Canada’s Gross Domestic Product (GDP) for May met expectations with a slight 0.1% decrease from the previous month. This shows that market predictions for the Canadian economy are stable. In other market news, the EUR/USD is gaining traction and nearing the 1.1450 level. The GBP/USD has seen some ups and downs but has settled back above 1.3200 after dropping to around 1.3180.

Gold Market Performance

Gold is experiencing a selling trend and has had a hard time breaking past the $3,300 mark per troy ounce. The performance of gold reflects lower US yields and only slight declines in the US Dollar. Bitcoin’s price has remained between $116,000 and $120,000 for sixteen days as big investors continue to buy. Over-the-counter balances have fallen to record lows due to a new agreement between JPMorgan and Coinbase that connects banking with crypto wallets. The Federal Open Market Committee (FOMC) is still unsure how tariff risks will affect job markets versus inflation. This ongoing discussion continues to influence US monetary policy decisions.

Monetary Policy Analysis

With Canada’s GDP decreasing in May, we expect low volatility in the Canadian dollar. The 0.1% decline was anticipated and contrasts with the modest 0.2% average monthly growth we saw in the last half of 2024. As a strategy, selling options to earn premiums on currency pairs like USD/CAD might be wise in the coming weeks. We are closely monitoring the EUR/USD as it tests the 1.1450 level. The Euro’s strength appears tied to the hawkish stance of the European Central Bank from their July 10th, 2025 meeting, indicating a tougher approach to inflation compared to the Fed. Traders may want to consider buying call options in case of a breakout above this key resistance level. The British pound’s recent movements above 1.3200 suggest continued price fluctuations. Unexpectedly high UK inflation data for June 2025, at 3.5%, is causing uncertainty about what the Bank of England will do next. This market environment is suitable for volatility strategies, like buying a straddle to profit from significant price swings in either direction. Gold’s struggle to rise above $3,300 indicates that the metal may be losing momentum after a strong start earlier this year. With the 10-year US Treasury yield stable around 3.8%, the appeal of non-yielding gold is fading. We see this as a chance to sell out-of-the-money call options at the $3,300 strike price, betting it will act as a ceiling. Bitcoin’s price range between $116,000 and $120,000 hints that a major price change is on the horizon. This calm period follows a big surge after the 2024 halving, and derivative data shows implied volatility at a six-month low. A long strangle strategy, which involves buying both a call and a put option, could take advantage of the breakout when it happens. The Federal Reserve’s uncertainty creates a tense market environment, making each new piece of information crucial. We will keep an eye on the US jobs report for July, set to be released on August 8th, 2025, as a key event. Traders should consider taking protective measures, like purchasing VIX call options, to prepare for any sudden market drops. Create your live VT Markets account and start trading now.

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The Core Personal Consumption Expenditures (PCE) Price Index in the United States went up by 0.3% in June, which was what experts expected. This index is important for understanding inflation and its effects on monetary policy. EUR/USD gained strength and moved close to 1.1450 after briefly dropping to about 1.1400. This shift came in response to the Federal Reserve’s actions and strong job data from the U.S.

The British Pound Movement

The GBP/USD fluctuated, dipping to 1.3180 before rising above 1.3200. This change was linked to selling pressure on the U.S. Dollar due to new economic data. Gold faced selling pressure as it struggled to stay above the $3,300 mark per troy ounce. These trends are connected to falling U.S. yields and slight losses for the dollar. Bitcoin has been stuck in a narrow range between $116,000 and $120,000 for over two weeks. Activity in large wallets and a record low in over-the-counter balance indicate ongoing market developments. The Federal Open Market Committee (FOMC) is debating the economic risks posed by tariffs. There’s disagreement about whether tariffs hurt labor markets or increase inflation.

