to continue until we get clear signals from upcoming inflation data. Short-term options strategies that benefit from this currency pair staying in a narrow range could be effective. Gold’s struggle to maintain prices above $3,400 is largely due to the strong dollar, despite the dovish Fed discussions. This situation poses a risk for gold, which could see a sharp decline if expectations for rate cuts decrease. We should think about using options to protect any long positions in gold against a potential short-term drop. Reflecting on the sharp market reactions during the 2022-2023 rate hike cycle, we can see that changes in policy can lead to big fluctuations. Current political pressure on the Federal Reserve is similar to past uncertain times, which has historically driven up options premiums. Therefore, positioning for an increase in market volatility seems to be the safest strategy leading up to the next FOMC meeting. Create your live VT Markets account and start trading now.

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