Fed’s Bowman, who often disagrees with the Federal Reserve’s views, did not discuss monetary policy or the economy in her recent speech. We might gain more insights during a Q&A session later. U.S. stock indices are trending upward before the market opens, although not at their highest levels. The NASDAQ is up by 183 points, boosted by Nvidia shares, which are set to hit a record level after getting approval to sell chips to China. The S&P index is also gaining, up 33 points.

Silence as a Signal

Bowman’s silence speaks volumes. When someone known for dissent keeps quiet on policy matters, it often indicates that there are heated discussions happening at the Fed. Previous comments from Waller suggest that there might be adjustments this summer, adding to the overall uncertainty. This isn’t a time for passive trading; it’s time to take advantage of the volatility that comes with such uncertainty. The Cboe Volatility Index, known as the “fear gauge,” has been stuck around 13, which is much lower than the long-term average of about 19. The low implied volatility paired with real policy uncertainty from the Fed presents a clear chance for traders. We think that options for protection or volatility are underpriced. Buying long-dated VIX calls or puts on the SPDR S&P 500 ETF (SPY) makes sense as a hedge against the market realizing that the future may not be as smooth as current prices suggest. At the same time, we must recognize the strength of the tech sector. This rally is mainly driven by a small group of stocks. Recent data shows that, without the top 10 largest companies, the S&P 500’s earnings growth for the first quarter would have been negative. This isn’t a broad bull market; it’s a few stocks on a rocket, with news about chip sales to China adding more fuel to their ascent.

Dynamic for Derivatives

This creates an interesting situation for derivatives. We are preparing for a rise in divergence. We are considering strategies like long call options on the Invesco QQQ Trust, which follows the Nasdaq 100, while also buying put options on an equal-weighted S&P 500 ETF like Invesco’s RSP. This strategy bets on the tech giants continuing to rise, while the other 490+ companies in the S&P 500 may struggle due to a slowing economy—the very reason Waller and his colleagues might consider a rate cut. Looking back, the time just before the first Fed rate cut in a cycle is usually volatile. Markets may initially cheer the “Fed pivot” but later face the economic weaknesses that prompted the Fed’s decision. The current futures market shows more than a 60% chance of a rate cut by September, according to the CME FedWatch Tool. This means we have limited time. We are using options to bet that the market’s initial excitement over potential rate cuts will soon give way to a more realistic assessment of why those cuts are necessary. Create your live VT Markets account and start trading now.

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USDCHF is currently struggling to find its direction, stuck in a range between 0.7919 and 0.7994. Since July 3, it has fluctuated within a 74-pip range, with support around 0.79197 and resistance near 0.7994. The 100- and 200-hour moving averages are coming together, signaling uncertainty. On Tuesday, the price bounced back but faced resistance near 0.7982. It then dropped during the Asia-Pacific session.

Lack Of Bearish Momentum

The 200-hour moving average has been broken several times, but there have been no hourly closes below it, indicating weak bearish momentum. This highlights overall market uncertainty. For a bullish approach, consider buying on dips, placing stops just below the 200-hour moving average. This strategy relies on continued support from buyers during dips. For a bearish approach, it’s best to wait and look for selling opportunities near the highs or after a confirmed drop below the moving averages. This hopes to catch a shift toward selling pressure during rallies. Trading USDCHF remains technically tricky until the price breaks clear of this range. Rather than a reason to step back, this period of indecision presents a tactical chance to prepare for a future breakout. The tight consolidation reflects the market absorbing significant fundamental differences. The key issue here is the growing gap in policies between central banks. The Swiss National Bank (SNB) was the first major institution to cut rates back in March and did so again in June, reacting to domestic inflation, now at a mild 1.4% year-over-year. They have shown a clear dovish trend.

