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USDCHF price nears key resistance, presenting opportunities for buyers and sellers
USDCHF is currently facing a significant resistance level as traders prepare for the FOMC meeting and important US economic updates. Last week, the USD saw some gains but didn’t have a clear reason for this shift, leaving the market waiting for a new trend. The common trade strategy is to “short the US dollar,” so any sudden price changes could be a natural response.
The Swiss National Bank (SNB) is not expected to lower interest rates further, as it has already adopted a zero interest rate policy. For rates to turn negative, there would need to be severe shocks in inflation data, which the market does not foresee.
Central bank interest rate expectations remain stable, influenced by upcoming meetings.
Expectations for interest rates from major central banks are steady. Markets are waiting for policy announcements and important economic reports like the US Non-Farm Payrolls (NFP) and Consumer Price Index (CPI).
Here are the expected rate cuts by the end of the year:
– The Fed is likely to cut by 44 basis points, with a 97% chance of no change at the next meeting.
– The ECB may decrease rates by 14 basis points, with a 90% chance of keeping rates steady.
– The Bank of England (BoE) could reduce rates by 46 basis points, with an 88% likelihood of a cut.
– The Bank of Canada (BoC) anticipates a 14 basis point cut, holding a 92% probability of no rate change.
– The Reserve Bank of Australia (RBA) might cut by 59 basis points, while the Reserve Bank of New Zealand (RBNZ) could lower rates by 35 basis points, with probabilities of 83% and 72% for cuts, respectively.
– The Swiss National Bank (SNB) expects an 8 basis point cut, with an 86% chance of no change.
Focus Shifts To The Fed
The Bank of Japan (BoJ) is looking for a 19 basis point rate hike but has a 98% chance of making no changes. Starting in early April, tariffs influenced the economy, but now focus is shifting to the Fed. Economic data and the Fed’s guidance are expected to take center stage for the rest of the year. With major central banks holding their ground, the market is in a wait-and-see mode. Old news about tariffs and political bills has been fully absorbed, leading to a pause for the next market driver. We believe the rest of the year will center around economic data and the Fed’s insights. The Fed is now in the spotlight, especially as markets anticipate a 44 basis point cut by year-end. The most recent US Consumer Price Index report for June 2025 showed a slightly stubborn inflation rate of 3.4%. Meanwhile, the jobs report highlighted a solid but unremarkable increase of 195,000 jobs. This mixed information keeps traders uncertain, making upcoming Non-Farm Payroll and inflation figures in August especially important.Preparing For Increased Volatility
Given the uncertainty surrounding the Fed’s next steps, traders should brace for increased volatility. Using options to buy straddles or strangles on major instruments like the SPX index or EUR/USD currency pair before key data releases may be a smart strategy. This approach allows traders to benefit from significant price movements in either direction. We are also keeping an eye on the strong possibility of rate cuts from the BoE, RBA, and RBNZ. Recent UK retail sales data for June showed an unexpected drop, while Australia’s latest quarterly inflation eased more than expected. This supports the case for easing monetary policy, making shorting these currencies against the US dollar an appealing strategy. To capitalize on this, we’re looking at derivatives that gain value from lower interest rates in these countries. Interest rate swaps could be utilized to prepare for declining policy rates from the BoE and RBA. We also expect continued weakness in currency pairs like GBP/USD and are using put options to express this view while managing risk. The Bank of Japan stands out with a market expectation of a 19 basis point rate hike by year-end. This view is backed by Japan’s core inflation remaining above the 2% target for 18 months—an unprecedented situation in decades. This divergence in policy compared to other G7 nations is a significant theme. This makes shorting the Japanese Yen an enticing opportunity for the latter half of the year. We are looking to position ourselves by considering long trades in pairs like USD/JPY and even AUD/JPY, where one central bank is cutting while the other is looking to raise rates. Using call options on these pairs can help manage the risk of any unexpected policy changes from the BoJ. Create your live VT Markets account and start trading now.Crude oil prices hold steady as they await upcoming economic data and central bank decisions for direction.
Crude oil prices are holding steady as traders await new developments that could lead to changes. The market has been quiet since the Israel-Iran conflict ended, with little new information to consider.
Trade tariffs seem to have peaked, with future changes expected to stay between 10% and 20%. The effects of OPEC+ supply increases have diminished since the market has already adjusted. Key economic data and Federal Reserve actions could affect asset prices for the rest of the year, likely supporting growth and inflation.