Implications of Core PCE Data

Today’s date is 2025-07-31T18:16:22.876Z. With the Core PCE data meeting expectations, it appears that the Federal Reserve is unlikely to make sudden changes to its policy. This hints at a period of steady, though elevated, interest rates. Hence, strategies like selling short-dated options for premium collection could be worth considering. The recent University of Michigan Consumer Sentiment survey for July 2025 showed a slight dip, further suggesting that the Fed may choose to remain stable for now. The Euro is showing strong momentum, nearing 1.1450 against the dollar. This is likely due to expectations that the European Central Bank will respond to ongoing inflation, which was over 4% in Germany and France last quarter. In the upcoming weeks, buying EUR/USD call options or taking a long position in Euro futures could be advantageous. The British Pound is also showing strength, rising above 1.3200. With UK inflation for June 2025 at a high 3.8%, markets are expecting another rate hike from the Bank of England at their next meeting. This ongoing support for the pound makes positions benefiting from GBP strength against the dollar seem justifiable. The selling pressure on Gold around $3,300 seems more like profit-taking than a trend reversal. Since World Gold Council reports from Q2 2025 indicate that central banks are still big buyers, we see dips as potential buying opportunities. Employing bull call spreads might let us capture upside while managing risk if U.S. yields start to increase again. Bitcoin’s narrow trading range between $116,000 and $120,000 looks poised for a breakout. The increase in open interest for September 2025 call options, especially at the $130,000 strike price, suggests that savvy investors are preparing for an upward move. We should be alert for a significant shift once this range is broken. The disagreements within the FOMC over tariffs are creating uncertainty in the market. This situation reminds us of the volatility from 2018-2019 when trade policies forced the Fed to change its approach. It may be wise to consider hedges for our portfolios, such as VIX derivatives, as this internal conflict could lead to unpredictable market conditions. Create your live VT Markets account and start trading now.

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The US 30-year mortgage rate has dropped to 6.72%. This offers a slight relief amid high home prices and borrowing costs. Last week, the rate was 6.74%, and it peaked at 7.04% earlier this year. The lowest point this year was 6.62%. Even with this decrease, the market is still struggling with falling sales.

Treasury Yield and Economic Implications

The current 30-year mortgage rate of 6.72% is linked to the 10-year Treasury yield, which is around 4.35%. This small drop suggests that bond markets are worried about future economic growth. For traders, interest rate futures are becoming increasingly important, as even minor adjustments in economic data could lead to bigger price changes. This dip in borrowing costs has sparked discussions about what the Federal Reserve might do next, and we expect this will be a key topic for the rest of the summer. Looking back at late 2023, traders began betting on rate cuts before the Fed signaled anything. Currently, fed funds futures indicate a 45% chance of a rate cut by the December 2025 meeting, up from just 30% last month. With the ongoing struggle between persistent inflation and a slowing economy, we may see increased volatility in the bond market. The MOVE Index, which measures Treasury market volatility, has been rising from earlier lows this year, reminiscent of the ups and downs seen in 2024. This situation hints that strategies aimed at profiting from larger interest rate movements could become more appealing.

Impact on Housing Market

This slight rate drop won’t immediately solve the housing market issues, as high home prices remain a significant obstacle. Data from the National Association of Realtors for June 2025 shows that existing home sales are still down 4% compared to a year ago. Traders in derivatives should pay close attention to homebuilder ETFs like XHB, as their stock prices are very responsive to changes in interest rate expectations. Create your live VT Markets account and start trading now.

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In July, US continuing jobless claims reached 1.946 million, just below the expected 1.96 million. This number gives insight into the job market and can impact market trends. The EUR/USD currency pair moved towards 1.1450 as the US dollar lost some of its strength. Positive job data from the US played a role in this shift.

GBP/USD Gains and Losses

The GBP/USD pair has been experiencing ups and downs, recently climbing back above 1.3200 after a short drop. This back-and-forth movement was driven by recent US economic data that affected the US dollar’s value. Gold prices faced some selling pressure while trying to rise above $3,300 per troy ounce. Falling US yields and slight losses in the dollar influenced gold’s performance. Bitcoin has been hovering between $116,000 and $120,000 for over two weeks. Increased buying from major investors and clearer regulations are affecting its current market sentiment. US continuing jobless claims are just under the 2 million mark, slightly higher than the 1.7 to 1.8 million range that was common in 2024. This ongoing rise suggests a slowing job market, which may affect the Federal Reserve’s future decisions. We should keep an eye on Fed Funds futures for signs of traders expecting a rate pause in September.

