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The Federal Reserve keeps interest rates steady, despite disagreement from two members about changes.
The Federal Reserve has decided to keep interest rates unchanged at 4.25% to 4.5%. Two members, Michelle Bowman and Christopher Waller, disagreed with this decision and wanted a 0.25% rate cut. Jerome H. Powell and the majority of members supported the current rates. Adriana D. Kugler was absent and did not vote.
Economic growth has slowed, unemployment is low, and inflation is still high. The goal is to achieve maximum employment and maintain a 2% inflation rate in the long run. There are ongoing risks to these economic goals, which will be monitored closely, possibly leading to policy changes.
Trump indicates Powell’s rate cuts may be unlikely as negotiations with China and India progress
The ongoing conflict between President Trump and Fed Chair Powell is clear. Trump believes Powell will not lower interest rates, which he thinks harms the public. He also discusses negotiations with India, claiming progress and hoping for more clarity by the end of the week.
Trump brings up talks with Harvard, aiming for a settlement. He mentions progress with China and anticipates a clear agreement soon. Additionally, he signed a 50% copper tariff and raised tariffs on Brazil to 50%.
Economic Emergency And Interest Rates
Trump has suspended the de minimis exemption for low-cost goods imported to the U.S., starting on August 29, highlighting an economic emergency. NEC Director Hassett noted that data supports a rate cut, reflecting what many economists believe: the Fed has been slow to act. Despite Trump’s pressure on Powell, current economic data shows 3% GDP growth and a 4.1% unemployment rate, with potential inflation from tariffs. This suggests that markets should stay alert, as the Fed’s future decisions remain uncertain. Looking back at 2019 provides a useful guide for today’s market. The clear conflict between the government and the Federal Reserve led to major market ups and downs. We see similar tensions today as the Fed keeps rates steady to control inflation, which opens opportunities for traders seeking volatility.Market Volatility And Trade Negotiations
The Volatility Index (VIX) is currently around a low 16, making options premiums not too expensive. Given the ongoing uncertainty in global trade and domestic growth, this is a good time to buy protection or bet on a big market move. In 2019, we saw how quickly market sentiment could change after one announcement, a lesson that is still relevant today. The Fed funds rate has remained steady at 5.25% for the past four months, while the latest core PCE inflation data from June 2025 showed a stubborn 3.5%. However, last week’s jobless claims rose to 255,000, the highest in six months, indicating a potential weakness in the labor market. This disconnect between stubborn inflation and weak employment puts the Fed in a tricky spot, making interest rate derivatives, like options on SOFR futures, especially important. The 2019 scenario showed how tariffs could disrupt specific sectors and currencies. Today, we are closely monitoring trade talks with India over digital services, expected to wrap up in a few weeks. The sharp movements in the Brazilian Real after tariff announcements in 2019 serves as a cautionary tale and may guide trading strategies with the Indian Rupee. Back then, the surprise suspension of the de minimis exemption negatively affected retailers who depended on affordable international shipments. Today, with consumer credit card debt at a record $1.15 trillion last quarter, the retail sector is still at risk. Any new policies that raise costs for consumers could have a significant negative effect, making puts on retail sector ETFs a smart hedge. Create your live VT Markets account and start trading now.USD/JPY climbs to a two-week high near 149.00 after positive US data following earlier declines
The USD/JPY exchange rate was around 149.00 on Wednesday, thanks to strong US economic data. Good employment numbers and a surprising GDP growth of 3% helped strengthen the US Dollar.
After a decline earlier, USD/JPY rose to a two-week high of 149.00, ahead of the Federal Reserve’s expected announcement to keep the policy rate steady.
The value of the Japanese Yen (JPY) largely depends on Japan’s economy and the Bank of Japan’s actions. It often strengthens during market stress because it is viewed as a safe-haven asset, influenced by differences in bond yields and overall market sentiment.
The Bank of Japan’s (BoJ) policies have created a larger bond yield gap in favor of the USD, and their strategies often aim to lower the Yen’s value as part of their currency control policy.
In uncertain times, the Yen typically increases in value due to its stability. While there may be mistakes or misjudgments in assessments, these do not serve as investment advice.
As of July 30, 2025, the USD/JPY pair is being closely monitored at around the 155.00 mark. We recall the events from late 2023 when robust US data pushed the rate down to 149.00. The difference in interest rates between the US and Japan continues to weaken the Yen.