Positioning For Explosive Momentum

In contrast, the Federal Reserve is maintaining its stance. The latest US Consumer Price Index (CPI) reading for June fell slightly to 3.3%, still above target, leaving little room for policy changes. This creates a supportive backdrop for the dollar against the franc, which the current technical picture is temporarily overlooking. We view this price action as the market gathering energy. Historically, extended periods of low volatility in this pair, especially when fundamentals are aligned, often lead to significant and sustained movement. For derivative traders, this setup calls for strategies that leverage the anticipated increase in volatility. Instead of just buying dips in the spot market with tight stops, we recommend considering medium-term call options. This method limits our risk to the premium paid while offering leveraged exposure to the upside when the range breaks higher, a move we believe is supported by fundamentals. Acquiring these calls now, while implied volatility remains relatively low due to the fluctuating price action, is essential. For those expecting a breakout but unsure of the timing, a long straddle can be positioned around the central pivot point. This position benefits from a significant price move in *either* direction and directly challenges current market indifference. Given the SNB’s readiness to act decisively and the Fed’s data-driven approach, a surprising event in the upcoming weeks could easily disrupt this calm. The savvy investors aren’t just monitoring the moving averages; they are preparing for an imminent change. Create your live VT Markets account and start trading now.

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The Pound Sterling fell by 0.18% during the North American session as the US Dollar strengthened following tariffs imposed by US President Donald Trump. Even with a positive trend in stocks, the FX market remained unchanged, with GBP/USD trading at 1.3453. Demand changes for risk-related assets caused the GBP/USD pair to drop to nearly 1.3450 during Monday’s European session. This level marked the lowest point in three weeks amidst trade tensions between the US and the EU.

Bearish Phase Starts

In the Asian session, GBP/USD entered a bearish phase, stabilizing around 1.3500, just above the three-week low reached on Friday. Market indicators suggest that the pair may continue to decline. Given the bearish pressure on the pound, we believe this signals the start of a larger movement. Derivative traders should prepare for further weakness in the coming weeks. The drop below 1.3500 is not just due to dollar strength caused by trade policy; it reflects a fundamental re-evaluation driven by differing central bank expectations. We see the easiest path ahead as downward, and derivative strategies should be adjusted to reflect this. We are closely watching the significant differences in monetary policies. The Bank of England recently observed UK inflation hitting its 2% target for the first time in nearly three years. While the Monetary Policy Committee (MPC) voted to keep rates at 5.25%, the door is now open for a rate cut in August. Currently, markets estimate a greater than 60% chance of a cut by that meeting. In contrast, the Federal Reserve’s latest predictions indicate only one rate cut in the US this year. This policy gap is the main driver, leading capital to flow towards higher yields, which creates ongoing pressure on the pound against the dollar.

Difference in Monetary Policy

Historically, periods of significant central bank divergence, like those seen in 2014-2015, have resulted in prolonged trends in currency pairs. We think a similar situation is developing now. Traders expecting this trend should consider buying GBP/USD put options with strike prices aimed at the 1.2600 level initially. This approach allows for defined-risk profit from continued declines. For those willing to take on more risk, opening short positions in the futures market offers a more direct way to gain exposure. The upcoming UK general election on July 4th adds another layer of uncertainty, reflected in rising implied volatility. This makes volatility-based strategies, like long straddles, appealing for traders anticipating a significant price movement but unsure of the immediate direction after the election. Additionally, data from the CFTC indicates that large speculators are reducing their net long positions on Sterling, signaling a shift in institutional sentiment. We view the recent consolidation as a pause before the next drop, providing an opportunity to establish bearish positions before the market fully adjusts to a new, lower trading range for the pair. Create your live VT Markets account and start trading now.

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Global stocks had a sluggish start to the week, with declines seen in both European and US markets on Monday. However, the FTSE 100 bucked this trend, nearing the highs achieved last week, thanks to performances from AstraZeneca and the London Stock Exchange. AstraZeneca’s shares climbed after their hypertension drug met all targets in a late-stage trial. The company expects this drug could generate $5 billion annually and boost its mergers and acquisition efforts, following its acquisition of CinCor Pharma in 2023.

Crypto Market Surge

In the US, stocks related to cryptocurrency rose sharply as Bitcoin soared to a record over $121,000. The House of Representatives plans to review important legislation that could expand Bitcoin’s use, potentially impacting the digital currency market. This week is crucial for US equities as earnings season heats up, with JP Morgan, Goldman Sachs, and Netflix among the companies set to report. Analysts have lowered earnings expectations due to concerns about the economy, particularly in the energy sector. Despite this, some companies remain positive. The tech sector is giving mixed signals, suggesting varied performances ahead. The banking sector’s earnings reports will be carefully watched for insights into profits and loan loss provisions that could reveal the state of the US economy and consumer health. The KBW banking index has risen 44% since its low in April and is close to the record highs of 2022. About 40 S&P 500 companies, including big names like Pepsi Co and United Airlines, are scheduled to release earnings this week.

