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The Bank of England’s interest rate decision met expectations at four percent.
The Bank of England has decided to keep interest rates at 4%, matching expectations. This decision led to a split among policymakers, with four opting to keep rates unchanged. As a result, GBP/USD rose above 1.3400.
EUR/USD stayed steady around 1.1650, despite some fluctuations, as traders awaited important US economic data. In the metals market, Gold corrected from over $3,400 but held above $3,900 due to ongoing geopolitical issues.
Bitcoin is trading below the $116,000 resistance level, with trade tensions affecting market sentiment. The US economic outlook suggests a slowdown in growth, further impacting market volatility.
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Given the Bank of England’s split decision, uncertainty around the future of the pound is growing. Recent data showed UK inflation dropped to 2.5% in July 2025, strengthening the case for a potential rate cut later this year. We are considering buying GBP/USD put options expiring in the fourth quarter to prepare for this possible change.
The current stability in EUR/USD might be temporary as we await essential US economic data. The last Non-Farm Payrolls report from July 2025 indicated job creation was at its lowest in over a year, suggesting a slowing economy. We believe that buying EUR/USD call options is a smart move to take advantage of expected dollar weakness if this trend continues.
Gold remains strong above $3,900 an ounce, backed by central bank demand and rising geopolitical tensions in the South China Sea earlier this year. The World Gold Council recently reported that emerging market banks bought an additional 50 tonnes in the second quarter of 2025, providing a solid price floor. Therefore, selling out-of-the-money put options could be a good way to earn premium while betting that prices will remain stable.
Bitcoin is encountering significant resistance after its strong rally following the 2024 halving event. On-chain data shows a 15% profit-taking increase from long-term holders around the $116,000 mark, indicating market hesitation. We see this as a chance to buy a long straddle, using both call and put options, in anticipation of a major breakout or rejection in the near future.
EURUSD decreases as it hovers between 1.16098 and 1.1631, with traders assessing movement direction
The EURUSD has recently pulled back from its earlier gains and is nearing the 50% retracement level from the decline that started on July 1st. This midpoint is located at 1.16098, just below a key swing range that reaches up to 1.1631.
Currently, the currency pair is trading around 1.16219. Traders are eager to see the next possible price movement, particularly whether it can rise above 1.1631.
Potential For Upward Momentum
If buyers can push the price above this level, we could see upward momentum reaching the 61.8% retracement level at 1.16615. This shift would support a bullish trend in the short term. If the price drops below the 50% retracement level, attention will likely shift to the 100-hour moving average at 1.1589. Further declines may bring the focus to the 200-hour moving average at 1.15487, which served as a solid base before the recent price increase. The EURUSD is retreating from its latest rally and is now testing a key support level around 1.1610. This price represents the midpoint of the drop we observed from the high on July 1, 2025. We are monitoring closely to see if buyers can maintain this level against current selling pressure. If the price remains above the 1.1610 midpoint, traders may see it as an opportunity to buy. Short-term call options aimed at the 1.1660 resistance level could be a good strategy in the coming week. This view is supported by the recent Eurozone CPI data for July, which showed a cooler-than-expected inflation rate at 2.1%, relieving pressure on the ECB for aggressive hikes.Signs Of Bearish Momentum
However, if we see a strong break below 1.1610, it would indicate that buyers have lost control, and momentum is shifting. In such a case, we would consider put options with an initial target at the rising 100-hour moving average around 1.1590. This bearish outlook is further backed by last Friday’s robust U.S. non-farm payroll report, which revealed 250,000 jobs added in July, strengthening the dollar. We’ve seen similar indecision before, especially during the central bank policy changes of 2024, which caused sharp market swings. With mixed signals from both the U.S. Federal Reserve and the European Central Bank, implied volatility on options may rise as we approach the September policy meetings. Traders should prepare for potentially quicker and larger price movements in the upcoming weeks. If selling persists past the 1.1590 level, we would then look toward the 200-hour moving average at 1.1549. This level was key in launching the rally we saw just yesterday, making it an important support zone. A test of this area would indicate a more serious downturn for the currency pair. Create your live VT Markets account and start trading now.The NY Fed’s survey shows increasing inflation expectations and consumers’ growing financial optimism.
The Federal Reserve Bank of New York reports that inflation expectations for the next year have increased to 3.1%, up from 3.0% in June. However, the three-year outlook for inflation remains steady at 3.0%.
