European gas prices have dropped due to eased tensions in the Middle East. The TTF reference price is now just above this year’s low, sitting over EUR 32 per MWh. An increase in LNG imports has raised European gas storage levels to 65%, narrowing the usual gap by three percentage points, now under 9.5%. The IEA’s Gas Market Report shows a 6.5% rise in gas demand in Europe during the first half of the year. This uptick is mainly due to higher usage of gas-fired power plants and weaker demand in Asia. LNG supplies from the US and the Middle East continue to grow, expected to rise by 5.5% this year and 7% next year. With gas storage facilities filling up quickly and moderate import demand from Asia, price forecasts have been revised down to EUR 35 per MWh by the end of 2025. In the medium term, European gas prices may rebound as the economy grows and industrial gas demand returns, especially with a possible increase in Asian LNG demand. Given the current market environment, traders should expect to see continued low price volatility in the short term. European storage facilities are nearing 70% capacity, well ahead of the five-year average, with front-month TTF futures around €34 per MWh. This solid supply situation suggests that selling near-dated call options could be a smart move to collect premium. The strong flow of liquefied natural gas (LNG) is a key factor keeping prices stable. Data from May 2024 shows that the United States remains a primary supplier to Europe. With expectations of a 5.5% growth in global LNG supply this year, there seems to be little chance of a price spike in the near future. Therefore, any short-lived price increases should be viewed as chances to take short positions or sell futures contracts. However, the reported 6.5% rise in Europe’s gas demand for power generation indicates a solid underlying market. This demand growth is partly due to maintenance at French nuclear plants and lower-than-average wind generation. It serves as a reminder that the energy transition can lead to temporary reliance on fossil fuels. We must keep a close eye on power market dynamics, as unexpected outages could quickly use up the current gas surplus. Looking ahead, we should get ready for a possible change in sentiment as Asian demand strengthens. Recent customs data reveals that China’s LNG imports for the first four months of 2024 increased by over 20% year-on-year, indicating a strong economic recovery. This will lead to more competition for cargoes and supports the idea that European prices may rise in the medium term. The difference between a bearish current outlook and a potentially bullish future makes long-dated derivatives appealing. We see value in buying call options for the first quarter of 2025, positioning ourselves for a winter price increase driven by renewed industrial and Asian demand. This strategy allows us to participate in potential future gains while minimizing risk in the current, well-supplied market. Historically, the market situation now is very different from 2022, when storage levels were below 45% and prices were much higher. The current stability results from high inventories and steady LNG flows. We should take advantage of this stable period to set up positions that will benefit when market tightness returns.

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The AUD/USD pair is currently in a consolidation phase, fluctuating between 0.6570 and 0.6615. While short-term momentum has slightly decreased, there is still a chance that the AUD could reach 0.6645 in the long run, although this is not expected. In the last 24 hours, it was anticipated that the AUD would strengthen. However, due to overbought conditions, it was unlikely to reach 0.6625. The currency peaked at 0.6625 but ended the day lower, down 0.19% at 0.6591, remaining within the consolidation range.

Short Term Outlook

Looking ahead 1-3 weeks, the outlook for the AUD has improved since it moved above 0.6575. There are indications that momentum could push it further to 0.6625, with a possibility of reaching 0.6645. However, if it falls below the 0.6545 support level, the chances of hitting 0.6645 will vanish. Be aware that trading in financial markets involves risks and uncertainties, so it’s essential to conduct thorough personal research before making trades. The completeness and accuracy of the information provided are not guaranteed. Potential risks include emotional distress and loss of investments. The authors are not responsible for any errors or omissions in the data. The current consolidation reflects conflicting economic signals. Australia’s monthly inflation rate unexpectedly increased to 3.6% in April, suggesting that the Reserve Bank of Australia may need to maintain a hawkish stance. This is offset by a robust US dollar, supported by Federal Reserve officials indicating that interest rates may remain high for a longer period, keeping the AUD/USD pair within a tight range. Given the established range, selling volatility appears to be a smart strategy. Implementing an iron condor, with short strikes just outside the anticipated 0.6545 to 0.6645 zone, could be beneficial. This strategy profits when the currency remains in this range and over time.

