Major European markets rose by 1% or more, except for the UK. France’s CAC and Italy’s FTSE MIB led the way, each climbing over 1.4%. Germany’s DAX hit new all-time highs, supported by gains in defense stocks. A new trade deal with the US has lifted investor spirits. The European Commission is working on an agreement to resolve a longstanding trade dispute with the US, aiming to finalize it by the end of the week.

European Market Closing Levels

Closing levels were as follows: – German DAX: +1.30% – France’s CAC: +1.44% – UK’s FTSE 100: +0.14% – Spain’s Ibex: +1.24% – Italy’s FTSE MIB: +1.59% As European trading wrapped up, US stocks made smaller gains. The Dow rose by 0.11%, the S&P increased by 0.28%, the NASDAQ went up by 0.58%, and the Russell 2000 climbed by 0.24%. The changes in European markets reflect reactions to specific events rather than broad risk sentiment or economic shifts. A pattern is emerging around sectors like defense, visible in the DAX’s rise. This growth indicates ongoing institutional interest in German industrials involved in military contracts. Instead of just looking at index performance, focusing on the factors driving prices can reveal clearer trading patterns. The prospect of resolving a long-term trade dispute likely boosted investor confidence across Europe. Finalizing the deal quickly could protect the eurozone from US trade barriers, reducing risk for capital-intensive exporters. It seems that investor anticipation of this deal has already influenced market prices. Now, traders should focus on the actual deal terms and how they will impact specific sectors. The UK’s slight increase deserves attention. While France and Italy experienced strong gains, London lagged behind, indicating different investment flows. The FTSE is heavily weighted toward energy, financials, and other cyclical sectors, which haven’t benefited as much from trade optimism as their European counterparts.

Across The Atlantic

Meanwhile, in US markets, we see slower growth. Although all indices rose, the momentum was not as strong as in Europe. This cautious pace suggests hesitance rather than weakness. The steady rise in the Russell 2000 indicates healthy, albeit cautious, interest in risk. The NASDAQ’s better performance aligns with ongoing investment in tech stocks seen since last year. It’s important not to overanalyze daily price movements. What’s more telling is what stays stable. For instance, the Dow’s modest gain shows that even with rising risk appetite in other markets, traditional weightings aren’t responding. This divergence hints at a changing preference that might persist. Looking ahead, attention should shift to sector rotation. With European benchmarks reacting to defense news and improving trade relations with the US, opportunities arise. Proper timing in sectors related to these developments could lead to strong performance. However, traders should wait for confirmation before acting—looking for actual price movements rather than just headlines. This week is unlikely to follow the trends of last week. Gains in Europe stemmed from optimism about real developments. As these unfold, market volatility may either decrease or reappear in sectors that were overlooked during the recent uptrend. Traders should monitor any sudden changes in price and volume, especially among mid-cap European stocks that have lagged but are linked to export-sensitive industries. Finalizing trade agreements affects not only currencies and bond yields but also alters valuations across sectors. For instance, France and Italy showed gains today, showing that external trade-related events impacted their domestic equities more than in markets focused on internal issues. What’s clear is that not all indices are climbing for the same reasons—that’s where the advantage lies. Focus on charts that respond to real developments and steer clear of those driven only by sentiment. There’s less noise to navigate in these cases. We should emphasize what can be seen and measured. In this instance, Europe’s dynamics aren’t speculative; they’re tied to ongoing trade flows and sector shifts. Create your live VT Markets account and start trading now.