Looking further ahead, the five-year expectation has dropped to 0.9%, down from 2.6% in June. The survey shows that expectations for home price growth are stable at 3.0% for July.
Consumer Optimism and Credit Access
Consumers are feeling more positive about their finances, both now and in the future. They also believe that getting credit will be easier. Today’s report shows short-term inflation expectations nudging up to 3.1%, while consumer optimism grows. This small increase aligns with recent government data showing that the July 2025 Consumer Price Index (CPI) was 3.2%. We expect the Federal Reserve to keep interest rates steady at the next meeting without making immediate cuts. A key takeaway is the significant drop in five-year inflation expectations to just 0.9%. This suggests that the market believes the series of rate hikes during 2023 and 2024 have successfully controlled long-term inflation. Traders seem to be anticipating major rate cuts starting in early 2026.Interest Rate Opportunities
The contrast between short-term inflation and long-term disinflation makes interest rate derivatives appealing. We should explore trades that benefit from a steepening yield curve, betting that long-term rates will fall more quickly than short-term rates. Historically, similar inflation expectation patterns have occurred before the Fed shifted to easing in previous cycles. The positive consumer outlook and the expectation of easier access to credit are strong signals for the stock market. This suggests that a “soft landing” scenario is becoming more likely, which could lead to decreased overall market volatility. We might consider selling VIX futures or buying call options on consumer discretionary stocks. Given the solid second-quarter 2025 GDP growth of 2.0%, the economy seems to be handling higher interest rates without significant damage. This stability, along with the long-term disinflation signal, supports a risk-on approach in equity derivatives. We can express this view by selling out-of-the-money puts on broad market indices like the S&P 500. Create your live VT Markets account and start trading now.The US dollar rises as EUR/USD gains fade, influenced by jobless claims and economic concerns
Euro’s Performance
The Euro has pulled back from its recent highs, and the US Dollar has made a small recovery as we await US Jobless Claims data. The US Dollar had weakened due to worries about stagflation and possible interest rate cuts by the Federal Reserve. The EUR/USD pair is currently seeing upward pressure, aiming for levels around 1.1700 and 1.1745. For three days, the Euro has been on the rise, boosted by positive peace talks in Ukraine, even with disappointing German data. Concerns about an economic slowdown in the US have also been impacting the US Dollar. Recently, the Euro increased from just under 1.1400 to the mid 1.1600s and continues to gain slightly, trading at 1.1665 before the US market opens. Support came for the Euro from a meeting between US envoy Steve Witkoff and Russian President Vladimir Putin. Meanwhile, the US Dollar remains cautious as economic data strengthens expectations for upcoming Federal Reserve rate cuts. The expected rise in US Jobless Claims by 3,000 to 221,000 will be closely monitored, especially after previous weaker job numbers. A disappointing reading could put further pressure on the US Dollar due to labor market worries. German data revealed a 1.9% decrease in Industrial Production and a shrinking trade surplus, yet the Euro’s reaction was minor. The EUR/USD is gaining strength now that it has passed 1.1600, with bullish targets set between 1.1700 and 1.1710.US Dollar and Euro Outlook
US President Trump’s trade policies and macroeconomic data have not favored the US Dollar, while recent German economic reports haven’t significantly impacted the Euro. We are focusing on immediate technical supports and resistances, as the US Dollar is closely connected to how Jobless Claims are interpreted. Although the Euro is pulling back slightly, we see this as just a short pause in a larger upward trend against the US Dollar. The market is anticipating a weakening US economy, pushing the EUR/USD toward the 1.1700 level. Traders should consider any dips as potential buying opportunities in the near future. We believe the US Dollar’s weakness is valid and likely to persist. The latest US jobless claims data for the week ending August 2nd, 2025, reached 224,000, indicating a gradual easing in the labor market since the second quarter. This confirms market expectations that the Federal Reserve will cut interest rates at its September meeting, with futures markets estimating over a 70% likelihood. On the flip side, the Euro remains strong despite some mixed signals from Germany. The market seems to be focusing on the policy difference between a dovish Fed and a more neutral European Central Bank. This situation is similar to what we saw in late 2019, when US growth concerns outweighed issues in Europe, benefiting the Euro. Considering this outlook, we are preparing for further strength in the EUR/USD. We are eyeing call options with strike prices at 1.1700 and 1.1750, aiming for the highs mentioned in recent analyses. The previous resistance around 1.1600 is expected to serve as solid support for any short-term pullbacks. Upcoming US economic data will be crucial in confirming this trend. Another weak jobs report or inflation data hinting at stagflation could push the dollar down further. We will be watching these figures closely to increase our long Euro positions. Create your live VT Markets account and start trading now.The strong relationship between the Mexican and US presidents led to another 90-day tariff delay.