Trading Strategies and Outlook

For traders with a slight upward outlook, a bull put spread provides a risk-managed approach. We might sell a put option near the 0.6545 support level and buy a lower strike put for protection. This allows us to collect a premium while benefiting if the currency avoids a significant decline. The likelihood of a sustained breakout largely depends on news from China, Australia’s biggest trading partner. Recent mixed manufacturing PMI data from China has dampened enthusiasm for a major rise in the Australian dollar. A strong move above 0.6645 would likely need clearer signs of economic recovery from China. Historically, we have seen similar extended periods of sideways movement for this currency pair, especially in 2023 when central bank policies weren’t diverging significantly. A notable breakout seems to require a clear policy change from either the Federal Reserve or Australia’s central bank. Until that happens, trading within the range appears to be the most sensible strategy. Create your live VT Markets account and start trading now.

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The Bank of Canada is set to announce its interest rate decision on July 30, keeping rates at 2.75%. All 28 economists surveyed expect this, with 17 predicting a drop to 2.25% or lower by the end of 2025. The most recent decision on June 4, 2025, held the rate steady at 2.75%, following a cut from 3.00% on March 12. The central bank explained this decision due to a weakening economy, ongoing inflation, and uncertainties in trade, especially concerning U.S. tariffs.

Strategic Considerations For Rate Cuts

With a strong agreement about rate cuts by the year’s end, there’s an opportunity to position for lower borrowing costs in the future. We are exploring strategies like receiving fixed payments on interest rate swaps, which become more valuable as floating rates decrease. Statistics Canada reported that GDP growth stalled at 1.7% in the first quarter, highlighting the need for economic support. This situation also affects the Canadian dollar. Lower interest rates usually make a currency less attractive to foreign investors. We expect the loonie to weaken further, especially since it has struggled against the U.S. dollar this year, staying around the 0.73 mark. Derivative strategies, like buying call options on the USD/CAD currency pair, could benefit from this expected decline. Timing is critical now, as many anticipate the upcoming policy decision will result in maintaining current rates. This is likely due to inflation still above the central bank’s 2% target, with the latest Consumer Price Index at 2.7%. This creates short-term uncertainty about economic data releases, making longer-dated options appealing to capture future moves without penalties for inaction in the short term.

Lessons From Past Economic Movements

Looking back at history can help us gauge the potential speed of future actions. For example, during the 2015 oil price shock, the central bank lowered its key rate by 50 basis points over six months to support the economy. This suggests that once a rate-cutting cycle begins, the pace may be quicker than many expect. Create your live VT Markets account and start trading now.

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The USDCAD exchange rate rose after President Trump’s comments, suggesting that some trade deals might involve tariffs instead of negotiations. This news caused the Canadian dollar to weaken, driving the exchange rate higher. The USDCAD had already been rising since it hit a low on Wednesday. In today’s trading, it went above the 100-hour moving average at 1.36388 and nearly reached the 200-hour moving average at 1.36801. Initial selling pressure pushed it back down toward the midpoint of July’s trading range at 1.36645.

Midpoint Support and Rally

This midpoint acted as a support level, enabling the pair to bounce back strongly due to the trade news. The rally continued into a resistance zone between 1.3707 and 1.37112, where more selling limited the gains and established a short-term risk boundary. Afterward, the pair fell back toward the 200-hour moving average. The key question is whether this level will provide support and spark the upward momentum seen earlier. Due to the uncertainty from the former president’s comments, traders should prepare for increased volatility. His remarks indicate that trade policy may become unpredictable, leading to sharp price swings instead of a steady trend. In this scenario, buying options that benefit from significant price movements is more appealing than simply trading futures. On a fundamental level, the case for a higher USDCAD is getting stronger, supporting the purchase of call options. Recent data shows Canadian inflation has dropped to 2.7%, giving the Bank of Canada more reasons to lower interest rates, while the stickier US inflation at 3.4% keeps the Federal Reserve on hold. This difference in central bank policies usually results in a stronger US dollar compared to the Canadian dollar.

Strategic Trading and Volatility

The technical levels mentioned give clear points for structuring trades. We see the 200-hour moving average around 1.3680 as a key pivot for starting bullish positions. Buying call options with strike prices just above this level, such as at 1.3700 or 1.3750, would be a direct way to profit from a breakout. However, political headlines can cause rapid swings, so a strategy that benefits from significant movements in either direction is also wise. A long strangle—buying both an out-of-the-money call and put—would effectively capture the expected rise in volatility. This strategy is especially relevant since over $2.7 billion in goods and services are traded between the two countries daily, making the currency pair sensitive to trade issues. Past trade negotiations from 2018-2019 show that headline risks often cause sharp, unpredictable spikes in this currency pair. During that time, implied volatility on USDCAD options increased significantly, rewarding traders who prepared for turbulence rather than a specific direction. We expect a similar trend could happen in the coming weeks. Therefore, we are looking at options that expire in the next 30 to 60 days to take advantage of this potential instability. The current price action, which is stabilizing near key moving averages, offers an opportunity to enter these positions. Our main strategy is to own volatility as political rhetoric is likely to heat up. Create your live VT Markets account and start trading now.