In June 2025, US inflation data showed a slight increase at 3.2%, lowering market expectations for any Federal Reserve rate cuts this year. This strengthens the Dollar and makes buying call options on it seem sensible, supporting a “higher for longer” interest rate outlook in the US.
However, caution is necessary regarding potential interventions from Japanese officials at these levels. The Ministry of Finance has intervened to support the Yen in the past (in 2022 and 2024) when it weakened significantly. They have already issued several verbal warnings this month, indicating a high risk of a sharp reversal.
This uncertainty suggests the potential for significant movement in either direction, with volatility being a key factor for trading. We think strategies like a long strangle—buying an out-of-the-money call and an out-of-the-money put option—are suitable now. This approach could be profitable if the pair experiences a major move up or down in the coming weeks.
We should also consider the Yen’s role as a safe-haven currency amid global economic uncertainties. A sudden market shock could lead investors to quickly buy the Yen, causing it to rise sharply, regardless of central bank policy. Thus, making large one-sided bets on the pair is incredibly risky at this time.
Gold prices fall to about $3,304, down nearly 0.50%, amid strong US economic data
Gold prices have dropped below $3,300, influenced by strong US economic data and anticipation leading up to the Federal Reserve’s policy decision. The market expects the Fed to keep interest rates steady, but the focus is mainly on hints about possible rate cuts.
Currently, gold is priced at around $3,293, a decrease of 1.0%. Strong US data has made other investments more appealing, reducing gold’s safe-haven appeal. However, a weaker US dollar and lower Treasury yields provide some support for gold.
Recent trade agreements, such as the US-EU deal, have raised optimism and lessened demand for safe-haven assets like gold. Additionally, US-China trade talks concluded with a commitment to keep communication open, upholding a tariff truce that is set to end soon.
Key economic reports, starting with the ADP Employment Change, will shape expectations for the Fed’s announcement. The US economy grew by 3% in the second quarter, while the PCE Price Index rose by 2.5% quarter-over-quarter, slightly exceeding expectations. Meanwhile, the GDP Price Index cooled down to 2.0%.
The yield on the 10-year US Treasury is around 4.33%, and many are closely watching Fed Chair Jerome Powell’s remarks after the meeting. There’s a growing chance of a September rate cut, with market odds at 65%. A dovish outlook from the Fed could put pressure on the US dollar, benefiting gold.
As of July 30, 2025, we see gold prices slipping below $3,300. This decline is mainly due to positive US economic data, which makes other investments more appealing than gold. Traders may find it challenging to bet on rising gold prices right now.
Our immediate focus is the Federal Reserve’s decision today. While we expect interest rates to remain steady for now, the real impact will come from future guidance. There is a strong belief that a rate cut could happen in September, with market odds at 65%.
Looking back at late 2023, we noticed strong market reactions to the anticipation of rate cuts, even before they were confirmed. During that time, gold experienced a significant rally as traders anticipated a more dovish Fed. This trend suggests that any indication of a September cut from Chair Powell could lead to a similar market response.
Given the uncertainty, using options could be a wise strategy. Traders might consider buying call options on gold futures to potentially profit from a price increase if the Fed hints at a dovish approach. These contracts provide upside potential while limiting risk to the premium paid if gold prices decline further.
Conversely, we should also prepare for a more hawkish surprise from the Fed, especially with the robust 3% GDP growth. To protect against a drop in gold, it makes sense to buy put options or take short positions in gold futures. This would safeguard portfolios if strong economic data leads the Fed to postpone planned rate cuts.
Recent data reinforces a cautious stance in the short term. The latest Commitment of Traders (COT) report reveals that large speculators, or “managed money,” reduced their net-long positions in gold futures by about 8%. This shows that professional traders are cutting back on their bullish positions ahead of today’s Federal Reserve meeting.
Anticipation grows as the Fed decides whether to maintain interest rates despite inflation concerns and political pressure.
The Federal Reserve is likely to keep its benchmark interest rate between 4.25% and 4.50%. In the past, the Fed made rate cuts in September and November 2024, facing pushback from President Trump. The economy is changing, as tariffs have stopped disinflation, keeping headline inflation steady while prices for goods remain firm. Inflation in the service sector has eased, providing some balance.
Chair Powell has noted that inflation risks are on the rise and wants to permanently eliminate inflation pressures. Without the impact of tariffs, a more supportive monetary policy might have been possible. Although he faces ongoing criticism, Powell is determined to avoid past mistakes and is focused on keeping inflation expectations stable despite political pressure.