Netflix Earnings Expectations

Netflix’s upcoming earnings report is highly anticipated, as it is the first major tech company to report this season. Analysts forecast revenue of $11.04 billion, up from Q1, with net income expected to reach $3.17 billion. Historically, Netflix’s stock tends to rise after earnings reports, maintaining a positive outlook for Q2 and Q3 revenues. Given the mixed market trends, we think derivative traders should prepare for increased volatility in specific sectors rather than betting on overall market direction. The calm surface, as shown by a CBOE Volatility Index (VIX) consistently below 15 for much of the past month, hides significant underlying tensions ripe for opportunity. AstraZeneca’s success in its drug trial signals strength. We view this as more than just a stock event; it could catalyze growth in the healthcare sector. Currently, the implied volatility on healthcare ETFs like XLV is quite low. We are considering buying long-dated call options on select pharmaceutical companies with promising pipelines, which may benefit from further M&A activity while carefully managing our risk. On the cryptocurrency front, things are heating up. Although Bitcoin reached record highs, it has since retreated from its March 2024 peak of over $73,000 and is currently in a consolidation phase. This pause comes ahead of significant legislative actions, like the FIT21 Act, which passed the House in May, creating a build-up of potential energy. For traders, this situation is less about choosing a direction and more about preparing for volatility. High option premiums for crypto-linked ETFs and stocks like Coinbase indicate the market expects significant moves. We are looking at strategies like straddles or strangles for these names, aiming to benefit from any breakout once more regulatory clarity or new narratives emerge. Earnings season is the main stage now. Even though analysts have cut forecasts, FactSet reports that the S&P 500’s estimated year-over-year earnings growth for Q2 is still a solid 9.0%. This creates a “beat the lowered bar” opportunity. The banking sector is particularly noteworthy. The banking index’s increase has been impressive, but it largely depends on net interest margins. As the Federal Reserve’s rate path remains uncertain, we will analyze the big banks’ reports for any updates on loan loss provisions. In Q1 2024, major US banks collectively set aside over $9 billion for potential bad loans; any changes in this trend will significantly impact the sector. A pairs trade—going long on a bank showing strong investment recovery while shorting a regional bank more tied to commercial real estate—could be a smart strategy. Lastly, Netflix’s report will influence the tech sector. Historically, the stock sees an average price move of about +/- 10% after earnings. With analysts predicting nearly 4 million net subscriber additions for the quarter, any surprises could easily trigger this kind of movement. This creates a perfect scenario for selling option premiums using strategies like an iron condor if we expect the move to be smaller than anticipated, or buying a straddle if we believe there will be a strong reaction to guidance on ad-tier revenue and password-sharing regulations. Create your live VT Markets account and start trading now.

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EURUSD rose after the core CPI came in lower than expected at 0.2% (unrounded 0.228%). The price hit a high of 1.1690, just shy of the 100-hour moving average at 1.16922. Sellers were active below this average all day, and trading on Friday also paused at this point. Resistance at the 100-hour moving average is crucial for future movements. A strong break above this level could shift the market’s outlook from bearish to bullish.

Essential Swing Zone

On the downside, the range between 1.1663 and 1.1691 is a key swing zone, marked from April to November 2021. The price dipped below this zone several times, including earlier today. After the data was released, a low of 1.16616 was noted, slightly below this range, before the price bounced back. While the 100-hour moving average is critical for resistance, staying below 1.1663 is equally important for downward trends. We are witnessing a classic battleground following the recent US inflation data. The U.S. core CPI came in at 0.2% for May, with the annual rate falling to 3.4%. This gave the Euro an initial boost, but it quickly faced strong selling pressure right at the significant 100-hour moving average. This level has repeatedly limited gains in recent trading sessions, highlighting the market’s uncertainty.