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Kazakhstan experienced uncertainty about oil exports through a Russian terminal on the Black Sea. New Russian rules temporarily stopped foreign oil tankers from loading at Russian ports, impacting Kazakh exports. Originally, the loading plan aimed for 1.66 million barrels per day. However, after getting the necessary approvals from the Russian intelligence service, loading operations resumed.

Prior Delays

Earlier, there were delays at Turkey’s Ceyhan port because of contamination checks on oil from Azerbaijan and Kazakhstan. Exports for July and August were expected to reach 17.3 million barrels, averaging 560,000 barrels each day. The delays affected five oil tankers, but loading started again as scheduled on Wednesday. These disruptions likely played a role in the Brent oil price dropping to about $70. With exports returning to normal, price movements might adjust as well. The recent price increase seems to have come from temporary supply disruptions at the Black Sea terminal. As exports from Kazakhstan normalize, the price premium caused by these concerns is likely to decrease. Traders should prepare for possible price corrections or stabilization as the plan of 1.66 million barrels per day resumes.

Current Market Conditions

Currently, Brent crude is trading higher, around $82 per barrel, but this rise is no longer tied to the short-term Kazakh supply issues. Recent data from the Energy Information Administration indicated a U.S. crude inventory drop of 4.2 million barrels, pointing to tighter supply and demand. This trend helps support prices, even as the premium from the port incident lessens. The overall market is also backed by OPEC+ maintaining strict production levels, recently deciding to extend significant output cuts into 2025. Their efforts to control supply make it difficult for anyone betting on major price drops. While the normalization of exports from the Russian port reduces bullish influences, it does not change this larger supportive trend. Historically, price spikes from temporary logistical issues, like storm damage at the same terminal in previous years, tend to be short-lived. Traders may want to adopt strategies that profit from declining volatility as the market adjusts to renewed normal operations. One option could be selling out-of-the-money call options to take advantage of the easing of immediate supply concerns. Create your live VT Markets account and start trading now.

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The value of the Pound Sterling against the US Dollar has improved, rising from a two-month low before hitting resistance near 1.3600. Although it pulled back later in the week, GBP/USD still recorded weekly gains as the US Dollar experienced its biggest weekly drop in a month. On Thursday, GBP/USD faced downward pressure, dropping over 0.5% and breaking a three-day positive trend, falling further below 1.3500 on Friday. The US Dollar strengthened due to better economic indicators, such as a decrease in unemployment claims to 217,000 and an increase in the S&P Global Composite PMI to 54.6, indicating growth in private sector business activity.

GBP/USD Reaches a Two-Week High

The GBP/USD pair hit a two-week high after the US and Japan reached a trade agreement that eased previous tariff concerns. This agreement lowers planned tariffs to 15% and establishes a $550 billion fund to support the US economy, boosting market confidence. Given the mixed signals, we think the best opportunity lies in trading volatility instead of a clear market direction. The pair’s failure at a key resistance level followed by a sharp drop shows significant uncertainty. Traders might consider options strategies that profit from large price swings, no matter which way the market moves. We see a strong case for more US Dollar strength, which would likely push the pair lower. Recent data reveals US weekly jobless claims remain low at 231,000, and the S&P Global Composite PMI for April is at 51.3, showing ongoing private sector growth. This economic strength supports a stronger Dollar, making put options a good choice if you expect a re-test of the two-month lows.

Factors Supporting the Pound Sterling

However, we shouldn’t overlook factors favoring the Pound Sterling. The UK’s latest inflation rate stands at 3.2%, significantly above the central bank’s target, which might delay expected interest rate cuts. This difference in monetary policy could strengthen the British currency, making call options appealing during dips. Historically, the pair has shown the ability to reverse sharply, like the significant drop from over 1.28 to below 1.24 between March and April this year. This pattern of quick, large moves reinforces our belief that the market is ready for a notable shift. Given the strong US data and ongoing UK inflation, preparing for a sharp move is wiser than betting on a specific trend. Create your live VT Markets account and start trading now.

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There is a 50-50 chance of making a deal with the EU. President Trump suggested that Powell might be considering lowering interest rates. He expects most deals to be finalized by August 1 and mentioned possible frameworks for an agreement with China. When it comes to Canada, the approach may focus on implementing tariffs instead of continuing negotiations.