EUR/USD Market Movement

The EUR/USD is heading towards 1.1450, a notable increase from the 1.08 level seen last year. This rise shows weakness in the dollar, particularly as recent data reveals that Eurozone core inflation remains steady at 3.5%. This situation keeps the European Central Bank on a more aggressive monetary policy path. It may be wise to buy call options on the EUR/USD, aiming for a rise above the 1.1500 resistance level. Similarly, the GBP/USD is trading above 1.3200, benefiting from the dollar’s decline. Reports from the Bank of England indicate that UK inflation remains persistent, making interest rate cuts unlikely before 2026. This difference in policy from the US supports strategies like bull call spreads for potential gains. Gold is facing sellers near the $3,300 level, a significant increase from the $2,350 range of mid-2024. Its strength is linked to US 10-year Treasury yields, which have recently fallen below 3.8%. This makes non-yielding assets like gold more attractive. We see an opportunity to sell out-of-the-money put options on gold, collecting premium while betting prices will stay supported above $3,250. Bitcoin’s tight range between $116,000 and $120,000 has led to low volatility. On-chain data shows that wallets holding over 100 BTC have been steadily increasing since the “SEC Digital Asset Framework” was introduced earlier this year. This calm accumulation phase often leads to a significant price movement, making a long straddle an interesting strategy for profiting from an upcoming breakout in either direction. Create your live VT Markets account and start trading now.

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In the United States, initial jobless claims for the week of July 25 dropped to 218,000, lower than the expected 224,000. This figure gives us a glimpse into the current employment situation in the country. EUR/USD has gained strength again, nearing the 1.1450 level. This shift follows decisions made by the Federal Reserve and positive US employment data.

Currency Market Changes

The GBP/USD pair has shown some ups and downs, staying just above 1.3200. This instability comes as the US Dollar faces pressure from recent American data. Gold prices are struggling to rise over $3,300 per troy ounce, facing downward pressure from falling US yields and some weakness in the Dollar. Bitcoin has stayed stable, trading between $116,000 and $120,000 for the last 16 days. Increased buying activity from large investors and a low balance in over-the-counter markets have supported this steady performance. The Federal Open Market Committee (FOMC) is divided on how to respond to tariff risks. The discussion focuses on potential effects on the job market and inflation.

Currency Trading Opportunities

The US labor market is strong, as shown by the drop in initial jobless claims to 218,000. However, the FOMC’s differing opinions on tariff risks create uncertainty. This clash between solid data and policy doubts suggests we should brace for market fluctuations. For currency traders, the dollar’s weakness opens up opportunities, especially in pairs like EUR/USD, currently testing the 1.1450 resistance level. Considering the instability in GBP/USD above 1.3200, using options to bet on price swings, known as a straddle, may be a better strategy than choosing one direction. This kind of volatility around Fed policy reminds us of significant currency swings from 2022 and 2023. Gold’s struggle to break through $3,300, despite lower US yields, is a warning sign. This indicates the recent rally might be losing steam. Traders with long positions should think about taking profits or hedging with put options. Historically, when speculative long positions in gold reach high levels, a price correction often follows. Bitcoin’s steady trading between $116,000 and $120,000 is promising, indicating strong accumulation by big investors. With low implied volatility during this 16-day stretch, buying call options could be a smart move for potential upside breakouts. This pattern resembles what we observed in late 2020 before a significant price surge, with the effects of the upcoming 2024 halving still offering support. In the end, the market is looking for a clear signal from the Federal Open Market Committee. Until we receive more consistent guidance on how they will handle inflation and trade risks, it’s wise to adopt strategies that limit potential losses. We should keep an eye on future speeches from Fed officials for hints about their next steps. Create your live VT Markets account and start trading now.

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European indices had mixed performances. The CAC in France and the FTSE MIB in Italy both fell over 1.1%. However, Spain’s Ibex saw a slight increase of 0.11%. The closing numbers for major indices were as follows: German DAX down 0.73%, France’s CAC down 1.14%, the UK’s FTSE 100 down 0.05%, and Italy’s FTSE MIB down 1.56%.