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Silver is currently priced at about $36.40. This marks its third consecutive day of decline due to a stronger US Dollar and rising US Treasury yields. The metal is still trading within a narrow range, close to its recent 13-year high. Recent threats of tariffs from the US have kept demand for safe-haven assets like silver steady. However, these tensions haven’t caused a clear price breakout. President Trump has announced new tariffs, including a 50% tariff on copper imports and a possible 200% tariff on pharmaceuticals. There’s also a planned 10% tariff on all BRICS nations, which are seen as opposing US interests. Even with global uncertainties boosting demand for safe-haven assets, silver has struggled to rise. Strong US labor data from last week makes it less likely for the Federal Reserve to lower interest rates soon. This supports the US Dollar and reduces interest in non-yielding assets like silver. Currently, silver trades between $35.50 and $37.30, following an upward trend since April. It’s near the lower end of this range, above the 21-day EMA at $36.19, which has been supportive. Technical indicators show weak momentum, with an RSI near 56 and an ADX of 12.50, indicating a lack of trend strength. A breakout above $37.30 could lead to price increases, but for now, silver is stuck in a range, focusing on geopolitical events. With silver at $36.40, we see a frustrating third straight daily loss. This decline is linked to a stronger US Dollar and higher US Treasury yields, which generally hurt the appeal of precious metals. While silver is close to a 13-year high, it’s not gaining much and is just consolidating. The White House’s new tariff proposals—like the striking 200% tax on pharmaceuticals and the blanket 10% on BRICS nations—have kept some demand for hard assets. Typically, increased trade tensions lead to stronger movements in metals, but lately, silver prices haven’t responded strongly and are just moving sideways. The strength of the US labor market also plays a role. Better-than-expected data last week likely delayed predictions of any quick changes in monetary policy. This supports the US Dollar and raises yields—conditions not favorable for silver, which doesn’t yield any interest. Traders are caught between the safe-haven demand from political risks and the downward pressure from tighter monetary policy. In terms of charts, silver is within an upward structure since April, constrained between $35.50 at the bottom and $37.30 at the top. The 21-day exponential moving average, roughly at $36.19, acts as a soft floor. As long as silver stays above this, it may discourage selling. However, bulls need more than just stability; they need to show initiative. Technical signals are still weak. The RSI at 56 is neutral, not overbought or oversold. The ADX at 12.50 indicates low energy. Currently, there’s no strong trend. Therefore, it doesn’t make sense to take aggressive positions unless prices convincingly rise above $37.30 with strong volume. Until then, a drop could test existing support zones. When planning trades, consider both macro factors and technical signals. With the US Dollar strong and no monetary easing in sight, the focus should shift towards short-term volatility instead of long-lasting trends. We might see temporary shifts in correlation, especially if geopolitical events heat up or market sentiment changes suddenly. Pay close attention to yield movements in the bond market. If Treasury yields peak or decrease, we might see safe-haven flows return to metals. Conversely, more strong US economic data could keep yields high, making real rates attractive, which could prolong the current range-bound action or even invite declines. For now, it’s best to watch and wait rather than make aggressive trades. Being patient and prepared for either side of the price range is a safer approach. Entry points should be carefully calculated, with stop placements that reflect uncertain but limited movements, supported by either moving averages or the edge of the trading channel, depending on market conditions.

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The Atlanta Fed’s GDPNow model predicts that the US economy will grow by 2.6% in the second quarter of 2025. This estimate hasn’t changed since July 3. Recent reports show a slight decrease in the forecast for real residential fixed investment growth, adjusting from -6.4% to -6.5%. Additionally, the contribution of inventory investment to annual GDP growth has been slightly reduced from -2.13 to -2.15 percentage points. The next update for the GDPNow model is set for Thursday, July 17. This means that expectations for the US economy are stable, even with some minor downward adjustments in certain areas. The overall growth rate of 2.6% for the quarter has not changed, indicating confidence that the economy will continue to grow steadily for now. This is based on how different GDP components, like housing investment and inventory changes, are currently assessed. For example, residential fixed investment has dropped a bit—from negative territory to a slightly worse negative. While this isn’t a significant decline, it shows a slowing trend in sectors closely related to construction and housing. Higher borrowing costs or lower demand might be making developers more cautious, or projects could be experiencing delays. Even a small change of 0.1% adds to the narrative of weakness in sectors heavily reliant on physical assets. Inventory investment is also slightly lower than previously thought. This isn’t a large change—just a small impact on GDP—but it suggests that businesses might be reducing production without immediate buyers. This often happens when companies anticipate less demand or are being cautious due to rising costs. In the short term, this isn’t a major concern, but it’s something to monitor. For analysts watching trends, these updates are more significant than their minor changes might imply. The details of growth can be just as important as the overall rate, showing that underlying issues may be emerging. As we prepare for the official update on July 17, we should consider not just new numbers but what they might indicate about overall sentiment and sector-specific trends. If the Fed stays focused on data, issues in housing or inventory levels will be important to observe. How we interpret recent data and whether a clear pattern emerges will inform short-term strategies. For instance, keeping an eye on changes in rate expectations or commodity flows related to manufacturing can offer insights before traditional reports are released. It’s important not to expect the same pace week after week—the tempo may be slowing down slightly, and that matters. We should also pay attention to upcoming corporate earnings, particularly from firms involved in residential construction or industrial production. Subtle comments about managing costs or future inventory can provide valuable insights, sometimes even more than hard data. Often, what’s left unsaid can clarify the situation. So, before the next GDPNow release, there’s a useful opportunity to adjust models, update volatility assumptions, and reconsider hedging strategies. The overall macro signal is modest and stable, which might cause some to feel overly confident. However, beneath the surface are slow but important changes that we can leverage.