Strategy and Volatility

For derivative traders, this situation isn’t about picking a direction—it’s about trading the tension. The divergence between central banks has become the main focus. While the Federal Reserve may have enough justification to consider a rate cut later this year, the European Central Bank (ECB) is grappling with its challenges. Eurozone inflation recently rose to 2.6% in May, surprising many and complicating the ECB’s path after its recent quarter-point rate cut. This creates a strong push-pull dynamic, keeping the currency pair in a tight range. Our strategy should focus on volatility. Implied volatility for EUR/USD options has been increasing, and we believe it remains undervalued given the conflicting factors at play. We plan to set up long strangles, buying both an out-of-the-money call and put option. This will allow us to profit from a significant breakout in either direction, which we see as likely. The key is to position this trade ahead of major catalysts, such as statements from central bank officials or upcoming flash PMI releases. Historically, periods of policy divergence, like the one during 2014-2015 when the ECB started quantitative easing while the Fed prepared to raise rates, are not smooth. They are marked by sharp swings and false starts before the main trend becomes clear. On the downside, a decisive break below the important swing zone between 1.0800 and 1.0825 would be our signal. Conversely, if there’s a sustained move above the 100-hour moving average, especially with a dovish Fed approach, that would signal the opposite. Until one of these levels breaks decisively, trading within the range is risky; however, there is an opportunity in waiting for a sharp break of that range. Create your live VT Markets account and start trading now.

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President Donald Trump noted that trade talks are advancing, with new deals set to be announced soon. He highlighted trade’s ability to promote peace and is open to discussions with Europe, as well as the EU regarding trade agreements. Trump mentioned that he regularly speaks with Russian President Vladimir Putin to seek a resolution in Ukraine. He suggested imposing 100% tariffs on Russia and secondary sanctions on nations buying Russian oil if a peace deal isn’t reached within 50 days. American Patriots and additional weapons shipments are expected to arrive in Ukraine shortly. Trump believes that a peace deal has been close several times and sees this moment as a significant opportunity for peace.

Trade Tensions and Market Opportunities

Following the former president’s comments, we believe that the upcoming weeks will offer varied opportunities, requiring a dual strategy. The discussions about trade deals with Europe and advancements with China could ease global trade tensions. We’ve seen this before; during the 2018-2019 tariff disputes, any hint of a deal would boost stock prices. With the VIX, which measures market fear, already at a two-year low around 13, traders should take note. The market isn’t prepared for good news. We suggest selling volatility on major market indices like the SPX could be beneficial, potentially leading to a rise if trade tensions lessen as Trump suggests. In contrast, the situation with Russia is far more complex and volatile. The 50-day deadline set by Trump signals a clear decision point. It’s not a gradual change; it’s an immediate switch. If a peace deal is reached, despite new weapon shipments, this could lead to a significant rally in European markets and a drop in energy prices. Conversely, enforcing 100% tariffs and secondary sanctions would cause a major shock to the energy sector.

Preparing for Oil Market Volatility

We see the greatest opportunity in oil. Russia still exports over 7 million barrels of oil and fuel daily. Secondary sanctions could drastically reduce this from the global market, a much tougher action than the current price cap. Remember, Brent crude surged over 30% in the month following the 2022 invasion. This type of volatility is what we need to prepare for. Instead of betting on peace or war, we should focus on the volatility itself. We are considering long-dated straddles on oil futures or related ETFs like USO. This strategy allows traders to benefit from a significant price spike due to sanctions or a sharp drop following an unexpected peace agreement. The key is to prepare for a swift movement, as current stability is likely to change once the 50-day deadline passes. Create your VT Markets account and start trading now.

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USD/JPY has risen above 147.00 as focus shifts to upcoming US Consumer Price Index data. The US Dollar is strengthening against the Japanese Yen, partly due to better interest rates, with USD/JPY’s RSI climbing to 64. The JPY faces pressure because low interest rates are causing funds to move toward higher-yield currencies like the USD. The Federal Reserve’s interest rates, between 4.25% and 4.50%, are influencing this exchange rate, with attention on US CPI data.

