EUR/USD is slightly up as markets watch trade and economic policy changes. The pair is trading above 1.1700, despite facing some economic challenges.
US-EU trade tensions are rising as we approach the August 1 tariff deadline. Important meetings on July 22-23 may lead to retaliatory tariffs from the EU if negotiations fail.
Potential Tariffs and Economic Impact
These tariffs might affect American exports, including digital services and aerospace products. Existing tariffs on autos, steel, and aluminum are still in place and impact economic data releases.
Thursday’s European Central Bank (ECB) interest rate decision is also in focus. This announcement will shed light on interest rates and the risks to the European economy.
EUR/USD has gone above the 23.6% Fibonacci retracement level at 1.1649 and is aiming to test the resistance at 1.1720, with the 20-day simple moving average acting as near-term resistance.
If the pair breaks this resistance, it may reach 1.1830 and 1.1900. However, if it fails to stay above 1.1649, it could drop to 1.1556.
Role of the Euro and Market Volatility
The Euro is the currency for 19 EU countries and makes up 31% of global foreign exchange transactions. The ECB affects the Euro through interest rates and inflation control.
The Euro’s value is significantly influenced by trade balance, inflation, and economic data releases. A positive trade balance and strong economic data can boost the Euro.
The next few weeks present a critical period with significant event risks. Although the pair is currently above 1.1700, major policy decisions may lead to volatility. Derivative traders should prepare for sharp price movements rather than a steady trend.
Trade negotiations are crucial, with US-EU trade exceeding $1.3 trillion each year. Failed talks could lead to retaliatory actions, shaking this economic relationship. Current option pricing reflects the uncertainty as we approach the deadline.
We should also focus on the central bank’s upcoming decision. Eurozone inflation was reported at 2.5% in June by Eurostat, leading many to expect a rate hold. However, Lagarde’s forward guidance will be closely analyzed for any signs of a more cautious approach, and this guidance will significantly affect the Euro’s direction.
Given the uncertain nature of these events, strategies that benefit from increased volatility seem wise. Using options to prepare for large price swings, regardless of direction, could be a smart move. This approach allows traders to capitalize on the outcomes of high-stakes negotiations and monetary policy announcements.
If trade talks go well and the central bank remains neutral, we might see a breakthrough at the 1.1720 resistance level. In this case, buying call options could help capture potential gains toward 1.1830 with defined risk. Historically, positive trade negotiations have led to short-term strength in the currency.
On the other hand, if negotiations fail or the central bank signals weakness, the pair could quickly test lower support levels. In this situation, we would consider put options to protect against a decline toward 1.1556. This strategy safeguards portfolios against the fallout from renewed protectionism.
Beyond these immediate events, we will closely monitor economic data as it comes in. Reports like the German ZEW Economic Sentiment and Eurozone trade balance will provide essential insights into economic health. These figures will impact the pair’s direction long after current headlines fade.
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Meta Platforms Inc. ($META) has recently shown notable market movements analyzed through Elliott Wave Theory. The stock underwent a 7-swing correction (WXY) after declining from its peak in June 2025, finding support between $700.47 and $677.50.
An early 5-wave impulsive cycle concluded, leading to a pullback that analysts anticipated. Following this, the stock rebounded and is now on an upward trend, with expectations for more waves to follow this pattern.
Current analysis indicates support against the April 2025 lows, focusing on the $762–$783 range as a potential target. Traders are advised to buy during dips and monitor pullbacks for entry opportunities, enhancing risk management through Elliott Wave Theory.
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We are currently witnessing the upward trend in Meta Platforms Inc., which was expected following the recent correction. The initial bounce has occurred, indicating that a new impulsive wave could be forming. This observation aligns with the technical structure suggesting a rebound after the stock stabilized.
The recent pullback was largely influenced by the late April earnings report. Investors reacted to the raised capital expenditure guidance, despite a 27% increase in revenue year-over-year. The company’s forecast of spending $35-$40 billion on AI in 2024 has created short-term uncertainty. We view these dips related to spending as entry points that the analysis promotes.
For derivative traders, this means considering buying call options during any weakness and targeting strikes near the identified zones for longer-dated contracts. Another strategy is to sell cash-secured puts or put credit spreads below recent support levels, such as the post-earnings low around $415, to collect premiums while targeting a favorable entry. This strategy takes advantage of the expected upward movement while managing risk.
Implied volatility remains high following recent market events, maintaining elevated option premiums. This situation makes selling premium strategies, like the spreads mentioned, particularly appealing right now. For those buying calls, using debit spreads can help lower costs associated with this increased volatility.