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The USDJPY reached a high earlier today close to the range of 147.01 to 147.338 but has since dropped. This indicates that buyers may be losing strength and highlights the support levels below. The next target area is between 145.92 and 146.26, which includes the 61.8% retracement level at 145.978 from the decline that started in June. We will be monitoring this area for any signs of renewed buying interest.

Shift Back To Sellers

If the support area is broken, sellers may regain control. This could lead to lower target levels at 145.347 and the 100-bar moving average on the 4-hour chart, which is currently at 145.02. The recent price movements give us insights into short-term momentum. Specifically, the rise to the 147.01 to 147.338 range and the subsequent decline indicate hesitation among those who previously pushed the pair higher. The pause just under that resistance level shows where demand has faced obstacles. While the difficulty in surpassing 147.338 has been seen before, today’s reaction makes it clearer. With the pair backing down, our attention turns to the support between 145.92 and 146.26. Within this zone, we are closely watching the 61.8% retracement at 145.978. This level represents a critical battleground in the current trend after the decline since June. As prices approach these Fibonacci levels, traders begin to look for reversal opportunities. This is not just an academic exercise; there is capital waiting for guidance.

Potential Downside Targets

If this support band fails, we could see prices drop further. The next relevant areas are based on previous value zones and moving averages. The level at 145.347 has attracted interest before, while the 100-bar moving average around 145.02 often influences price movements when volatility decreases. These are not arbitrary lines; they are significant levels based on historical patterns, indicating where prices might hesitate again, either for new buy opportunities or short-term relief. We avoid guessing and instead react to the levels in play. If prices start climbing toward 146.26 again, the reaction at that level will be more important than the price movement itself. Additional buying may occur, but it needs to be supported by trading volume. We pay close attention when these levels align with retracement signals. It’s when price, time, and participant activity intersect that we gain clarity. With the failed push above 147.33 earlier showing weakness from bulls, our focus shifts to the pressure points below. Monitor the hourly closes and avoid getting trapped by false breaks. Use the 4-hour moving averages to guide your exposure—not your excitement. Create your live VT Markets account and start trading now.