Labor Market and Economic Indicators
While there are signs of weakness in the labor market, Powell believes the Fed is in a good position to pause and closely watch economic trends. Political pressure from President Trump continues, urging for rate cuts despite recent GDP growth. Some members of the Federal Open Market Committee (FOMC), like Bowman and Waller, are considering rate cuts, which could influence future expectations. Key elements of the upcoming meeting will include the tone of the statement, Powell’s press conference, and discussions around growth versus inflation. The market is cautiously predicting no rate cuts this year, reflecting Powell’s influence and potential divisions within the Committee. With the Federal Reserve expected to hold interest rates steady at 4.25%-4.50%, traders are focused on future signals rather than immediate actions. The market is tense, waiting to see if the Fed will hint at future rate cuts or maintain its stance against inflation. This situation suggests that volatility is likely in the weeks ahead. We need to consider the mixed data the Fed is analyzing. The latest Consumer Price Index (CPI) for July shows a year-over-year increase of 3.4%, indicating that the decrease in prices has stalled since the tariff announcements in early 2025. Additionally, a recent jobs report revealed an addition of 175,000 payrolls, slightly below expectations, confirming a slow cooling of the labor market.Market Reactions and Future Trajectories
This data presents arguments for both sides of the FOMC. The strong 3.0% GDP growth from last quarter supports calls for rate cuts, suggesting the economy can handle them. However, Chair Powell is wary of reigniting inflation, especially after facing criticism for acting too slowly in 2021 and 2022. Given this uncertainty, a smart strategy is to use options for positioning ahead of the Fed’s clarifications. We are monitoring any indications that dissent among members like Bowman and Waller is increasing within the committee. A divided Fed could signal a weakening consensus on maintaining high rates, possibly speeding up the timeline for cuts. Currently, the market is anticipating the first rate cut in November or December, so any remarks reinforcing this timeline would be viewed as neutral. If Powell expresses concern about slowing growth, it could lead to rate cuts being pushed forward to September, causing a rally in bonds and stocks. However, if he emphasizes that the fight against inflation is not over, expectations for a cut in 2025 may disappear. Reflecting on the Fed’s slow reaction in 2021-22, Powell seems determined not to repeat that mistake. He appears prepared to tolerate a softer labor market if it helps eradicate inflation for good. Thus, traders should be ready for him to sound more hawkish than is currently expected. Create your live VT Markets account and start trading now.European indices mostly finished higher, but gold declined as the US dollar strengthened.
The main European stock markets closed with small gains. Italy’s FTSE MIB led the way with an increase of 0.98%. Germany’s DAX climbed by 0.19%, France’s CAC rose by 0.06%, the UK’s FTSE 100 gained 0.01%, and Spain’s Ibex went up by 0.23%.
European 10-year bond yields had mixed results. Germany’s yield increased by 1.6 basis points to 2.701%. France’s yield went up by 2.3 to 3.366%. In contrast, the UK’s yield dropped by 2.2 basis points to 4.597%. Spain’s yield stayed the same at 3.289%, while Italy’s yield rose by 0.6 basis points to 3.543%.