Historically, tech companies that have engaged in large investment cycles, such as Amazon’s early spending for AWS, often see their stock prices lag before experiencing significant long-term growth. We believe the market is currently following a similar pattern, digesting heavy investments before recognizing future growth potential. This trend supports acquiring positions during these uncertain times.
Goldman Sachs predicts that the Federal Reserve will start cutting interest rates in September 2025, with additional cuts expected in early 2026. These reductions are likely to happen during meetings on September 16-17, October 28-29, and December 9-10.
This forecast relies on stable inflation; any increase could change the plan. Analysts believe the Federal Reserve will keep interest rates the same at the upcoming meeting on July 29-30.
Economic Conditions And Job Market
Current economic conditions suggest a gradual shift in policy might happen. The job market is getting weaker, with less hiring in the private sector, raising the chance of a bigger economic slowdown.
Additionally, consumer spending has been flat for six months, which is typically seen during recessions. These signs indicate that there could be room for adjusting rates to maintain economic stability.
Goldman Sachs’s forecast leads us to think the derivatives market will start reflecting a clearer path toward easing monetary policy. With the first projected rate cut not until September 2025, we should focus on longer-term interest rate futures and options. We can expect a slow decline in long-term yields, creating chances with options on bond ETFs.
Implications For Investment Strategies
Since the forecast hinges on inflation, it signals how to manage risk. The Core CPI recently showed a 3.6% inflation rate; any significant increase in inflation could disrupt this outlook and cause higher volatility. Thus, we should think about buying low-cost, short-term options as insurance around key inflation reports in the upcoming months.
This view is backed by a cooling job market. Recent JOLTS data shows job openings dropped to 8.4 million, the lowest in over three years. This trend gives the Federal Reserve a reason to adopt a more lenient policy. We see this as a chance to not overreact to any single strong jobs report since the overall trend is downward.
The stagnant consumer spending highlighted by analysts is evident in the recent retail sales data, which showed only a 0.1% increase last month. Normally, such extended weakness without a declared recession is unusual, suggesting that the economy may be weaker than current stock prices suggest. This supports strategies that benefit from slowing growth, like buying puts on cyclical sector ETFs.
This situation is reminiscent of the period before the 2019 rate cuts, when anticipation built for months before the actual change. We expect implied volatility on interest rate products to gradually reduce as the market adapts to this new direction. We can take advantage of this by selling volatility on longer-term expirations, while staying flexible enough to respond to any data that contradicts the easing outlook.
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SoFi Technologies, Inc. provides financial services across the US, Latin America, Canada, and Hong Kong through its Lending, Technology Platform, and Financial Services segments. The company trades on Nasdaq under the ticker “SOFI.”
Since its low in December 2022, SoFi’s price has increased five times. The high reached $28.26 in early 2021, before dropping to a low of $4.24 in December 2022. The recent price rise fits within an expected upward pattern.
Elliott Wave analysis predicts a rally starting from a low in April 2025. The current price movement suggests a correction within wave ((iv)), and we anticipate a rise afterward.
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The current market correction, viewed as wave ((iv)), presents opportunities for derivative traders. Despite SoFi achieving its second consecutive quarter of GAAP profitability, the stock’s recent decline indicates that the weakness may be more technical than a fundamental issue.
In the near term, as the correction unfolds, we can consider selling cash-secured puts with strike prices around or below recent support levels, possibly near $6.00. The stock’s high implied volatility, recently above 60%, offers attractive premiums for this strategy, allowing traders to earn while waiting for a better entry point.
Looking ahead to the expected rise, buying long-dated call options is a sensible response. To benefit fully from the rally projected from the April 2025 low, we should target expirations in late 2025 or January 2026. This strategy helps manage the risk associated with accurately timing the market bottom.
We must also account for the broader market situation, as CEO Noto mentioned the challenges posed by the current interest rate environment. If the Federal Reserve maintains high rates for an extended period, it could hinder the financial services sector and postpone the next upward wave. This economic pressure implies we might experience a corrective phase before a significant advance.
The company’s high short interest, around 18% of the free float, adds another consideration. This situation could lead to a short squeeze triggered by any positive news, resulting in a swift upward price movement. A bull call spread might effectively position us for such a scenario while keeping risk defined.