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The EIA inventory data is due for release soon. Private reports revealed a surprising increase of 7.1 million barrels in crude oil. In contrast, gasoline stocks dropped by 2.2 million barrels. Estimates for today’s report suggest a decline of 2.071 million barrels in crude oil, a decrease of 1.486 million barrels in gasoline, and a drop of 0.314 million barrels in distillates. Last week, data from Cushing showed a decline of 1.49 million barrels. Right now, crude oil is priced at $67.87, down by $0.46, or 0.67%. The recent private inventory figures showing a rise of 7.1 million barrels in crude surprised many, as expectations were different. Meanwhile, the drop in gasoline stocks of about 2.2 million barrels suggests rising demand. The market seems to be preparing for the official EIA numbers, which are highly anticipated this week. Heading into the official release, forecasts suggest a drawdown of 2.071 million barrels of crude oil, along with moderate decreases in gasoline and distillates. These predictions contrast with the private report, creating potential for market volatility. Last week’s decline at Cushing, which dropped 1.49 million barrels, indicates that stockpiles at the WTI delivery point continue to decrease. Reductions in these inventories can significantly affect prices, especially when combined with wider national inventory drops. Observers are cautiously focusing on the full report’s regional details. With crude oil at $67.87, down 46 cents, the market appears cautious. Even this small dip often indicates traders are reacting to earlier data. The downward pressure suggests that traders might be bracing for mixed or unexpected results. This situation presents various near-term dynamics for strategy in derivatives. It’s crucial to monitor gamma positioning and shorter-term volatility around the EIA release. Current option prices might be underestimating the chances of significant market movement if today’s data confirms an inventory increase. This is particularly relevant if commercial stocks go up while key products tighten. We should closely analyze structural activity in futures and options this week by examining open interest changes around the weekly expirations. Clustering of open interest near the $68 and $70 strikes could serve as short-term indicators. It’s important to watch for potential squeezes if trading volume tests those levels. The gap between the private report and public expectations means that secondary confirmations from refinery utilization and import/export numbers—often buried in the EIA report—could quickly influence the markets if they differ from seasonal trends. Therefore, new positions should focus less on being directionally confident and more on managing exposure to surprises in the data. The increasing uncertainty calls for flexible exposure sizing and readiness to counter exaggerated reactions post-data. Depending on EIA results, implied volatility may drop temporarily, creating entry opportunities. Those monitoring spreads between WTI futures contracts should also pay attention to shifts toward contango or backwardation, as these shifts will affect sentiments about supply tightness beyond the headline numbers. In summary, with the current price movements ahead of the data and subtle shifts in options flow, we need to closely watch both the actual data outcomes and the market’s immediate reactions to perceived discrepancies. The growing difference we see today raises the chances that the market’s reaction could overshoot, at least initially.

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Market Developments

The Japanese Yen is steady against the US Dollar as it enters Wednesday’s North American session. Overnight, it showed strength, bouncing back due to changes in the US Treasury market. Yield spreads are shrinking, which supports the Yen. The USD/JPY pair is stable, trading between 142.50 support and 148.00 resistance. Market watchers are looking forward to the Producer Price Index release scheduled for 7:50 pm ET. Additionally, a hint from a Bank of Japan board member suggests a likely upward revision in the bank’s inflation forecast at the next meeting on July 31. Caution is present in the market, as EUR/USD has pulled back and GBP/USD is slightly lower, trading below 1.3600. These movements are caused by ongoing uncertainties in US trade policy. Gold prices have also weakened, dropping below $3,300, due to a strong US Dollar influenced by rising US Treasury yields. Ethereum may improve its security thanks to a new proposal from Vitalik Buterin. This plan aims to limit transaction sizes, enhancing network stability and reducing the risk of Denial of Service attacks.

Tariff Implications

New US tariffs are focused on Asia, with Singapore, India, and the Philippines potentially benefiting if negotiations progress. Currently, technical factors, currency flows, and upcoming data releases are creating a wait-and-see approach in the market. Although the Yen is flat overall, it has shown some upward movement due to narrowing US-Japan yield spreads. The USD/JPY pair is comfortably holding around 142.50 support, indicating that significant selling pressure would require a strong fundamental change to break through. Meanwhile, resistance near 148.00 remains strong. For those watching this pair from a short-gamma perspective, short-term options are pricing in lower volatility until we receive more economic clarity. If the upcoming inflation data changes expectations for Federal Reserve policy, it could quickly impact interest-rate-sensitive pairs. We will monitor the producer price report to see if it indicates renewed cost pressures that might raise rates and shift this currency pair out of its current range. Comments from Nakamura this week did not go unnoticed. The possibility of a change in medium-term inflation estimates from the BoJ at the end-of-month meeting adds weight to discussions about policy bias. While a rate hike is not imminent, there is less certainty that the BoJ will stay on hold indefinitely. We might see an increase in options trading closer to the July 31 meeting, especially if JGB yields begin to rise, making carry trades more appealing. Regarding the wider economic environment, gold has dipped below $3,300 due to a stronger US Dollar. This trend is linked to a slight steepening of the US yield curve, making long-term treasuries more attractive for global fund managers seeking quality. It’s important to understand that precious metals are underperforming not due to lack of demand but because of currency valuation pressures and adjustments to real rates. Traders should consider this nuance when assessing safe-haven interest. In the crypto markets, Buterin’s proposal to cap individual transaction sizes has revived discussions about scalability versus decentralization. The aim is clear: reduce vulnerabilities to high-volume attacks. While this doesn’t immediately impact Ethereum’s spot market, any security enhancement tends to gradually build confidence among institutional holders worried about systemic risks. While this isn’t a direct market signal yet, it may indicate a higher baseline for ETH volatility in the future. Overall, sentiment in FX trading is cautious. Trade flows are particularly choppy due to Washington’s new tariff proposals aimed at resolving supply issues in Southeast Asia. While these developments are not yet actionable, if discussions lead to agreements, cross-border flows could support Asian currencies even without direct links to the US Dollar. Bond spreads in these regional economies have already started tightening slightly. Our view is to prepare for a potential momentum shift in USD/JPY through gamma scalping or adjusting risk as we approach Wednesday evening’s PPI release. We are not trading against current levels without confirmation. While gold is weakening in dollar terms, it would be premature to conclude that this reflects a decrease in demand as an inflation hedge without closely monitoring real yields, particularly over the five-year term. Keep an eye on how option markets adjust implied volatility once US data is released. Often, there is a noticeable effect on the spot market after London’s trading session the following day. Create your live VT Markets account and start trading now.