US Market Overview
US stock indices experienced gains, with the Russell 2000 and NASDAQ performing the best. The Dow industrial average rose by 0.06%, the S&P by 0.21%, the NASDAQ by 0.41%, and the Russell 2000 by 0.84%. Microsoft and Meta are about to report their earnings, with estimates of $3.38 EPS and $73.86 billion in revenue for Microsoft, and $5.88 EPS and $44.81 billion for Meta. US bond yields increased: the 2-year at 3.899%, the 5-year at 3.941%, the 10-year at 4.364%, and the 30-year potentially at 4.904%. The US dollar strengthened against the AUD, NZD, EUR, and GBP. Meanwhile, gold prices dropped by $30.24 to $3297, with the 100-day moving average at $3250.48. As we await the FOMC decision, markets seem to be preparing for a strong, hawkish announcement from the Federal Reserve. Rising US bond yields and a stronger dollar signal that traders expect higher interest rates to last longer. This trend continues the fight against persistent inflation, which was common during 2024, often exceeding 3%. US stocks show cautious optimism, but the real challenge will be the tech giants reporting this week. The NASDAQ has gained over 20% in the past year, raising high expectations for Microsoft and Apple. Traders might want to consider options to hedge against potential disappointments, which could lead to a swift sell-off.Market Tension and Strategy
Despite today’s modest gains, market tension is building ahead of these key events. The CBOE Volatility Index (VIX) is trading around 18, much higher than the calmer levels seen in 2024. Buying call options on the VIX may be a cost-effective way to protect a portfolio from possible market shocks in August. In the currency market, the US dollar remains dominant. The Euro’s weakness continues a trend that started when the European Central Bank began cutting rates in mid-2024, ahead of the Fed. If the FOMC meets hawkish expectations, we might see EURUSD dip below the crucial 1.1447 support level. In Europe, Italy’s market shows impressive performance compared to the other sluggish markets on the continent. This suggests domestic factors are boosting Italian stocks while Germany and the UK show little movement. A possible strategy could be to favor Italian assets over German ones. Gold’s significant drop today is linked to rising bond yields, with the US 10-year yielding over 4.36%. As bond yields rise, the appeal of non-yielding gold decreases. We will closely monitor the $3250 level; a drop below this 100-day moving average might indicate further price declines. Create your live VT Markets account and start trading now.AMD shares rise from the blue box zone: an analysis of the Elliott Wave trading strategy
AMD’s stock recently dropped, reaching a point known as the Equal Legs area or Blue Box. This suggests that AMD is in a wave 4 pullback, and it may decline further in the short term toward the Blue Box.
We’re looking at a target range of $153.72 to $149.60 for buying opportunities. It’s best not to sell AMD, as the overall trend is upward. We expect a strong bounce back from the Blue Box.
To manage your trades, make your positions risk-free when the stock hits the 50% Fibonacci level. Set stop-loss orders below the 1.618 Fibonacci extension. The stock found support at the Blue Box and is now moving towards new highs. As long as it stays above the $149.27 low, we expect more upward movement.
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Looking back a few weeks, AMD’s stock pulled back just as we expected, finding support between $153.72 and $149.60. This confirmed that the dip was a healthy pause in a larger upward trend, reinforcing our belief in the stock’s strength.
As of late July 2025, AMD is trading well above that support level and is nearing $185. This strength follows AMD’s recent Q2 2025 earnings report, which exceeded expectations due to strong demand for their MI400 series AI accelerators. We believe this positive momentum will continue, pushing the stock higher in the coming weeks.
For those trading derivatives, this is a good time for bullish strategies. We see potential in selling out-of-the-money cash-secured puts with expiration dates in August or September, targeting strike prices around $170. This strategy lets us collect premiums while setting a lower entry point if the stock dips briefly.
Recent industry reports from this quarter strengthen our confidence. AMD’s market share in data centers has climbed to over 35%. We are keeping a close eye on the $149.27 low from the last pullback. As long as the price stays above this level, we expect upward movement.
Traders looking to maximize their gains might consider using call debit spreads. With increased implied volatility following the positive earnings news, spreads offer a cost-effective way to position for a move toward new all-time highs. We view this as a continuation of the primary upward trend.
This setup reminds us of the consolidation phase at the end of 2024, where a similar dip was quickly bought up, leading to a multi-month rally. That past pattern suggests that this recent bounce isn’t just a short-term swing. We anticipate this upward momentum will continue through the rest of the summer.
Federal Reserve will announce interest rate decision and policy statement after July’s meeting
Following its July meeting, the Federal Reserve decided to keep the federal funds rate steady at 4.25%–4.50%. This decision was widely expected given the current economic climate. The Fed Chair noted that while inflation is above the target, the economy remains strong and the low unemployment rate indicates near-maximal employment. Some policymakers showed interest in reducing rates. Ongoing trends in consumer spending and the housing market are leading to slower economic growth.