European Debt Market

In the European debt market, yields mostly decreased, but Italy’s rates stayed the same. Spain’s 10-year yield was 3.271%, Germany’s was 2.693%, France’s was 3.347%, and the UK’s was 4.572%. In the US, the stock market showed overall gains. The Dow slightly dipped by 0.01%, while the S&P increased by 0.47%, NASDAQ rose by 0.87%, and the Russell 2000 dropped by 0.30%. Microsoft shares rose 4.4%, and Meta shares surged 11.85%. Apple and Amazon were set to report after the market closed, with Apple slightly down and Amazon up by 1.74%. US interest rates declined for various durations, with the 10-year yield at 4.340%. Commodities showed mixed results: copper fell, crude oil decreased, and gold went up by 0.60%. Bitcoin also increased, trading at $118,298. Initial job claims remained low, and Core PCE slightly exceeded expectations at 2.8%.

European Markets Weakness

European markets, especially in France and Italy, are showing notable weakness. This presents an opportunity to hedge against further declines. The drop in the CAC and FTSE MIB, both over 1%, suggests traders might want to buy put options on European index ETFs in the coming weeks. Concerns about the French budget deficit and Italian political instability are affecting investor sentiment, making this strategy a way to protect portfolios. In the US, the tech-heavy NASDAQ is rising while the Russell 2000 small-caps are falling, pointing to a possible pairs trading strategy. We should consider buying call options on the NASDAQ 100 and put options on the Russell 2000. This divergence is similar to the pattern observed in late 2023 and early 2024, where major tech stocks outperformed the overall market during economic uncertainty. Tonight’s earnings from Apple and Amazon are expected to create significant volatility, especially following major movements from Microsoft and Meta. Given this uncertainty, we could use straddles or strangles on these stocks to benefit from large price swings in either direction. Historically, stocks like these have seen average post-earnings moves over 5%, making the cost of options a worthwhile investment. The significant drop in copper due to tariff news suggests a risk-averse sentiment in global industrials and materials. This echoes the trade war period of 2018-2019, which pressured cyclical sectors. We should think about buying puts on mining and industrial ETFs to protect against potential trade disputes. Despite the slightly higher-than-expected inflation with Core PCE at 2.8%, US bond yields are falling, indicating that the market is more concerned about a slowdown in growth than the Fed. This uncertainty opens up opportunities to trade options on Treasury bond ETFs like the TLT, betting on continued rate volatility. The last Federal Reserve meeting reflected a divided committee on future rates, supporting potential swings in the bond market. Gold is rising while oil is falling, suggesting a move towards safety and away from growth-dependent assets. With the VIX, a measure of market fear, still low at around 14, buying VIX call options seems like an inexpensive way to protect against market shocks. This approach would guard against various risks we see across different markets. Create your live VT Markets account and start trading now.

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The Atlanta Fed has announced its first growth estimate for the third-quarter GDP at 2.3%. This comes after the second-quarter GDP was reported at 3.0%, which was slightly higher than the Atlanta Fed’s earlier estimate of 2.9%. Their model, which is known for its accuracy, initially predicted that market economists would forecast a growth of 2.4%. Early estimates can vary quite a bit, but these fluctuations should decrease as more data becomes available.

Third Quarter Growth Estimate

As of July 31, 2025, the initial estimate for real GDP growth in the third quarter (seasonally adjusted annual rate) is 2.3%. This follows the announcement from the US Bureau of Economic Analysis, which reported a 3.0% growth for the second quarter, slightly above what the Atlanta Fed expected. The GDPNow estimate will be updated again, with the next update set for August 1. For more release details, check the “Release Dates” section. We just experienced a solid 3.0% GDP growth for the second quarter, surpassing most forecasts. However, the Atlanta Fed’s model is now indicating a slower 2.3% for the third quarter. This initial estimate suggests that the economy may be losing some momentum as we move into the second half of the year.