Mexico has secured another 90-day extension on tariff increases, thanks to the strong relationship between its president and the U.S. president. While some issues remain unresolved, this connection offers hope for future improvements.
The Mexican Peso’s current focus is on domestic matters, especially July’s inflation figures. Year-on-year inflation is expected to dip, approaching the 3% target due to the effects of last July’s price surge.
Inflation And Interest Rates
Though inflation is set to improve, price increases in the core rate have continued. July’s figures are forecasted to drop only slightly. As a result, Banxico is expected to reduce interest rates by 25 basis points, less than earlier cuts, influenced by the postponed tariffs. This change in interest rates is unlikely to significantly impact the Peso, as it aligns with analyst expectations. Many analysts anticipate this decision, which reduces its effect on the currency’s value. With the 90-day suspension of U.S. tariffs, we see a chance for reduced external risks for the Peso. This is evident in the derivatives market; one-month implied volatility on the USD/MXN pair has decreased from over 14% in July 2025 to about 11% this week. This trend suggests a more stable, range-bound environment for the currency in the coming weeks. Given this lower volatility, we find strategies that benefit from stability, like selling strangles, appealing. With the Mexican Peso trading around 17.15 against the dollar, we expect a trading range of 16.90 to 17.40 through early September. Traders might opt to collect premium rather than invest in significant directional bets.Banxico’s Interest Rate Decision
The upcoming decision from Banxico about interest rates is not expected to disrupt this calm. A 25 basis point cut is widely expected and likely already factored into current prices, marking a slowdown from the 50 basis points cuts we had earlier in 2025. Unless the central bank surprises the market with a hold or a more substantial cut, reactions should be minimal. Our attention now shifts from the rate decision to Banxico’s future guidance and upcoming inflation reports. We are particularly watching the core inflation rate, which has stubbornly stayed above 4.3% recently. If core prices don’t cool as anticipated, the central bank may adopt a more hawkish stance later this year. This period of stability contrasts sharply with the high-alert atmosphere during trade talks in 2019, when peso volatility often spiked in response to political news. The current environment supports Peso strength, but the narrowing interest rate gap with the United States calls for caution. We will keep an eye on this differential as a crucial indicator for the sustainability of any carry trade. Create your live VT Markets account and start trading now.Apple drives tech rally as semiconductors recover, but healthcare faces challenges, leading to cautious investor sentiment
Apple’s stock is up 2.27%, highlighting the focus on the technology sector. Semiconductor shares are also bouncing back, with Nvidia increasing by 1.58% and Broadcom rising by 1.75%. This positive change is fueled by encouraging market signals and hopeful earnings forecasts.