Expected CPI Figures

For June, the US CPI is projected to increase by 0.3% monthly and show a yearly growth of 2.7%, up from 2.4% in May. Core CPI, excluding food and energy, is also expected to rise by 0.3% month-to-month, with an annual increase to 3%, up from 2.8% in May. From a technical perspective, USD/JPY is making gains, facing resistance at 148.00, while support holds at the 38.2% Fibonacci retracement level of 147.14. If the price surpasses 148.00, it might retest the 148.65 high and the 149.38 Fibonacci point. Support levels are noted at 146.00 and the 10-day SMA of 145.69. The US Dollar is heavily traded, accounting for 88% of foreign exchange activity, and is largely influenced by the Fed’s monetary policies, including interest rate changes and quantitative easing or tightening measures.

Trader Sentiment and Risks

With the yield gap widening in favor of the USD, we expect the currency pair’s path to lean higher. Still, traders must beware of complacency. Recent US inflation data revealed a year-over-year Consumer Price Index increase of 3.7%, which was higher than expected, supporting the Federal Reserve’s stance of keeping rates high for an extended period. The CME FedWatch Tool indicates a continuous, albeit lower, chance of another rate hike by year-end, boosting support for the dollar during dips. Our attention is not just on the dollar’s strength but also on the yen’s weakness. A rising USD/JPY could be threatened not by a dovish Fed, but by a hawkish Bank of Japan or direct actions from the Ministry of Finance. Japan has previously intervened in the currency markets when USD/JPY surpassed 150, spending over $60 billion to stabilize the yen. With market levels approaching those extremes, Finance Minister Suzuki has issued warnings against “excessive” and “speculative” moves. This serves as a real threat of intervention, which can cause significant drops in minutes. Given these risks, we are positioning our derivative strategies to benefit from upward movements while hedging against possible interventions. We are avoiding outright long positions due to skewed risk-reward. Instead, we prefer buying call spreads, such as purchasing the 148.00 strike call and selling the 150.00 strike call simultaneously. This approach limits our risk and allows profit from continued price increases toward the critical intervention zone, with the sold call making the position less costly. Additionally, we find implied volatility too low considering current events. The market may be underestimating the potential for a sudden policy shift from Japan, where inflation has stayed above the central bank’s 2% target for over a year. Thus, we are also adding long positions in out-of-the-money puts around the 146.00 strike. These should be seen as affordable and crucial insurance against a sudden downturn led by Japan. Create your live VT Markets account and start trading now.

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In June 2025, the US Consumer Price Index (CPI) increased by 0.3% from the previous month, meeting expectations. The Core CPI rose by 0.2%, which was lower than the predicted 0.3%. Year-over-year, the headline CPI reached 2.7%, up from 2.4% in May. The Core CPI also rose to 2.9%, compared to 2.8% the month before. The rise in the headline CPI was mostly due to shelter costs, which went up by 0.2%. Energy prices increased by 0.9%, with gasoline rising by 1.0%. Food prices went up by 0.3%, affecting both grocery and restaurant costs. The Core CPI experienced increases in areas like household furnishings, medical care, and personal care, while seeing declines in used cars, new vehicles, and airline fares.

Yearly Basis And Market Movements

On a yearly basis, energy prices dropped by 0.8%, but food prices climbed by 3.0%. In the markets, the NASDAQ index gained 143 points, and the S&P index increased by 26.44 points. US Treasury yields stayed mostly steady, with small changes in the 2-year and 5-year yields. This report suggests that the initial stock market rally might be misleading. It is not a clear signal to buy, but rather a warning sign. The lower month-over-month Core CPI figure set off trading algorithms, but the underlying data presents challenges for Powell and the Fed. Year-over-year inflation rates for both headline and core measures have increased, indicating ongoing difficulties. This situation mirrors the tough times from 2023 and 2024 when reducing inflation from 3% to 2% felt impossible. For those trading derivatives, the sensible approach is to take advantage of this quick surge and sell when the prices are high. The VIX, which has remained low for a long time, likely decreased due to this news. This situation presents a good chance to buy volatility at a lower price or create trades that could benefit from a market reversal. Think about call credit spreads on the Nasdaq 100 (NDX) and S&P 500 (SPX) situated just above the new highs after this data release. For more than a year, buying the dips has been successful, but the recent rise in headline CPI from inelastic categories like food and energy could change that trend.