Technical Analysis
On the daily chart, crude oil prices are bouncing around a support level at $64.00. Buyers are aiming to push prices toward the $72.00 resistance, while sellers are looking for a dip below support to target $55.00. In the 4-hour chart, prices are moving between the $64.00 support and $69.00 resistance, indicating ongoing range trading until a breakout occurs. The 1-hour chart shows erratic price movements typical of range-bound markets, so traders should focus on managing risk at these key levels. Upcoming events include several U.S. economic indicators: Job Openings and Consumer Confidence today, followed by GDP, FOMC decisions, and others throughout the week, culminating with the U.S. NFP report and ISM Manufacturing PMI on Friday. The crude oil market is currently quiet, providing specific opportunities for derivative traders in the weeks ahead. Prices are stuck between strong support at $64 and resistance near $69. This tight range suggests strategies involving these boundaries or waiting for a breakout. This sideways price action is supported by recent fundamental data. For example, the latest EIA report indicated an unexpected rise in crude inventory of 1.4 million barrels last week, showing that supply currently meets demand. This keeps sellers active at the top of the range and reduces bullish sentiment.Options Trading Strategy
For options traders, this low-volatility environment is ideal for premium-selling strategies like iron condors or short strangles. By setting strike prices outside the $64-$69 range, we can take advantage of time decay while the market waits for a new driver. This method helps generate income while managing risk until a clearer trend surfaces. This week, the main catalyst will be economic data, especially the FOMC rate decision on Wednesday, July 30th. Fed funds futures currently indicate an 80% chance of a rate cut, which could weaken the dollar and push oil prices toward the $72 resistance. However, any deviation from this expectation could easily drop prices to test the $64 support. Looking ahead, it’s important to remember that conditions can change quickly, as seen with late 2023 supply disruptions. Although the scheduled OPEC+ supply increases for this quarter seem fully anticipated, any change in stance from the cartel or new geopolitical tensions could quickly shift the market. Therefore, we will continue to use options to define our risk in any directional trades. Create your live VT Markets account and start trading now.UK mortgage approvals rise to 64,170, surpassing expectations amid increased consumer credit growth
In June, UK mortgage approvals hit 64,170, exceeding the expected 63,000. The previous month’s figure was updated from 63,030 to 63,290.
Net consumer credit rose to £1.4 billion, surpassing the forecast of £1.2 billion, up from £0.9 billion earlier.
Mortgage Debt Borrowing
UK individuals borrowed an additional £3.1 billion in mortgage debt in June, bringing the total to £5.3 billion. In May, borrowing increased by £2.8 billion, leading to a total of £2.2 billion. Consumer credit growth in June was 6.7% compared to last year, up slightly from May’s 6.5%. We find the latest consumer credit and mortgage information surprisingly robust. This points to an underlying economic strength that could keep inflation persistent. It suggests that the Bank of England may need to maintain a tighter policy longer than the market expects. In the coming weeks, we believe the SONIA futures curve will show a lower chance of near-term rate cuts. This follows trends seen during the post-pandemic recovery when strong consumer data led central banks to adopt a more hawkish approach. Therefore, preparing for higher short-term rates seems like a smart move.Impact On Currency And Equities
This data is positive for the pound, especially since the Bank of England is battling ongoing services inflation, which the ONS reported as 5.7% for the year leading up to June 2024. This domestic strength could lift GBP/USD, and we’re considering strategies like buying call options to benefit from potential gains. However, a stronger pound may negatively impact UK equities. The possibility of sustained high interest rates might squeeze company profits, especially in sensitive sectors like construction and retail. We are exploring FTSE 250 put options as a possible hedge since this index is more tied to the UK economy. This unexpected economic strength adds more uncertainty to the Bank of England’s next steps. We expect an increase in implied volatility for both short-term rates and sterling currency pairs. In this scenario, strategies like buying straddles on GBP/EUR could be appealing, as they profit from significant price movements in either direction. Create your live VT Markets account and start trading now.Deutsche expects a rate hike from the ECB, changing its stance from previous forecasts of further cuts.
Deutsche no longer expects the European Central Bank (ECB) to lower interest rates. Instead, they now predict the next move will be an increase. Just recently, they thought the ECB would cut rates in September to a low of 1.50%.
The firm has recognized that there are new risks regarding this 1.50% outlook. They now see the ECB’s easing cycle potentially ending at rates of 1.75% or even 2.00%. Deutsche anticipates the ECB will raise rates, but only at the end of 2026.