Market Implications

Given the early volatility in this forecast, we can expect an increase in implied volatility. Traders might want to consider buying options, such as puts on the SPX, to protect against a potential market drop if upcoming data confirms this slowdown. We remember the VIX spiked above 20 during the regional banking concerns in spring 2024 when mixed economic signals first appeared; a similar reaction could happen again. This GDP outlook arrives just as the July CPI report showed core inflation finally dropping to 3.1%, which is a bit lower than expected. The job market remains strong with a 3.6% unemployment rate, but the latest report from early July indicated that wage growth is slowing for the second month in a row. The Federal Reserve is monitoring this closely, and any sign of a significant slowdown could adjust their previously hawkish stance. If this growth concern develops, we are looking at defensive sectors like utilities (XLU) and healthcare (XLV) to potentially outperform. On the other hand, it might be wise to use derivatives to hedge or take bearish positions on cyclical stocks in the industrial and consumer discretionary sectors, as they are most sensitive to declines in spending and investment. The market is already beginning to factor in a reduced likelihood of another rate hike this year. Traders in SOFR futures are starting to position for the idea that the Fed may have already reached its peak rate. We witnessed a similar shift in late 2018 when the Fed eased its tightening cycle amid growing concerns about economic growth, which led to a significant bond rally. Create your live VT Markets account and start trading now.

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The average of initial jobless claims in the United States dropped to 221,000 by late July, down from 224,500. This data gives us a look at the current job market. The EUR/USD currency pair rose to 1.1450 after falling to 1.1400, driven by the Fed’s decisions and strong employment and PCE reports from the US. Likewise, GBP/USD climbed back above 1.3200, responding to the volatility of US data and pressure on the US Dollar.

Gold and Bitcoin Market Trends

Gold faced challenges at $3,300 per troy ounce. It fluctuated due to changes in US yields and the US Dollar. Bitcoin remained stable between $116,000 and $120,000 for over two weeks, affected by whale buying and regulatory news. The FOMC is discussing tariff risks and whether they could harm jobs or spark inflation. Trading in the Forex market involves high risks, including the potential for total loss. Traders should carefully assess their risk tolerance and goals. With jobless claims averaging 221,000, the US labor market appears strong. This is supported by a June 2025 non-farm payrolls report showing 210,000 new jobs, suggesting the Federal Reserve might keep interest rates steady to control inflation. Derivative traders should be cautious about predicting rate cuts and might explore strategies that benefit from consistently high yields.

Recent Market Movements

The rise of EUR/USD to 1.1450, despite strong US data, indicates that traders are considering other influences, like the European Central Bank’s recent hints about addressing inflation. This creates a delicate situation, making volatility strategies like straddles worth considering in the coming weeks. Reflecting on 2024, similar differences in central bank policies often led to sudden and unpredictable movements. The shift of GBP/USD back above 1.3200 suggests that the US Dollar is facing pressure on multiple fronts. With UK inflation for June 2025 being slightly higher than expected at 3.1%, the Bank of England is unlikely to signal any easing of policy soon. This difference could present opportunities in options that favor Sterling strength against the dollar, at least in the short term. Gold struggles at the $3,300 level as the US 10-year Treasury yield rises to around 4.8%. This increase in yield makes gold, which does not earn interest, less appealing for new investments. Traders might want to consider buying put options as a hedge against a possible price drop if yields keep climbing. Bitcoin’s stable range between $116,000 and $120,000 hints that a significant movement may be coming. The market balances positive indicators, like whale accumulation, with uncertainty from the SEC’s forthcoming guidance on staking in late 2025. This uncertainty is a good reason to prepare for a breakout, possibly using long strangle options to benefit from a significant price change in either direction. The ongoing FOMC discussion about whether tariffs could lead to inflation or hurt employment remains a key uncertainty in the market. This internal conflict within the Fed makes their next decision hard to predict, increasing risks for directional bets. In this environment, it’s crucial to use derivative strategies that have a clear risk profile. Create your live VT Markets account and start trading now.

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The Personal Consumption Expenditures (PCE) Price Index in the United States for June rose by 2.6% compared to last year. This was higher than the expected 2.5%, showing that consumer prices increased during this month. The EUR/USD currency pair moved upward, approaching the 1.1450 level, thanks to a weaker US dollar following positive employment and PCE data. In a similar trend, GBP/USD fluctuated and went slightly over 1.3200 after the US data was released.