Reflecting on the five distinct upward movements since the low in 2022, each has been followed by a notable pullback. This historical pattern suggests that once the next rally starts, it may be wise to sell covered calls against core stock holdings. This strategy allows for income generation during the price increase, aligning with the stock’s volatile behavior.
Price Movements of SoFi since December 2022
Nvidia has reached new highs since its low in April 2025, showing a strong upward trend. On April 7, 2025, the company finished a pullback at 86.62. After that low, the momentum shifted toward a rally with a series of higher highs. During this phase, Nvidia reached a high of 115.44 in wave (1) and 95.04 in wave (2).
Next, wave 1 of (3) came in at 143.84, followed by wave 2 at 132.93 and wave 3 at 174.53. Wave (3) exceeded the 2.0 Fibonacci extension of wave (1), indicating potential for further gains. Currently, Nvidia is retracing towards the 170.13 to 168.11 range. It’s finishing wave 4 and is likely to see a rally in wave 5 or at least bounce back in three swings.
Wave 4 Support
In wave 4, parts ((a)) and ((b)) peaked at 171.26 and 173.38, respectively. Soon, potential support could emerge to encourage a rise. Wave 5 of (3) might reach 175.9 or higher, keeping the bullish trend intact. After that, a pullback against the April low is expected, which could happen in 3, 7, or 11 swings, depending on whether the bullish momentum continues.
We view the current drop towards the 170.13 to 168.11 area as a good short-term buying opportunity for bullish positions. Derivative traders might consider implementing call option strategies as the stock approaches this support zone. This aligns with the expected end of the brief wave 4 correction.
Nvidia’s recent 10-for-1 stock split on June 10, 2024, has historically attracted more retail interest and liquidity. This fundamental support adds to the technical setup for another upward move. We believe strong demand for the next-generation Blackwell platform will keep positive sentiment high in the coming weeks.
Implied volatility has slightly decreased from its recent highs, making call options for the next leg up more reasonably priced. Data from Cboe Global Markets shows a steady, high volume of call options, indicating widespread bullish speculation that fits with our wave 5 target. This suggests traders are positioning for a rise to the 175.9 level or beyond.
Historical Patterns Indicate Consolidation
Looking back at historical trends, the stock has experienced several quick pullbacks of 10-20% over the past 18 months, followed by notable new highs. This pattern suggests the current minor dip serves as a healthy consolidation rather than a reversal. We expect this pause to provide the momentum for the next rally.
Once wave 5 completes, traders should adjust their strategies to prepare for a more substantial pullback. This may include taking profits on long positions or starting bearish positions, like buying puts, to protect against the anticipated multi-swing correction. It’s essential to watch for signs of exhaustion as prices near new highs.
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The US dollar has dropped against major currencies for two days in a row. As the August 1 deadline for US trade deals approaches, worries about possible tariffs are impacting the dollar, which has fallen around 10% this year. Concerns about the fiscal deficit and political pressures on the Federal Reserve are also shaking confidence in the dollar. US yields are declining, with the Richmond Fed manufacturing index recently falling from -8 to -20.
Technically, USDJPY has fallen to the 100-bar moving average near 146.389, testing important swing levels. EURUSD has broken through key resistance levels and is moving higher, while GBPUSD has surpassed the 38.2% July retracement level, indicating that buyers are in control. AUDUSD initially dipped but later rebounded to trade at 0.6551, showing a bullish trend.
US Market Summary
US yields closed lower, with the 2-year yield at 3.833% and the 10-year yield at 4.346%. The S&P reached a new record high, while the NASDAQ ended its six-day increase. The Dow rose by 179.37 points, and the S&P gained 4.02 points. Crude oil fell by $0.56 to $65.39, while gold prices rose by $33.98. Bitcoin jumped by $2185 to $119,622.
The fundamental outlook for the dollar is weakening, and technical breakdowns across major currency pairs support this view. This situation creates a clear opportunity to prepare for more declines in the coming weeks. Recent data from the Commodity Futures Trading Commission shows that hedge funds and large speculators have increased their net short positions on the U.S. dollar to the highest level in over two years, indicating alignment with institutional trends.
We should think about buying call options on the Euro and Australian dollar, using the breakout levels mentioned as references for strike prices. This strategy limits risk while taking advantage of the upward trends in EURUSD and AUDUSD. With the trade deadline approaching, there could be more volatility, making options a smart choice compared to more leveraged futures positions.
Bearish Dollar Outlook
The decline in U.S. yields across the curve supports our negative outlook, as it reduces the dollar’s appeal in carry trades. The CME FedWatch Tool shows an over 85% chance of a rate cut by the September meeting, indicating that the market anticipates a more dovish central bank. Political pressures on Chair Powell further strengthen the belief that rates are likely to decrease.
