Eurostoxx futures dropped by 0.2% in early European trading. The atmosphere is cautious due to mixed results from Wall Street overnight. German DAX futures fell by 0.4%, French CAC 40 futures by 0.2%, and UK FTSE futures by 0.1%. Uncertainty surrounding the US-EU trade deal is adding to this caution as the August 1 deadline approaches.

Mixed Wall Street Results

Wall Street had mixed performances, with the Dow finishing 0.7% lower while the Nasdaq gained 0.2%. US futures rose by 0.2% today, but the effect on European stocks is noticeable before the markets open. The current decline in European futures shows growing caution. This trend isn’t only a response to Wall Street but also reflects uncertainty at home, especially with the approaching trade deadline. It seems wise to adopt a defensive approach in the coming weeks. Volatility is increasing, and options markets are reflecting this change. For example, the Euro Stoxx 50 Volatility Index (V2X), which measures fear in Europe, spiked over 17% in a week after a snap election was announced in France. This indicates that traders are willing to pay more for protection as potential political instability looms. In this context, buying protective puts on indices like the DAX and CAC 40 makes sense. This strategy helps limit potential losses to the cost of the option. It’s a sensible way to manage risk in these uncertain market conditions.

Historical Market Patterns

This situation resembles the market environment in 2016 around the Brexit vote, when political news heavily influenced market movements for weeks. During that time, implied volatility was high, making it costly yet essential to hold protective positions in portfolios. We expect a similar pattern of volatility until political and trade issues clear up. The mixed results among industrial and technology stocks in the US indicate important differences that can be capitalized on. This implies that not all sectors will react the same way to current pressures, presenting opportunities for pairs trades—going long on a strong sector while shorting a weaker one. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

UK retail sales in June rose by 0.9% from May, but this was below the expected rise of 1.2%. The previous month’s decline was adjusted from -2.7% to -2.8%. Year-over-year, retail sales increased by 1.7%, missing the anticipated increase of 1.8%. When excluding cars and fuel, retail sales increased by 0.6% from the previous month, also below the expected 1.2%. The last month’s figure was revised from -2.8% to -2.9%. On a yearly basis, sales excluding cars and fuel rose by 1.8%, just below the 2.0% expected.

Factors Driving Sales

The increase in sales was largely due to food stores, with good weather helping boost sales. Online sales, especially from non-store retailers, rose by 1.7%, marking the biggest rise since February 2022. Retailers pointed to promotions and good weather as reasons for this boost. Overall, the data reflects a recovery from a weak performance in May. However, these numbers may not influence the Bank of England’s current outlook. The latest retail figures showed a recovery from a poor May but missed analyst expectations. This suggests that while consumer spending is picking up, it isn’t strong enough to prompt any policy changes from the Bank of England. We agree with Low’s view that this report is unlikely to alter the central bank’s stance. With UK core inflation steady at around 2.3% for the past few months, this mild consumer activity offers no reason for a more aggressive approach. The Office for National Statistics confirmed that GDP growth was flat last quarter, highlighting a delicate economy. Therefore, we expect policymakers to keep interest rates steady through the summer.

Market Implications

This situation reminds us of the prolonged economic stagnation in late 2023 and early 2024 when mixed data led to a long pause in policy changes. During that time, traders anticipating significant shifts were often let down by the central bank’s steady approach. History shows that without a major economic shock, it’s likely that they will wait for clearer data. For those trading short-term interest rate derivatives, this suggests lower volatility. We believe that instruments linked to the SONIA rate will likely trade in a narrower range compared to previous months. This environment might benefit strategies that capitalize on minimal price movement and time decay. The pound sterling is also unlikely to find strong support for a sustained rally based on this domestic report. Without the prospect of higher interest rates to attract investment, the currency may struggle, especially as the US Federal Reserve maintains a cautious approach. We would consider options strategies that benefit from range-bound price movements on currency pairs like GBP/USD in the near term. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

Recent data from the Japan Cabinet Office, released on July 25, 2025, shows that the leading indicator index for May was adjusted to 104.8, up from the previous value of 104.2. The coincident index remains unchanged at 116.0 from April. The Cabinet Office continues to describe the index as “halting to fall,” suggesting there hasn’t been a recent decline. This consistent data reflects stability similar to previous months.