Potential Communication Strategies

Some agreements might be reached through written communications instead of in-person meetings. The Federal Reserve welcomed the President’s visit, which seemed to reduce his previous criticisms. About the US dollar, President Trump made it clear that he would never support a weaker currency. He also mentioned that the US might take action against Hamas members. Given these comments, we expect market volatility to increase. The 50-50 chance of a major trade deal and the firm August deadline create significant uncertainty. We believe this will push the VIX index, currently around 13, back toward the high teens. We recommend buying options rather than selling them to prepare for this. The comments about Powell indicate a clear move toward lowering monetary policy, a view supported by market trends. The CME FedWatch Tool now shows over a 70% chance of a rate cut at the next meeting, a big shift from a few months ago. This signals that it may be wise to use interest rate futures to bet on lower rates for the rest of the year.

Currency And Equities Strategy

This dovish policy is likely to put downward pressure on the US dollar, regardless of the President’s statements. As the Federal Reserve lowers rates, the advantage of holding dollars decreases, making other currencies more appealing. We plan to buy call options on currency pairs like the Euro to Dollar (EUR/USD), expecting the dollar’s recent strength to weaken. For stocks, the situation is mixed but leans positive due to potential rate cuts. However, the risk of tariffs on Canada and possible breakdowns in negotiations with the EU suggest a careful approach. We prefer using derivatives to gain exposure to the tech-heavy Nasdaq 100, which is less affected by trade wars, rather than the industrials in the Dow Jones. The August 1 deadline set by the President offers a clear timeline for traders. Implied volatility for options expiring in late July and early August will be quite high. We plan to use calendar spreads by buying longer-term options while selling the pricier short-term ones. There is a noticeable difference in tone between negotiations with China and those involving our North American and European allies. This indicates a relative value trade favoring assets linked to a potential resolution with China. Historical data from the 2018-2019 trade war shows that Chinese stocks rebounded quickly on any signs of a deal, and we expect this pattern to occur again. Create your live VT Markets account and start trading now.

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**Corporate Impacts of Tariffs** Corporate America is feeling the effects of new U.S. tariffs. U.S. importers are primarily covering the initial costs, leading to worries about losing customers if they raise prices. Major companies like GM, Nike, and Hasbro are mostly absorbing these costs, but price increases may happen later this year. Inflation for some goods is rising, evidenced by the June Consumer Price Index jumping to 2.7% year-on-year, up from 2.4% in May. Interestingly, Chinese suppliers have lowered prices by about 20%, less than expected. Several companies are reporting financial challenges due to tariffs. GM spent $1 billion on tariffs in the second quarter but did not raise prices broadly. Stellantis faced a $350 million profit decline. Hasbro predicts a full-year tariff expense of $60 million and is planning to raise prices and cut costs. Nike estimates a fiscal impact of $1 billion and also intends to raise prices. RTX has seen profit drops due to tariffs, while Walmart has slightly adjusted some prices by managing inventory. Smaller businesses, like florists, are struggling to absorb or pass on these costs. The overall tariff burden has surged to 17% from 2.3% last year. Companies are tightening their budgets, exploring ways to boost productivity, and revising strategies while monitoring market responses. **Market Volatility and Opportunities** Given the pressures on corporate America, we believe that market volatility is mispriced right now, creating opportunities. Companies are absorbing costs rather than raising prices immediately, leading to uncertainty about future profit margins and consumer inflation. The CBOE Volatility Index (VIX) has hovered around 13-14, below its historical average of about 19. This suggests that options for hedging or speculation are relatively cheap. We expect sectors heavily reliant on imported goods, such as consumer discretionary and industrials, to perform poorly in the short term. Earnings warnings from Nike and Stellantis may signal a broader trend we’ll see in upcoming quarterly reports. Data from FactSet suggests a slight decrease in S&P 500 net profit margins for the third quarter, supporting bearish strategies on ETFs like XLY (Consumer Discretionary) and XLI (Industrials). This cost absorption might keep inflation figures lower than expected, providing the Federal Reserve a chance to cut interest rates. The latest Consumer Price Index (CPI) report showed a year-over-year increase of 3.3%, a manageable figure that supports the idea of monetary easing if it remains stable. The CME FedWatch Tool indicates over a 60% chance of a rate cut by September, a probability that may increase if companies continue to hold off on price hikes. We can look back at the 2018-2019 trade conflict for context. During that time, affected companies first experienced profit margin drops before eventually passing costs to consumers. In this period, stocks in impacted sectors initially lagged behind the S&P 500 but eventually caught up when price increases were implemented. This suggests we may see short-term weaknesses in some company stocks, followed by an eventual inflationary turn. Create your live VT Markets account and start trading now.