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Pressure continues on Fed Chair Powell and the Federal Reserve, mainly concerning interest rates, which many believe may be too high by at least three points. Criticism directed at Powell also extends to other Fed members. If these views gain traction, the group’s stance could shift.

Focus On Inflation Data

Much depends on upcoming inflation data. Powell expects inflation to increase in June, July, and August. We will soon see June’s inflation numbers. The Consumer Price Index for July will be released on July 15, followed by the Producer Price Index on July 16. With June’s inflation figures pending, we expect modest increases in the coming months. Powell has already set market expectations, meaning any rise below the expected level could lead traders to consider a more favorable path for rates. The market has largely anticipated Powell’s outlook of a temporary rise, so any significant deviation—either greater or smaller—will likely cause sharp changes in futures contracts.

Monetary Policy Expectations

The previous section shows that monetary policy might not be fixed. Short-term yields indicate that inflation has not yet met the central bank’s targets. However, a sharp increase in CPI or PPI numbers would reinforce this view. Without such confirmation, some members of the FOMC might quietly adjust their positions. If this occurs, it is usually reflected in subtle language shifts—through speeches, meeting minutes, or informal remarks. Waller and others on the Board are known for expressing changes in views sooner than their colleagues. If inflation data appears less concerning than Powell expects, even for one month, someone like Waller might argue it as a reason to reconsider tightening— or at least to pause. In our opinion, this leads to unusually sensitive options pricing. Risk reversal skews may start favoring calls, especially in the 2- to 6-month range. This could show growing confidence in a more moderate policy response if inflation doesn’t rise sharply. Anyone hedging against upside risks in rates should take this period into account. The critical dates remain unchanged. On July 15, we will see how consumer prices have changed, and the next day will provide insight into broader economy input costs. If these two figures differ, they could create added volatility, as one shows real-world pricing while the other impacts manufacturing and supply chains. Additionally, swap spreads and Fed Funds futures should be watched closely during the 48 hours after both reports. Historically, even minor surprises can lead to significant price adjustments across the curve, especially in short-dated instruments. Considering Powell’s forecast, traders need to reassess their strategies in anticipation of this period. Pay close attention to expectations in Eurodollar strips and SOFR FRAs as we approach the data. The tension between what the market believes and what policymakers indicate suggests the repricing may begin modestly and then accelerate. This makes entering positions ahead of CPI riskier yet potentially more rewarding, as long as exposure is properly hedged before the release. In summary, traders should not rely solely on past trends. The market still shows uncertainty, and a surprise in either direction could spark a broader discussion within the Fed. Initially, they may not make loud statements, but we’ll notice changes in their language and messaging. Create your live VT Markets account and start trading now.