Economic Outlook and Investment Strategies

These latest figures indicate that the Japanese economy may be stabilizing. The increase in the leading indicator suggests a cautious optimism for the upcoming months. The “halting to fall” assessment hints that the downward trend might be ending. With this stabilization in mind, we are revising our perspective on Nikkei 225 derivatives. The index has shown recent strength, remaining above the 40,000 mark after a turbulent second quarter. We are considering closing our short positions and are looking into long-dated call options to take advantage of potential growth as we approach the fourth quarter.

Currency and Market Dynamics

This shift in economic outlook could boost the yen, a trend we have anticipated. With core inflation for June holding steady at 2.5%, which is above the central bank’s target, there is increasing pressure to normalize monetary policy. As a result, we are exploring opportunities in USD/JPY put options, especially given the currency pair’s recent struggle to stay above 159, which we see as a significant technical indicator. This new stability implies that implied volatility on Japanese assets may be overpriced. We noticed a similar trend in late 2016 when the economy shifted from contraction to slow growth, leading the Nikkei Volatility Index to drop from the high 20s to the mid-teens over several months. Therefore, selling strangles on the index, which benefit from minimal price fluctuations, could become a more appealing strategy. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

On July 25, FX option expiries are centered around one important level: the EUR/USD option at 1.1745. The EUR/USD pair saw a slight rise after the European Central Bank (ECB) announced plans to pause interest rate changes through September. However, its upward momentum is limited since markets expect one more rate cut by the end of the year.

Key Technical Levels

The overall trend this week remains positive, even though the dollar is trying to regain strength. The upcoming expiry may limit price changes as traders evaluate trade developments for next week. A key level to watch is the 100-hour moving average at 1.1723, which might have a bigger impact than the day’s expiries. Looking at the forecast, large option expiries are likely to hold prices steady in the short term, but central bank policies will drive the bigger trend for the upcoming weeks. Traders should focus on the overall economic situation rather than getting caught up in daily price movements. The ongoing story is a dovish ECB compared to a steady Federal Reserve. We believe traders should prepare for continued dollar strength or at least limited upside for the euro. The ECB started cutting rates in early June when Eurozone inflation was at 2.6% in May, showing their willingness to tolerate higher inflation to support growth. This is in stark contrast to the U.S., where the latest Consumer Price Index stands at 3.3%, prompting the Federal Reserve to hold its ground and possibly only make one rate cut this year.

Historical Context and Strategies

Historically, this difference in policy has strengthened the dollar against the euro, as seen from 2014 to 2016 when the ECB eased policy while the Fed prepared to hike. Therefore, we should consider strategies that benefit from a stable or slightly lower EUR/USD. Selling out-of-the-money call options or setting up put spreads could be effective ways to leverage this outlook. Current market data shows that one-month implied volatility for EUR/USD is near multi-year lows, recently around 5.5%. This makes buying options cheaper, but it also indicates market complacency, which we can turn to our advantage. We think selling volatility through strategies like short strangles, with strikes placed outside important technical levels like the 200-day moving average, offers a strong risk-reward setup. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

JP Morgan has changed its prediction for the European Central Bank’s next rate cut, moving it from September to October. The bank still expects the terminal rate to be 1.75%. While many analysts thought the cut would happen in September, there are differing views on the terminal rate. Institutions like Deutsche Bank, Citi, Barclays, and Nomura believe the terminal rate will be lower at 1.50%.

Convergence in Forecasts

JP Morgan’s prediction aligns with Commerzbank, Goldman Sachs, Societe Generale, UBS, and Danske, who also estimate the terminal rate to be 1.75%. We see JP Morgan’s updated forecast as a sign that reducing rates might take longer than expected. The move from a September cut to an October one suggests that borrowing costs won’t drop as quickly as the market anticipated. This change is crucial for our strategy. Recent data backs up this view, showing that Eurozone inflation unexpectedly rose to 2.6% in May, up from 2.4% in April. Additionally, wage growth hit a record 4.7% in the first quarter, complicating the central bank’s efforts to lower prices sustainably. These figures support the idea of a policy pause after a June cut. As a result, we should think about adjusting our short-term interest rate positions to be more cautious. This might mean pulling back on trades that depended on a September cut or unwinding bets on quickly falling Euribor futures. Our attention now turns to the fourth quarter for the next major policy action.