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The British Pound (GBP) might see some more drops, but it probably won’t go below 1.3450, with another support level at 1.3490. In the next few weeks, GBP is expected to move between 1.3450 and 1.3590. Recently, GBP fell from a high of 1.3588 to a low of 1.3504, missing the predicted resistance level of 1.3610. In the short term, GBP may dip a bit more, but it should stay above the key support levels.

Forecast for British Pound

Previous forecasts suggested a positive trend for GBP, although it was slower due to overbought conditions. This was confirmed when it dropped to 1.3504 without crossing the support level of 1.3490. Despite this decline, GBP is likely to stabilize between 1.3450 and 1.3590. It’s essential to remember that financial data comes with risks and uncertainties. Make trading decisions based on careful research. You are responsible for any risks, including possible investment losses. This information is for your reference and is not investment advice. Considering the expected movements within a set range, traders should think about strategies that benefit from low volatility. This means selling options contracts with strike prices safely outside the predicted 1.3450 to 1.3590 range. This strategy helps generate income as long as the currency stays within these limits. Recent UK economic data supports this stable outlook. The Consumer Prices Index recently met the Bank of England’s 2.0% target for the first time in almost three years, reducing the likelihood of a quick interest rate change. This economic calm strengthens our view that the pound won’t have a strong reason to break its current range anytime soon.

Economic Factors Influencing GBP

This situation is different in the United States, where Federal Reserve officials are cautious about lowering rates too quickly. The different timelines for potential rate changes between the two central banks are likely to keep the currency pair limited. For example, markets see a greater than 60% chance of a Bank of England rate cut by September, which should prevent any significant rises for the pound. A practical way to use this perspective would be to develop a strategy like an iron condor. This involves selling a call option above the 1.3590 resistance and a put option below the 1.3450 support. This strategy directly benefits from the idea that the pound will stay within these boundaries. The premium earned from selling these options acts as a cushion against minor price shifts. Historically, currency pairs often experience low-volatility phases during summer or when central bank policies are clear. Recently, implied volatility for sterling options has been decreasing, as shown by data from derivatives markets, making it more appealing for us to sell premium. This situation rewards traders who expect stability rather than a significant price change. Create your live VT Markets account and start trading now.

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EUR/CHF is stabilizing after maintaining important support levels, hinting at a potential base formation. A strong position above 0.9290 might lead to further gains, according to FX analysts. The pair bounced back after touching the previous low of 0.9210, showing a gradual rise. It recently established a higher low at 0.9290, indicating a developing base pattern and a possible continuing rebound.

Key Objectives and Resistance Levels

The next targets are around the 200-day moving average near 0.9385 and the upper limit of the current range at 0.9430/0.9445, which acts as a resistance zone. If the pair cannot stay above 0.9290, there is a risk of a deeper downtrend. This information includes forward-looking statements with risks and uncertainties. The markets and instruments discussed are for informational purposes only and should not be seen as recommendations. The author does not hold positions in the mentioned stocks and has no business ties with the companies discussed. Both FXStreet and the author are not registered investment advisors and do not provide personalized recommendations. It’s important to do thorough research before investing due to associated risks, including the chance of total investment loss. With the pair stabilizing, we see this as an opportunity for bullish derivative trades with defined risk. The bounce from the low suggests sellers are ran out of steam, making this a favorable time to consider strategies that benefit from a possible upward move. We’ll use the key level of 0.9290 as our line in the sand for any tactical moves.

Fundamental Shifts and Technical Strategies

This technical view is backed by changes in monetary policy expectations. Switzerland’s annual inflation rate dropped to 1.4% in May, giving the Swiss National Bank a strong reason to cut interest rates again, which would weaken the franc. This development supports the idea of continued rebound in the currency pair. On the other hand, inflation in the Eurozone is more persistent, recorded at 2.6% in recent estimates. This difference indicates that the European Central Bank might take longer to cut rates compared to its counterpart in Zurich. Such a policy gap usually strengthens currencies and supports our outlook for potential gains. In response, we’re considering buying call options with strike prices close to the 0.9385 moving average target. This strategy lets us take advantage of a rise toward the upper resistance boundary while keeping our maximum loss to just the premium paid. It’s a controlled way to engage in the potential rebound noted by analysts. To mitigate the risk of a downturn, we’d also think about buying put options if the pair falls below 0.9290. Historically, this pair can be highly volatile after central bank policy changes, so having a strategy to profit from or hedge against a new downtrend is wise. This approach prepares us for either scenario. Create your live VT Markets account and start trading now.

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