The strong rise in gold is a clear confirmation of the anti-dollar trend, and we expect this momentum to continue. Even as the S&P hits new highs, the NASDAQ’s recent stumble suggests we should be cautious about the broader risk-on narrative. This might favor currency pairs like AUDUSD, which benefit from both dollar weakness and a solid commodity backdrop.
Historically, times of coordinated easing by the Federal Reserve often lead to extended periods of dollar weakness, similar to the declines seen after the rate cuts of 2007-2008 and 2019. We should be ready to maintain bearish dollar positions for more than just a few weeks and consider adding to them during any short-term pullbacks. The weak Richmond Fed index signals that the economic factors for a weaker currency are also developing.
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Japan’s Akazawa and US Treasury Secretary Bessent recently spoke for about 30 minutes about trade tariffs. According to Japanese media outlet NHK, a trade agreement between Japan and the United States is not close.
The meeting discussed the current state of trade between the two countries, but no solutions were found. This lack of a trade deal highlights ongoing disagreements about trade policies.
Currency Market Instability
Since there was no progress made during the talks, we expect the currency markets to become more volatile. The Japanese Yen is under a lot of pressure right now. This stalemate could lead to sudden and sharp changes in the USD/JPY exchange rate.
Given this uncertainty, traders might want to look at options strategies that benefit from volatility instead of direction. With the USD/JPY exchange rate near a 34-year high around the 159 level, the chances of intervention or sudden changes in sentiment are higher. We suggest considering long straddles or strangles on this currency pair to prepare for a significant move in either direction.
This situation will likely affect Japanese stocks, especially those that export goods. Major companies in the Nikkei 225 depend heavily on the U.S. market, which accounted for over $180 billion in Japanese exports in 2023. We are planning to buy put options on the Nikkei to protect against potential tariff threats or a stronger yen that could hurt exporter profits.
Prolonged Economic Uncertainty
Historically, long trade disputes, like the US-China conflict from 2018 to 2020, have caused extended periods of high market volatility. During that time, the VIX index often rose above 20, indicating significant market fear. We expect a similar situation might occur now, making long positions on volatility indices a wise decision.
The political factors add another layer of long-term risk, as these discussions might hint at a more aggressive American trade policy. This suggests that uncertainty will last beyond the next few weeks and possibly through the U.S. election cycle. To capture this extended period of instability, we are looking into longer-term derivative contracts that expire in late 2024 or early 2025.
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The YM_F Dow futures have been on an upward trend since hitting a low on April 7, 2025. This trend hints at more price increases, and it’s recommended to buy during dips in certain blue box areas.
By July 15, 2025, the Dow futures rose to a high of $45,177 after completing a cycle from the previous low on June 19, 2025. After that, a correction occurred, ending in the blue box area of $44,291–$43,819, where buying interest could lead to more upward movement.
Market Update
As of July 22, 2025, the index has been rising following the correction in the blue box area. To maintain upward momentum, it’s crucial to break above $45,177; otherwise, a more significant decline may happen.
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We view the upward trend since April as the main direction, suggesting that the Dow futures are likely to rise further. The recent dip into the blue box was a normal correction within a larger uptrend. Traders should consider this a healthy pause instead of a cause for concern.
Economic Indicators and Market Performance
This technical outlook is supported by recent economic data. The June 2025 jobs report indicated a moderate payroll increase of 170,000, while the Consumer Price Index eased to 3.2% year-over-year. This indicates a growing economy without overheating, which reduces the Federal Reserve’s need to raise interest rates.
Historically, markets thrive in conditions of lowering inflation coupled with steady economic growth. Corporate earnings have also been strong, with over 75% of companies in the index exceeding profit expectations last quarter. This financial stability supports the bullish technical trend we’re seeing.
As a result, we suggest that derivative traders take advantage of any small pullbacks in the upcoming weeks to prepare for further upward movement. Recent buying interest in the $44,291–$43,819 area shows that buyers are active during dips. It’s essential to manage risk while anticipating the continuation of this trend.
The immediate goal should be for the index to clearly break and hold above the previous peak of $45,177. A sustained movement past this level would indicate the end of the corrective phase and the start of the next upward leg. Until that occurs, a larger sideways correction is still a possibility.
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The Richmond Fed Manufacturing Index in the U.S. dropped to -20 in July, while analysts had expected it to be -3. This indicates a decline in the manufacturing sector around Richmond.