Uncertain Policy Outlook

Beyond the immediate timing, the differing terminal rate predictions between institutions like Deutsche Bank and Goldman Sachs highlight significant long-term uncertainty. Whether rates settle at 1.75% or drop to 1.50% creates a wide range of outcomes for the yield curve over the next two years. We need to prepare for this lack of consensus on where policy may end up. Historically, the European Central Bank has been very cautious. It tends to pause and assess new data rather than quickly implement cuts. We saw similar pauses during the easing that followed the sovereign debt crisis, where market expectations for cuts were often delayed. This historical pattern makes a delay a very likely scenario. In this environment, options strategies on interest rate futures could be especially appealing, allowing us to profit from increased volatility without betting on one direction. We might also consider yield curve steepener trades, which would benefit if long-term rates remain relatively high while the market debates the future of this cutting cycle. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Bitcoin has dropped over 3%, falling below $116,000 for the first time since July 11. This decline threatens its recent upward momentum, and if Bitcoin doesn’t hold its ground, it could slide further toward $110,000. Even with this setback, Bitcoin is up nearly 8% in July, but it hasn’t performed as well as Ethereum, which has jumped 45% this month. Although Ethereum recently dipped nearly 3%, its price has stalled around $3,800 and is now testing closer to $3,600. The $116,000 level is crucial for Bitcoin’s recovery, while for Ethereum, the key support level is $4,000. However, for Ethereum to reach this level, buyers may need to be patient as the market develops. As mentioned by Low, the current challenges may lead to more volatility. If Bitcoin breaks below this key level, we could see a larger decline. Therefore, buying protective put options with strike prices near $60,000 could be a smart move to protect any long positions. Recent trends support this cautious outlook. There have been six straight days of net outflows from U.S. spot Bitcoin ETFs, with totals exceeding $870 million. This ongoing selling from institutional investors reinforces the idea that prices might drop even further. It shows that the market is currently absorbing a lot of supply. This phase of consolidation is common based on historical trends. After the 2020 halving, we witnessed a similar period of sideways trading before the next big upswing. Thus, we see the current lull not as the end of the bull market but as a possible accumulation phase that requires patience. For Ethereum, its strong performance this month relates to market expectations of spot Ether ETF approvals. We are closely monitoring the updated S-1 filings from major asset managers, which analysts believe could lead to trading in early July. This potential development is why traders are leaning toward Ethereum over Bitcoin. This situation offers a great opportunity for a pairs trade: going long on Ethereum futures while shorting Bitcoin futures to benefit from their relative strengths. For options traders, bull call spreads on Ethereum with target strikes below the important $4,000 level could effectively allow speculation on the anticipated pre-ETF rally. This strategy capitalizes on the differing narratives between these two assets.

here to set up a live account on VT Markets now

Analysts are set to change their predictions about the European Central Bank’s (ECB) actions in the coming weeks. A leaked report has made traders rethink, moving away from earlier expectations of rate cuts in September and perhaps December. Despite this adjustment, the euro hasn’t significantly risen. This is because traders had already factored in about 26 basis points of rate cuts by the year’s end before the report.

Current Rate Cut Expectations

Currently, the outlook for rate cuts has dropped to about 15 basis points by the end of the year, suggesting a 50-50 chance of another cut this year. There are three ECB meetings left — in September, October, and December. The ECB’s current deposit rate stands at 2.00%, which matches the neutral rate estimates of 1.75% to 2.25%. This could explain why the ECB seems hesitant to make further moves. With a stronger euro, there’s a risk of not meeting inflation targets. While policymakers might deny this, de Guindos mentioned a threshold of 1.20 for EUR/USD, showing that it is still a consideration. Given the dramatic changes in rate expectations, it seems wise for derivative traders to shift focus from directional bets to volatility strategies. With the market currently seeing only a 50% chance of one more rate cut this year, uncertainty about the ECB’s next steps is a central theme. This environment indicates that options strategies designed for price volatility, rather than sustained movements, may be more effective.

Volatility Strategies

The declining expectations for a cut in September are further backed by recent data. Eurozone inflation for May unexpectedly climbed to 2.6%, and services inflation remains particularly strong. This provides policymakers with a valid reason to wait and evaluate the situation, making the “leaked report” about holding rates more believable. Thus, we find value in buying volatility through strategies like straddles or strangles on EUR/USD, especially around the upcoming policy meetings. With three decisions left this year, implied volatility might be underestimating the chance of a surprise or a hawkish hold. Historically, the central bank has held rates steady over multiple meetings, a trend the market might be overlooking. Additionally, we should keep an eye on the currency level itself, as noted by the policymaker. His reference to 1.20 in EUR/USD indicates a ceiling at which the central bank may resist further euro strength. For derivative traders, this offers a chance to sell out-of-the-money call options with strike prices near that level, taking advantage of this perceived cap. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Goldman Sachs has changed its outlook for the European Central Bank’s (ECB) deposit rates. They no longer expect a 25 basis points cut in September 2025. The new prediction shows that the deposit rate will remain at 2%, instead of the previously expected 1.75%.