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The Pound Sterling didn’t change much against the US Dollar on Wednesday. It saw little movement overnight due to a lack of significant data releases. The key event to watch for is the trade and industrial production figures coming out on Friday, which may impact discussions at the Bank of England (BoE) ahead of their August meeting. Current indicators show that GBP/USD momentum has returned to a neutral state after a recent dip. The Relative Strength Index (RSI) is currently at 50. The market is still bullish as long as it stays above 1.35, supported by the 50-day moving average at 1.3486. Short-term support is just below 1.3550, while resistance is seen above 1.3650.

Market Sentiment

Markets are currently stable. After a quiet Tuesday and little movement overnight, the Pound is lacking direction. With no strong data or surprise announcements, traders are consolidating positions, keeping GBP/USD in a narrow range. They are hesitant to commit too much ahead of important data that could shift sentiment. Friday’s industrial output and trade balance data may provide insights into future policy direction. While these figures aren’t major news, their timing—just weeks before the BoE’s next decision—makes them significant. If the numbers are better than expected, it could impact views on a less dovish stance for August. Conversely, disappointing figures might prompt expectations for delayed tightening. On the technical side, short-term momentum seems to be pausing. The RSI at 50 shows no extremes—neither overbought nor oversold—which reflects what we are seeing in price movement: consolidation rather than a trend reversal. The pair is still staying above 1.35, acting as a psychological support. The price is hovering around the 50-day average, indicating some interest from dip buyers, though overall confidence appears limited. Support just below 1.3550 aligns with past lows where demand has emerged repeatedly. The key level to watch is 1.3486, the 50-day moving average. Falling below this could lead to a more aggressive sell-off of long positions, as stop-loss orders are typically placed just beneath major moving averages. On the resistance side, 1.3650 is the upper limit of the recent range. A strong move above this level would likely require a significant catalyst or a broader dollar decline.

Current Trading Strategy

Currently, we are neutral but watchful. Options positioning has been ordinary, and implied volatility remains low, indicating limited expectations for sharp price movements soon. However, this also means that markets could be surprised if Friday’s data deviates from expectations. With important policy guidance approaching and the economic environment in play, there’s heightened sensitivity to releases. In these conditions, focusing on ranges and respecting technical boundaries might be the better approach, rather than chasing breakouts. Trend-followers need to remain patient. Short-term derivatives appear reasonably priced, particularly for those involved in intraday trades. It’s advisable to monitor realized volatility, as even small changes in rate expectations can influence option premiums, especially during quieter summer months. Create your live VT Markets account and start trading now.

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US wholesale inventories decreased by 0.3% in May 2025 compared to April, matching earlier estimates. Wholesale sales also fell by 0.3% during the same time. In May, sales totaled $697.2 billion, down from April but up 4.8% from May 2024. April’s sales figures were revised and showed little change from March. May’s inventories were at $905.5 billion, reflecting a 0.3% drop from April but a 1.4% rise from the previous year. This change in inventories was consistent with earlier forecasts. The inventories-to-sales ratio for May 2025 was 1.30, unchanged from the previous month. This is slightly lower than the 1.34 ratio from May 2024, which was the lowest since 2022. The 0.3% drop in wholesale inventories in May aligns with predictions, indicating a stable pace of restocking. Sales dropping by the same percentage suggests a synchronized slowdown in activity, showing that the market is maintaining its position without drastic changes. Sales for May were lower than in April but higher than a year ago, indicating seasonal cooling rather than overall weakness. The revised April sales figures show little movement from March, supporting the idea of steady wholesale demand. Inventories for May were $905.5 billion, marking another 0.3% decline but still 1.4% higher than last year. Holding fewer goods as sales decline can help balance cash flow, but continued decreases could signal a cautious outlook among wholesalers. The inventories-to-sales ratio of 1.30 remains steady for the second month. This measure indicates how many months it would take to sell current inventories at the existing sales rate. Stability in this ratio suggests neither excess stock nor overly lean inventories. Compared to last year’s ratio of 1.34, the current figure indicates a tighter situation. A lower ratio means inventory is turning over faster compared to sales. The previous year’s ratio was already the lowest in two years and has dipped slightly further. Traders dealing with derivatives related to wholesale numbers or macroeconomic indicators should pay attention to the balance between sales and inventory changes. The simultaneous drop in both categories helps keep volatility low, making short-term bets less reliable. Instead, a measured approach that adjusts based on solid data is preferred. With the inventories-to-sales ratio stabilized, the potential for sudden shifts in the near term is limited. This could reduce uncertainty premiums across logistics, shipping margins, and credit risks in distribution networks. Options pricing in these sectors may reflect the decreased likelihood of significant disruptions. Analyzing these reports reveals not just what has changed but also what hasn’t. While stability may not be exciting, it lays the groundwork for future movements. Until those sharp moves occur, the data supports narrower ranges and lower volatility in predictions. The steady decline in inventories and stable ratios limit the case for drastic changes in wholesale margins or ordering patterns. This makes aggressive positions less attractive in the short term, especially for those modeling sales velocity or adjusted risk in manufacturing and distribution indexes. May underscores a trend of caution and planning rather than major shifts or misaligned expectations. We are witnessing a careful balance between stock and flow, softening reactions in related capital instruments. Those anticipating surprises may need to be patient or explore other areas of the supply chain where discrepancies are more evident.