Economic Outlook
The Fed’s statement highlighted ongoing uncertainty about the economic future, even as key indicators suggest moderate growth in 2025. While inflation is somewhat high, the labor market is solid. Two members of the Fed disagreed with the decision, as they preferred a rate cut, arguing that current policies may be too tight. The CME FedWatch Tool shows a low chance of rate cuts in July but a greater possibility in September. Policymakers anticipate more cuts in the coming years, signaling changes ahead for the economy. Market reactions showed the US Dollar fluctuating but staying strong against currencies like the Australian Dollar. The heat map illustrates changes in major currencies versus the dollar, emphasizing the economic narratives and expectations linked to rate decisions and future fiscal policies. With the Federal Reserve keeping rates steady, we expect the upcoming weeks to focus on data-driven trading. The divide among Fed members, with some favoring rate cuts, means inflation and employment reports will be closely examined. This creates opportunities in interest rate derivatives, especially around the September policy meeting, where the market is factoring in a greater chance of a cut.Trading Strategies
Traders should consider strategies that take advantage of this uncertainty regarding timing rather than direction. While rates are likely to decrease overall, the path to that outcome will be bumpy. Options on SOFR futures for the September and December 2025 contracts can help traders position for either a cautious Fed or a surprise early move. The ongoing strength of the US dollar, especially against currencies like the Australian Dollar, illustrates this policy gap. Recent data shows US unemployment holding steady at 4.0%, contrasting with signs of slowing in other economies, justifying the dollar’s strength. We believe holding long positions in the dollar against a mix of currencies from more dovish central banks is a solid strategy. This scenario resembles what we experienced in late 2023 when the market was trying to determine the end of a historic rate-hiking cycle. The shift from holding rates to easing them is rarely smooth and usually brings volatility. Therefore, we expect similar price fluctuations over the next two months. With the Fed maintaining its position, we are closely monitoring incoming economic data. The latest Consumer Price Index report indicated core inflation stayed sticky at 3.3%, supporting the Fed’s choice to wait. We are positioning ourselves for significant market movements around the upcoming jobs and inflation data releases, as these will be the main drivers affecting Fed expectations. Create your live VT Markets account and start trading now.GBP/USD trades below the 100-day moving average, signaling a shift towards bearish market conditions.
The GBP/USD has hit a new low due to strong selling pressure. The pair is currently trading below its 100-day moving average of 1.33339, which used to provide temporary support but is now failing with sellers in control.
This price drop makes the technical outlook more negative, continuing the bearish trend. Attention is now on the 38.2% retracement level of the 2025 move, from low to high, at 1.31403. This level coincides with a critical swing area between 1.3145 and 1.3202, making it an important target.
Price Dynamics and Key Levels
If the price drops below this range, sellers may gain further momentum. The current struggle lies between the resistance at the 100-day moving average and the support range of 1.3140–1.3200. The Federal Open Market Committee is set to meet soon, and rates are likely to remain steady. However, it’s uncertain if the Federal Reserve will adopt a more dovish stance, especially with rising inflation expectations due to tariffs. The GBP/USD is breaking below its 100-day moving average, signaling bearish trends for the upcoming weeks. As long as the pair stays under 1.33339, the most likely path is downward. This suggests that strategies favoring a weaker pound against the dollar should be explored.Fed Meeting and Market Strategies
The main downside target is the range between 1.3140 and 1.3202. This area is crucial, representing the 38.2% Fibonacci retracement of the entire 2025 rally. Traders should watch this level as a likely draw for price in the near future. The focus is now on the Federal Reserve’s meeting later today, which will affect market volatility. A dovish outlook is expected due to concerns about new tariffs harming the economy. This may weaken the US dollar and push prices closer to our 1.3140 target. The current market unease is understandable based on recent data. The US CPI for June 2025 showed an unexpected 3.1% increase, mainly due to new tariffs on UK and EU goods introduced last month. The market believes the Fed will prioritize growth over addressing this inflation. History provides a useful reference; the Fed’s pivot in late 2018 during similar trade war pressures and slowing global growth led to a shift from tightening to easing, weakening the dollar significantly. This history supports the anticipation of a softer Fed stance today. Given this outlook, traders might consider buying put options on GBP/USD with expiration dates in August or September 2025. Strikes around the 1.3200 level could offer a way to profit from the expected decline toward the key retracement zone. This strategy limits risk to the premium paid while allowing for potential gains from the downward move. Create your live VT Markets account and start trading now.The USDCAD has a bullish outlook, with upcoming resistance levels affecting short-term price movements and trends.
The USDCAD is showing a bullish trend, with important resistance levels between 1.38279 and 1.3833. These levels are highlighted by the 100-day moving average and the 61.8% retracement from the decline in May. The pair is currently above the June high of 1.37969, which is crucial for maintaining its upward movement.
Resistance levels at 1.38279 and 1.38335 may attract short-term sellers looking to take profits. If the price breaks above these levels, it could increase buyer confidence, leading to further upward movement. Right now, the USDCAD is down by 560 pips, or 3.968%, year-to-date, which helps the Canadian inflation outlook.