Market Developments
Amazon is on the rise, up 0.81%, showing faith in online retail. Financial results vary; JPMorgan Chase dipped slightly by 0.31%, reflecting caution in the market. In healthcare, Eli Lilly fell sharply by 14.37%, raising doubts about the pharmaceutical industry’s future. Despite Eli Lilly’s drop, sentiment in technology remains strong, thanks to gains in Apple and semiconductor stocks. Yet, the decline in Eli Lilly raises concerns about healthcare’s stability. Overall, the market exhibits mixed feelings, with optimism in tech and worries in sectors like healthcare. This tech upswing presents a great chance to boost investments in the sector. Increasing stakes in strong tech firms like Nvidia and Broadcom could be advantageous. Keeping a close watch on the healthcare sector due to Eli Lilly’s fall may open opportunities to invest in robust companies. It’s wise to diversify to guard against declines in specific sectors. Given the current strength in technology, it’s time to explore bullish positions in key stocks. Apple’s rise today, following the announcement of a product event on September 10th, makes buying call options for late September an appealing strategy. Call volume for Apple has surged by 40% this week, indicating significant interest from institutional investors.Investment Tactics
The rebound in semiconductor stocks like Nvidia and Broadcom appears linked to a positive global chip sales report from the Semiconductor Industry Association last week. This report indicated a 5% month-over-month rise, easing worries about a slowdown in AI hardware production. We can use bull call spreads on the SOXX semiconductor ETF to capture this sector momentum while controlling our costs. Eli Lilly’s sharp 14% drop presents a significant opportunity to trade volatility in the healthcare sector. This decline was sparked by competing data on a new weight-loss drug, resulting in an implied volatility of over 85% on Lilly’s options. This suggests we could buy straddles, betting on increased price fluctuations as the market assesses whether this is a temporary setback or a long-term issue. The mixed financial results, including JPMorgan’s slight decline, signal investor uncertainty ahead of next week’s inflation data. We saw similar indecisiveness in the banking sector earlier in 2024 before the Fed clarified its plans. For now, selling iron condors on the Financial Select Sector SPDR Fund (XLF) allows us to earn premiums by betting that the sector will stay within a certain range in the short term. Create your live VT Markets account and start trading now.Bostic raises concerns about ongoing tariff effects while balancing inflation risks and employment uncertainties in the economy
The President of the Atlanta Federal Reserve, Rafael Bostic, expects the economy to keep slowing down. There is increasing uncertainty about how this will affect jobs and inflation. Companies are holding back on hiring, and price increases are likely to continue for the next six to twelve months, putting pressure on the Federal Reserve.
Policymakers are unsure if tariffs will lead to temporary or long-lasting price changes. The long-term nature of tariffs makes it tough to assess their effects. Businesses are trying different ways to adjust prices and may keep doing this into next year, as the economy’s fundamentals stay strong.
Impact Of Lower Income
Lower-income consumers are feeling more strain as the savings built up during the pandemic are running out. Still, the job market in the Southeast has not seen a major slowdown. The July jobs report has prompted a reevaluation of how well the Federal Reserve’s employment goals are being met. Bostic notes that tariffs, designed for structural change, may have long-term effects. The federal debt could impact liquidity and requires the Federal Reserve’s attention. Even with significant reductions in the Fed’s balance sheet, one rate cut for this year seems fitting, depending on future data. The risks in the labor market are higher than expected, although price pressures might ease by mid to late next year. There is a clear split at the Federal Reserve between officials who are worried about job losses and those who are focused on inflation. This division leads to uncertainty about the outcomes of the upcoming September meeting. Traders should prepare for increased volatility as a result. The July jobs report showed only 95,000 jobs added, far below the expected 180,000, which has clearly unsettled policymakers. This raises concerns that the labor market might be weaker than initially thought, giving more support to those at the Fed who want to cut rates sooner.Persistent Price Pressures
At the same time, we are experiencing ongoing price pressures from the new broad tariffs that began rolling out in the second quarter of 2025. The latest Core PCE inflation rate remains high at 2.8%, significantly above the Fed’s target. This keeps officials reluctant to ignore inflation risks or commit to a rate cut. Given this uncertainty, traders should look at strategies that could profit from a significant price movement in either direction. Buying straddles or strangles on major indices like the S&P 500 may be a smart choice, allowing for gains whether the market rises sharply on a dovish surprise or declines on a hawkish one. In the rates market, there are opportunities due to the gap between short-term and long-term expectations. The Fed’s division could cause volatility in short-term interest rate futures linked to the SOFR. If inflation fears keep the Fed from acting while the economy slows, we may see the yield curve continue to flatten. We can learn from the trade disputes of the late 2010s, which showed how quickly the Fed can shift from raising to cutting rates as trade uncertainties impact business investment and growth. This past suggests we should not underestimate how swiftly the Fed’s stance can change. The CBOE Volatility Index, or VIX, has been rising, recently hovering around 19, signaling confusion in policy. We believe buying VIX futures or call options could be an effective way to prepare for the expected turbulence ahead of the September meeting. This is a straightforward bet on the uncertainty itself. Create your live VT Markets account and start trading now.UOB Group expects USD/CNH to trade between 7.1780 and 7.1980 within a broader range.
The US Dollar (USD) is expected to stabilize between 7.1780 and 7.1980. Looking further ahead, it seems to have entered a trading range of 7.1600 to 7.2240.
In the last trading session, the USD was expected to move between 7.1800 and 7.2000. Instead, it fluctuated between 7.1836 and 7.1953, a narrower range than predicted.