Gold And Bitcoin Overview

Gold faced resistance at $3,300 per troy ounce due to falling US yields and a weaker dollar. On the other hand, Bitcoin remained steady within the $116,000-$120,000 range, supported by buying from large investors and clearer regulations in the market. The Federal Open Market Committee (FOMC) is divided on how tariffs will affect the economy. The main debate is about whether these tariffs will significantly affect labor markets or push inflation higher. The June PCE data, indicating a 2.6% increase, adds uncertainty. This unexpected rise in inflation makes the Federal Reserve’s next steps more complicated, especially since the committee is split. We should expect more market fluctuations, especially with the July employment report coming out next week. Looking back, the aggressive rate hikes to fight the high inflation from 2023-2024 make the Fed cautious now. The market seems to believe that the Fed will accept this small inflation spike to protect jobs, which explains the weakening of the US dollar despite higher inflation.

Currency Pairs And Strategic Moves

The move of the EUR/USD pair towards 1.1450 is gaining traction, supported by the weaker dollar and a resilient Eurozone economy. Recent purchasing managers’ index (PMI) data from Germany and France exceeded expectations, with the composite Eurozone PMI for July reaching 51.5. We see chances to buy call options on the Euro to benefit from a continued uptrend through August. Similarly, the GBP/USD shows bullish signs as it crosses 1.3200, especially with the UK’s inflation for June being 2.9%. This puts pressure on the Bank of England to maintain a strict stance compared to the cautious Fed. Traders might consider using bull call spreads on the pound to take advantage of potential gains while managing risk. Gold’s attempt to break through the $3,300 resistance is a result of falling US real yields and a softer dollar. Historically, gold performs well in such conditions, and World Gold Council data for Q2 2025 showed record central bank purchases of 250 metric tons. We believe that selling out-of-the-money put options below the $3,200 level is a good strategy for earning premium. Bitcoin’s stability between $116,000 and $120,000 indicates a solid accumulation phase. This support level is backed by steady institutional investments following the SEC’s approval of two more spot Bitcoin ETFs in June. Data from the options market for August shows significant interest in call options at the $125,000 strike price, hinting that many traders are preparing for a price breakout. Create your live VT Markets account and start trading now.

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President Trump shared that he had a productive phone call with Mexican President Claudia Sheinbaum, aimed at improving understanding between the two countries. The U.S. and Mexico have agreed to continue their current trade terms for another 90 days. This includes a 25% tariff on fentanyl and cars, and a 50% tariff on steel, aluminum, and copper. In addition, Mexico will immediately eliminate its non-tariff trade barriers. Both countries plan to work on a more comprehensive trade agreement during this period or afterward.

Details of the U.S.-Mexico Agreement

The call included key U.S. officials such as Vice President JD Vance, Treasury Secretary Scott Bessent, and Secretary of State Marco Rubio. Both nations also pledged to collaborate on border security, drug trafficking, and illegal immigration. This agreement is a short-term solution, with more extensive discussions expected to take place leading up to or beyond the August 1 deadline. The 90-day delay on significant trade changes provides a brief period of stability. This should reduce uncertainty in key sectors over the next few weeks and delay the threat of a trade war from the August 1 deadline. The auto sector, which depends on Mexico for about 40% of its parts, can now feel more secure. We expect stocks in companies like Ford and GM to rally soon, making short-term call options appealing. This relief follows months of concern, especially since trade in vehicles and parts surpassed $180 billion in 2024.

Implications of Tariffs on Steel and Aluminum

The continuation of the 50% tariff on steel and aluminum will support U.S. producers like U.S. Steel and Cleveland-Cliffs, helping their stock prices remain stable. However, these high tariffs could be used as negotiation tools that might disappear, posing risks three months from now. With Mexico removing non-tariff barriers and extending the deal, the peso may strengthen against the dollar in the short term. Yet, we recall the significant fluctuations in the USD/MXN exchange rate during the 2017-2018 USMCA talks, so this stability is not guaranteed. True volatility may return as the 90-day deadline nears in late October. The best approach is to keep an eye on the October deadline and prepare for potential volatility in contracts expiring in late October and November. Purchasing straddles or strangles on ETFs like XME (metals) or the peso (through PEX) may yield returns, as either a final agreement or a breakdown could trigger a major market move. For the broader market, we anticipate the VIX to decrease from recent highs as this risk is temporarily set aside. This presents an opportunity to buy cheaper, long-term VIX call options, essentially betting on a resurgence of market anxiety. While the market enjoys a summer lull, tensions are likely to rise again in the fall during crucial trade negotiations. Create your live VT Markets account and start trading now.

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