Ecb Easing Cycle
We believe the easing cycle of the European Central Bank has come to an end. The market had expected another rate cut in September, but this perspective is becoming harder to support. Our attention now turns to a long period of stable rates before any future changes. This adjustment is backed by recent data showing inflation is still high. The flash estimate for July 2025 HICP inflation was 2.5%, which unexpectedly jumped and is well above the ECB’s target. Additionally, wage growth remained strong at 4.7% in the second quarter, raising concerns about ongoing price pressures. For those trading derivatives, this means shifting away from bets on decreasing short-term interest rates. We expect to see selling pressure on Euribor futures for contracts due late 2025 and early 2026 as the market adjusts to this new policy direction. The updated baseline suggests that yields will stabilize here, making strategies that benefit from steady rates more appealing.Market Volatility and Strategy
This sudden change in guidance from the central bank is likely to increase market volatility in the upcoming weeks. We see opportunities in options strategies that capitalize on larger price movements in both bonds and currencies. In the foreign exchange market, this shift is positive for the Euro, encouraging traders to rethink any short positions in EUR. Historically, when central banks quickly halt an easing cycle, government bond yields tend to rise. A similar change occurred in 2011 when the ECB shifted its stance, which led to a sell-off in German Bunds. Therefore, positioning for higher yields through bond futures may be a wise approach. Create your live VT Markets account and start trading now.Inflation expectations for next year dropped to 2.6%, while long-term projections stayed stable
The European Central Bank’s Consumer Expectations Survey reveals a drop in inflation expectations for the coming year. It’s now at 2.6%, down from 2.8%. However, expectations for inflation three years from now remain steady at 2.4%, and five years from now at 2.1%.
The survey suggests that inflation expectations are stable, which is good news.
Inflation Expectations Analysis
The decline in one-year inflation expectations to 2.6% is encouraging. It shows that price pressures are easing. This supports our belief that the European Central Bank won’t feel the need to make aggressive changes soon. While this data is positive, it isn’t strong enough to alter their current policy before the September meeting. This trend is evident in other economic data as well. The latest Eurozone flash HICP inflation for July 2025 is 2.4%. This remains above the ECB’s 2.0% target, which is why they kept the main deposit rate at 3.50% earlier this month. We expect this to create a steady environment through August. With major policy changes unlikely, we see a chance to sell volatility in the options market. The VSTOXX index, which measures Euro Stoxx 50 volatility, is now at a low 15. This environment makes it a good time to use strategies like selling short-dated strangles on major European indices.Investment Strategy And Hedging
In interest rate derivatives, we are preparing for a period of stability. The market has factored out the possibility of an August rate cut, and the German 10-year Bund yield remains strong at around 2.3%. Therefore, we are focusing on short-term interest rate swaps (EONIA swaps) that will be profitable if the ECB stays steady as we expect. However, we should remember the unexpected rise in energy prices in late 2024, which briefly raised concerns about inflation rising again. For this reason, we are keeping some inexpensive, out-of-the-money call options on inflation swaps as a hedge. This safeguards our core investments against any surprise economic changes during the typically quieter summer trading period. Create your live VT Markets account and start trading now.On the second day of discussions, the US trade team aims to uphold the ongoing truce.
The US and China are meeting in Stockholm for the second day to discuss trade relations. They aim to extend the current truce, which ends on August 12.
China has accepted the higher tariffs imposed by the US, while the US is wary about possible disruptions in rare earth exports. Both countries are trying to find a path that benefits them both.
Market Volatility Concerns
As the August 12th deadline nears, we expect market volatility to increase. The talks in Stockholm are crucial, and any hint of problems could shake up the market. Traders might want to consider buying protection or betting on significant price changes. The CBOE Volatility Index (VIX) is currently around 14, but we’ve seen a more than 30% surge in weekly call option volume for mid-August expirations. This indicates that traders are preparing for a big outcome from the talks, whether it’s a relief rally or a sharp drop. We recommend holding long volatility positions during this period as a wise approach.Rare Earth Export Concerns
We’re also closely watching rare earth exports. China controls over 90% of global rare earth processing, so any disruption could pose a serious risk to tech and defense supply chains. Buying out-of-the-money call options on rare earth producers might be a cheap yet effective hedge if negotiations go wrong. History suggests that trade talks lead to unstable markets. During the intense 2018-2019 trade war, headlines often caused 2% swings in the Nasdaq 100 index. Therefore, we anticipate that the two weeks leading up to August 12th will be influenced more by rumors and news bites than by actual fundamentals. Create your live VT Markets account and start trading now.Buyers are targeting the $4,000 level as Ethereum bounces back from a recent drop.
Ethereum has bounced back from losses yesterday, gaining an additional 2% today. The price hit a high of $3,941 before pulling back during US trading hours. Sellers tried to test the support levels, but buyers held strong around the 200-hour moving average at about $3,736. Right now, Ethereum buyers are working to surpass the $4,000 mark.