Impact On The Euro

This updated forecast is likely to help the euro strengthen. It indicates a shift in how economists view the economy. With this new outlook, we believe the euro could perform better in the near future. Recent data also supports this belief, as Eurozone inflation unexpectedly increased to 2.6% in May, making it less likely for further rate cuts to occur. Therefore, we should consider strategies like buying EUR/USD call options or taking long positions in euro futures. A higher expected terminal rate could pose challenges for European stocks. Increased borrowing costs can reduce company profit margins, potentially leading to a slowdown in indices like the Euro Stoxx 50. This suggests we might want to buy put options on these indices as a way to hedge or bet on a downward trend.

Market Volatility And Strategy

This change in outlook will probably lead to more market volatility as traders adjust their positions. ECB President Christine Lagarde described the path to reducing inflation as “bumpy,” adding to the uncertainty. Because of this, trading options on volatility indices like the VSTOXX could be more appealing. Historically, when the central bank hints at pausing or ending an easing cycle, the euro usually gains value. We’ve seen similar patterns in the past when rate expectations shifted unexpectedly. This history supports our view that taking long positions in the euro is the best way to align with this revised forecast. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Ethereum’s trading today fell by about 3%. The USD/JPY continued to rise, crossing the 147.40 mark. The People’s Bank of China set the USD/CNY reference rate at 7.1419, which was stronger than expected.

Consumer Confidence and Economic Indicators

Consumer confidence in the UK dropped. However, the GfK savings index increased by seven points to +34, its highest level since 2007. In Tokyo, the July Consumer Price Index (CPI) was 2.9%, slightly below expectations. Both the core and core-core CPI met their expected rates of 2.9% and 3.1%, respectively. Intel reported second-quarter earnings with revenue exceeding expectations, although earnings per share were less than predicted. CEO Lip-Bu Tan warned that the company might withdraw from advanced chip manufacturing if it does not attract new foundry clients. The U.S. dollar gained slightly, as Trump’s remarks overshadowed earlier concerns about Federal Reserve leadership. In Asia-Pacific stock markets, the Hang Seng in Hong Kong fell by 1%, Japan’s Nikkei 225 declined by 0.75%, and the Shanghai Composite dropped by 0.35%. A military clash in Asia has displaced 100,000 people, leading to an emergency UN Security Council meeting. The U.S. housing market showed a 9.8-month supply, pointing to potential recession risks. With the current political dynamics at the Federal Reserve, the immediate risk of a leadership change seems lower. This suggests there may be less market volatility in the short term than expected, making strategies like selling short-dated call and put options on the U.S. dollar index appealing. However, as figures like Warsh hint at potential rate cuts, we advise caution in holding these positions for too long, as political pressures may increase later this year.

Inflation and Currency Trade Strategies

Japan’s ongoing inflation, with core-core CPI at 3.1%, points to a possible policy shift, although the market is concerned with when that will happen. The interest rate gap, with the Fed funds rate over five percentage points higher than Japan’s, is likely to support the yen carry trade for now. We are looking at buying call options on USD/JPY to benefit from future increases while clearly managing our risk. There’s a noticeable divide in the technology sector, with one major chipmaker struggling while AI-related businesses thrive. We see a chance to employ a pairs trade, using options to go long on AI companies and short on legacy semiconductor firms that are losing market share. Recent earnings support this trend, as AI leader Nvidia reported over 260% revenue growth, while older tech firms are seeing single-digit or negative growth. The military clash in Asia poses a significant, underestimated risk that could drive investors to seek safer options. Historically, such events have led to increased volatility; for instance, the VIX surged over 45% in the two weeks after the Russia-Ukraine conflict escalated in February 2022. We believe it is wise to buy inexpensive, out-of-the-money put options on major equity indices like the S&P 500 as a budget-friendly hedge for our portfolios. In China, the central bank is managing its currency by setting the daily reference rate considerably stronger than market expectations to avoid a chaotic downfall. This hints at a slow, controlled depreciation of the yuan rather than a sharp drop, even with weak economic indicators like the recent decline in the manufacturing PMI to 49.5. We would use option collars on the offshore yuan to prepare for a gradual rise in USD/CNH while keeping trading costs in check. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now