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The Euro is slightly dipping against the US Dollar but is staying above the 1.17 support level this midweek. Traders are looking forward to the upcoming CPI data from Germany and France, while ECB council member Vujcic has made neutral statements, suggesting that interest rates should remain unchanged due to concerns about short-term targets. The difference in interest rates helps support the Euro, especially as US yields stabilize after the Non-Farm Payroll report. Ongoing trade talks between the US and EU also provide a positive outlook for the Euro. However, recent pullbacks have slowed momentum. Traders are spotting potential support between 1.1650 and 1.1680, with resistance beyond 1.1780.

Multi-Month Trend Remains Upwards

The overall trend remains positive, with the Euro holding strong above 1.15 and the 50-day moving average at 1.1450. This area is considered a medium-term support level, vital for the Euro’s continued rally. Trading comes with risks, so it’s essential to do thorough research before making decisions. Despite some downward pressure, the Euro’s position above 1.17 signals stability. Traders should focus on this structure instead of worrying about minor declines. The positive momentum observed in recent months is still intact, with prices comfortably above the key support level near 1.15 and the 50-day moving average, indicating that sentiment remains strong. Vujcic’s neutral comments indicate a wait-and-see approach without urgent policy changes. This situation lowers volatility, especially if inflation continues to drop in the upcoming CPI data from Germany and France. These figures will affect not only local consumption forecasts but also expectations throughout the region. Short-term price action might remain flat until this information is released. Yields have begun to stabilize since the US jobs data surge, providing some support for the Euro. However, this support is based more on expectations than on changes in policy. This approach works if you are trading based on trends, but entering too early—before major economies release inflation numbers—can increase risk. The price levels between 1.1650 and 1.1680 are where buyers seem ready to re-enter, so any short-term dips to this area may present good re-entry points for those who missed the earlier upswing.

Resistance Levels Are Crucial

Resistance is less clear at the top, but traders seem cautious around 1.1780. A strong break above this level might change the market’s volatility, leading to a reevaluation of the Euro based on broader optimism. Traders dealing with options spreads, especially in the short term, might opt for a more careful approach until a breakout is confirmed. The broader trend earlier in the quarter shows that there is still demand for Euros, even though momentum has slowed due to recent GDP and inflation issues in the US. Current price movements are more about adjusting than reversing. The 1.1450–1.1500 zone remains a crucial support level for trend followers. If prices test this area with significant volume, it would need to be reassessed, but the upward bias still holds for now. What’s happening now looks more like market consolidation rather than a reversal. Indicators such as future curves, cross-market correlations, and volatility readings suggest a pause instead of a new cycle beginning. Thus, any significant revaluation might require more than just domestic data; it likely needs coordinated signals from both the US and Europe. We believe the space between 1.1650 and 1.1780 will be where notable trading activity occurs in the next sessions. Traders focusing on medium-term strategies may consider these levels, as long as liquidity remains stable and options markets aren’t anticipating excessive volatility. Create your live VT Markets account and start trading now.

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