In the coming weeks, we think the USD will continue to trade within the 7.1600 to 7.2240 range. This view has remained consistent over the last few days.
It’s important to note that forward-looking statements carry risks and shouldn’t be seen as investment advice. Always do your own research before making financial decisions, as open markets can be very risky.
We’re seeing the US Dollar settle into a routine against the yuan. In the upcoming weeks, we anticipate that trading will stay within 7.1600 to 7.2240. This suggests a period of low momentum, making it challenging for trend-following strategies.
This outlook is supported by the market’s recent calm movements, which have been even steadier than we expected. The Cboe/CME FX Yuan Volatility Index dropped to 4.2% late last week, the lowest since March 2025. This low number indicates that the options market isn’t expecting big price swings.
Given this stability, strategies that benefit from limited movement seem promising. Selling options, like creating short strangles or iron condors within this expected range, could be a smart move. These strategies gain from time decay as long as the dollar stays within the set limits.
Reflecting on the past, this calm period reminds us of the tight ranges we saw throughout 2023 when central bank policies helped keep volatility down. However, unlike the slow upward trend we observed back then, the current market shows signs of true consolidation. This suggests that a breakout is less likely now than in previous years.
Recent economic data from both the U.S. and China supports this sideways view. The U.S. July jobs report released last Friday showed steady but not outstanding growth, giving the Federal Reserve little reason to change its neutral position. At the same time, Chinese inflation figures remain low, promoting continued currency stability.
Commerzbank analyst notes decline in Russia’s economy amid stalled US mediation efforts
The Russian economy is facing a downturn for the first time since sanctions were imposed. Key economic measures, like the manufacturing and services PMIs, have fallen below 50, indicating contraction.
The International Monetary Fund has cut its GDP growth forecast to under 1% for next year. Meanwhile, revenues from oil and gas are decreasing, which is worsening the fiscal deficit. The Central Bank of Russia is lowering interest rates, which may weaken the exchange rate.
It’s expected that the USD/RUB and EUR/RUB exchange rates will continue to rise steadily. This situation carries risks and should be handled carefully. It’s important to do thorough research before making any investment decisions.
No guarantees are made about the accuracy or timing of the information provided. Users bear all risks, losses, and costs associated with investing. The views expressed here are those of the author and do not represent any official position.
Current economic indicators suggest that the Russian ruble will weaken in the upcoming weeks. Recent S&P Global data shows that for July 2025, manufacturing and services PMIs fell to 48.2 and 47.9, respectively. This marks the first ongoing contraction since sanctions were initially imposed in 2022.
The pressure on the ruble is rising due to decreasing energy revenues. This is crucial for the Russian budget. The Ministry of Finance reported a 22% year-over-year drop in oil and gas earnings for the first seven months of 2025. This decline is expanding the fiscal deficit and pushing the government to allow a weaker ruble to enhance the local value of its exports.
The Central Bank of Russia’s recent decision supports this trend. Its 50-basis-point rate cut on July 28, 2025, bringing the rate down to 7.0%, shows a shift toward fostering economic growth instead of defending the currency. For traders in derivatives, lower interest rates make it less appealing to hold long positions in the ruble because of a smaller yield spread.
We’re now in a different situation compared to 2023 and early 2024 when capital controls and high energy prices artificially boosted the ruble. During that time, betting against the currency was challenging. Current economic data indicates that these supports are diminishing, making a bearish outlook on the ruble more reasonable.
In light of this, we recommend traders consider long positions in USD/RUB or EUR/RUB currency pairs using derivatives such as forwards or call options. With the USD/RUB rate now exceeding 95, aiming for the 98-100 range by late Q3 2025 seems realistic. Using options can help manage risk by limiting the maximum potential loss on the trade.
Waller emerges as the favored candidate for Fed chair with support from Trump’s team
Fed’s Waller is a top candidate for the new Fed chair, according to Bloomberg. The Trump team supports Waller because he predicts Fed rate cuts. He has met with the Trump team, although not directly with Trump.
Trump claims to support the Fed’s independence but recent comments from the White House suggest that Fed actions reflect political divides based on who chose the Fed governors. Trump wants to tilt this political balance in his favor, viewing a new Fed chair appointment and a replacement for Kugler as beneficial. If Waller becomes chair, it will leave two governor positions open.