The overall mood in the cryptocurrency market is positive, especially as Wall Street reaches new record highs. However, the upcoming earnings reports from major tech companies could influence market sentiment and impact Ethereum’s chances of breaking through the $4,000 barrier.
The $4,000 level is crucial to watch in Ethereum’s price movements.
Buyers are concentrating on pushing Ethereum toward the $4,000 target. The support at the 200-hour moving average indicates strength in the market. This suggests that traders should prepare for a possible breakout attempt soon.
This week’s tech earnings reports will be a significant test for this bullish trend. These reports may lead to short-term volatility across the market, including Ethereum, creating opportunities for traders who thrive on price fluctuations.
Recent data backs this positive outlook, showing that Ethereum ETFs had net inflows of over $1.2 billion in July 2025. Additionally, there’s substantial activity in the options market, with many traders holding call options at a $4,200 strike price set to expire in mid-August. This indicates that many expect the upward trend to continue beyond the $4,000 level.
Given the expected market fluctuations, we are using bull call spreads. This strategy allows us to target movements toward $4,000 or higher while limiting our risk. It’s a way to pursue gains without full exposure if the resistance holds.
However, if the tech earnings turn out to be disappointing, we might see a quick retreat to support around $3,700. A similar situation occurred in early 2025, where a failed breakout resulted in a sharp 15% drop. Therefore, holding some protective puts could be a smart way to guard against any unexpected negative turns.
Oil Eases Ahead Of Fed Decision
Oil prices gave back some gains on Tuesday, pausing after Monday’s sharp advance, as markets absorbed the broader implications of a fresh US–EU trade agreement and turned their attention to an upcoming Federal Reserve policy meeting. West Texas Intermediate (WTI) edged down 0.2% to $66.60 per barrel, while Brent crude slipped 0.1% to $69.98.
The retreat followed a strong start to the week, which saw both major benchmarks climb more than 2%, with Brent reaching its highest level since 18 July. However, sentiment began to cool as traders examined the finer points of the trade deal. Though the agreement managed to avoid an all-out trade war, its terms introduced new uncertainties.
A key feature of the pact is the EU’s commitment to purchase $750 billion worth of US energy over President Trump’s second term.
Market watchers have expressed scepticism over the feasibility of this target. Similarly, a promised $600 billion in European investment into the US remains a lofty goal without a firm schedule.
In the near term, the outlook continues to lean bullish, but price action remains sensitive to central bank signals and any resurgence in trade tensions. The Federal Open Market Committee convenes on 29–30 July. While interest rates are expected to remain unchanged, a dovish shift in tone is possible should inflation indicators continue to soften.
Elsewhere, talks between US and Chinese negotiators in Stockholm remain in focus. Monday’s five-hour dialogue signalled interest in extending the current truce, though the path forward remains murky.
President Trump has also issued a 10–12 day ultimatum to Russia over rising tensions in Ukraine, adding another layer of geopolitical uncertainty.
Technical Analysis
Crude oil (WTI) surged to a session high of $67.123 on the 29th before retreating below the 5- and 10-period moving averages. The price action shows a clear uptrend from the low of $64.979, but the rally appears to be losing steam as the MACD crosses lower and the histogram shifts into negative territory.
The failure to hold above the $67 handle suggests a weakening of bullish momentum. This aligns with broader sentiment after recent API data hinted at a potential build in US crude inventories and ongoing concerns about Chinese demand weighed on energy markets. If the price holds above $66.40, a rebound remains possible. A break below may expose the $65.60 zone as the next downside target.
Outlook Remains Guarded
WTI continues to hold above $66.50 for now, but a lack of fresh drivers could see the upside capped near $67.20. Any hawkish surprises from the Fed or setbacks in trade negotiations could trigger a pullback toward the $66.00 mark. Traders should prepare for increased volatility around the Fed’s announcement.
European stocks rebound as indices rise, but worries about the recent trade deal remain
European stocks opened higher today, with various indices making gains. The Eurostoxx increased by 0.6%, Germany’s DAX rose by 0.7%, France’s CAC 40 gained 0.5%, and both Spain’s IBEX and Italy’s FTSE MIB advanced by 0.5%. The UK’s FTSE saw a smaller rise of 0.1%.
Concerns about the US-EU trade deal continue. While a trade war has been avoided, there is some dissatisfaction in Europe regarding von der Leyen’s agreement. Meanwhile, Japan’s Nikkei index fell by 0.8%, marking its third consecutive day of losses this week. The market is also looking ahead to major tech earnings from Wall Street, expected after the close on Wednesday and Thursday.