The EUR/USD pair has climbed to about 1.1760, but recent factors have put pressure on the US Dollar. Meanwhile, GBP/USD has passed 1.3500, reaching its highest level in several days due to these changes.
Gold Prices Surge
Gold prices have jumped above $3,400, hitting five-week highs. This rise is due to a weakening US Dollar, decreasing US yields, and ongoing trade tensions.
Bitcoin has stayed above $118,000 after SpaceX, led by Elon Musk, transferred $150 million. Ethereum’s gains have eased a bit, moving towards $3,600, although spot ETF inflows remain stable.
In politics, the early part of Trump’s second term has seen new policy changes, but the markets remain strong. There is a clear focus on “America First” policies, impacting trade and national strategies.
The significant drop in the Richmond Fed’s manufacturing data indicates a slowdown in the US economy. This isn’t just a small miss; it’s a serious decline that suggests traders should brace for more weaknesses in future economic reports. Historically, sharp decreases in regional manufacturing surveys have signaled broader economic troubles.
Weakness In The US Dollar
The clear weakness in the US Dollar stems from this economic sentiment, and we expect this trend to last. We are looking at put options on the dollar index or call options on major currency pairs to benefit from further declines. Recent CFTC data shows a rise in speculative short positions against the dollar, supporting this bearish outlook.
With gold exceeding previous highs, it has reaffirmed its status as a safe-haven asset amid falling yields and political uncertainty. We see this as a chance to buy long-dated call options, which would allow us to profit from further price increases while managing our risk. This approach is supported by historical trends where gold performs well during US dollar weakness and geopolitical issues.
Bitcoin’s rise, driven by Musk’s company activities, offers a high-risk, high-reward opportunity. We suggest using call spreads to capture potential gains while managing the risks associated with such volatile moves. For Ethereum, its steadier growth, backed by institutional interest, makes a covered call strategy attractive. This allows us to generate income while holding the asset.
The policy changes under the current administration add friction to the markets, likely keeping volatility high across various assets. This situation favors strategies that benefit from price swings, so we are considering buying straddles or strangles on major indexes. This will help us stay neutral while taking advantage of increased uncertainty from the “America First” agenda.
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A private survey from the American Petroleum Institute (API) found that crude oil inventory decreased less than expected. The survey estimates changes in inventories as follows: crude oil down 1.6 million barrels, distillates down 1.1 million barrels, and gasoline down 0.9 million barrels.
This information comes before the official figures from the U.S. government. The U.S. Energy Information Administration (EIA) will release its official report on Wednesday morning, which is known for being more accurate and detailed.
API and EIA Data
The API gathers data from oil storage facilities and companies, while the EIA relies on data from the Department of Energy and other official sources. The government report not only shows crude oil storage levels but also details about refinery inputs and outputs, plus storage levels for various grades of crude oil. These differences make the EIA report more reliable for understanding the overall oil market.
The private survey’s smaller-than-expected crude draw raises concerns. It suggests that demand might be slowing down more than the market had anticipated. This data point should prompt traders to be cautious about holding too many bullish positions before the official report.
The EIA’s later data confirmed this trend, but it was even stronger. The EIA reported a surprising inventory increase of 3.7 million barrels, going against expectations for a decrease, which caused West Texas Intermediate crude prices to drop below $78. This trend indicates weakening demand fundamentals in the United States.
Market Implications and Future Predictions
Looking ahead, we are keeping an eye on broader economic challenges, especially when the Federal Reserve might cut interest rates. Recently strong U.S. job data has delayed expectations for rate cuts, boosting the dollar and making oil pricier for global buyers. This situation will likely limit significant price increases for crude oil in the near future.
On the supply side, OPEC+ has decided to continue its significant production cuts but plans to gradually ease them starting in October. This might support prices now but could create a bearish outlook for the fourth quarter and beyond. We are considering this future increase in supply in our longer-term derivative positions.
In the past, large differences between private surveys and official reports have led to market volatility. Derivative traders might want to use strategies that profit from price fluctuations, like buying straddles, due to high uncertainty around weekly inventory numbers. We expect implied volatility to increase around the Wednesday morning data releases.
Global demand also remains uncertain, especially after recent purchasing managers’ index data from China showed an unexpected decline in manufacturing activity for May. This raises doubts about the strength of recovery in the world’s largest oil importer. As a result, we are protecting against the possibility that weak demand from Asia will put additional pressure on the market.
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