Bond Market Reaction And Currency Implications

The bond market’s lack of response is significant. The 10-year yield remains nearly the same. This indicates the bond market is not excited about a dovish report; instead, it sees persistent shelter costs and rising energy prices, concluding the Fed still has work to do. Any hopes for a quick rate cut have receded. In the Fed funds futures market, chances for a rate cut in the next two meetings will likely drop. This strengthens the case for a stronger dollar. The initial drop in the dollar was a misunderstanding; its recovery reflects the true situation. With US inflation still high and the global growth outlook fragile, the dollar benefits from its yield advantage. This data complicates the situation, especially with tariff issues raised by Michalowski’s team. The impact of tariffs has not yet been fully felt in the supply chain. Historically, as seen during the 2018-2019 trade conflicts, tariffs can create baseline costs that build slowly and are hard to reverse. We are increasing positions that will benefit from a stronger dollar and see the equity rally as an opportunity to build short exposure rather than chase after rising prices. The critical issue is not the 0.2% core monthly figure but the annual 2.9% figure, which keeps the Federal Reserve cautious and limits the potential gains for risk assets. Create your live VT Markets account and start trading now.

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Canada CPI Trim Consistent Dellamotta’s view that the Bank of Canada will stay on the sidelines seems fair, but we believe the market is missing a key detail. The headline rate of 1.9% is misleading. The real issue lies in the core components, which are showing troubling signs that people are overlooking. Core year-over-year CPI is increasing at 2.7%, while the BoC’s preferred median and trim measures are stubbornly at 3.1% and 3.0%, respectively. The idea of a smooth return to the target inflation rate is unrealistic. This isn’t a gentle landing; it’s a rough descent, and there’s a serious risk of needing to pull up. History Repeating Itself We’ve seen this scenario before. In the first half of 2023, the BoC paused rate hikes but had to raise them again in June and July due to persistent inflation. Now, the market is becoming too comfortable, which presents an opportunity. Right now, overnight index swaps suggest nearly 40 basis points of cuts by the end of the year. We believe this is inaccurately priced. The Bank has emphasized its reliance on data, and this report does not support a more dovish stance. If anything, it suggests the opposite. For derivative traders, this situation calls for buying cheap volatility. With the market expecting a steady approach from the BoC, implied volatility on short-term Canadian dollar options has dropped, sitting just above 6.0%. This seems too low given the clear difference between headline and core inflation rates. We plan to buy options structures, like straddles or strangles, ahead of the September and October BoC meetings. If the Bank leans hawkish in its language, it could cause a significant market adjustment, which would benefit our positions. Moreover, the rise in durable goods prices—also noted in the US—adds more complexity. This isn’t only about domestic inflation; external supply chain and trade issues are impacting it too. According to the latest data from Statistics Canada, prices for motor vehicles—a key durable good—have significantly contributed to monthly inflation. This situation complicates the BoC’s task since monetary policy is a blunt tool against such pressures. This persistence leads us to expect a shift away from the market’s dovish pricing. We are positioning for a flatter or even inverted yield curve by paying front-end rates while receiving longer-term rates, anticipating that the market will have to delay its rate cut timeline. Create your live VT Markets account and start trading now.

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Gold is trading today between $3,340 and $3,370. The market is reacting to the possible 30% US tariff on imports from the EU and Mexico, which may start on August 1. This has increased demand for Gold as a safe investment, with current prices around $3,350 and resistance at $3,370. Concerns have risen due to communications from US President Trump to leaders in the EU and Mexico about these tariffs, which has driven more people to buy Gold. On Tuesday, key economic data, including US inflation figures, is expected to affect Gold prices further.

Shift In Momentum

Gold has broken out of a triangle pattern on daily charts, indicating a shift in momentum. The price moving above the 20-day Simple Moving Average (SMA) near $3,340 shows more bullish sentiment. However, resistance at the 23.6% Fibonacci retracement level around $3,371 poses a challenge. If Gold closes above $3,371, it could move toward $3,400 and potentially rise to the June high of $3,452. If it fails to stay above the 50-day SMA at $3,327, attention may return to support at $3,300. The Relative Strength Index at around 56 suggests bullish momentum, with room for more gains before reaching overbought conditions. Given the current situation, we believe traders in derivatives should brace for increased volatility rather than a clear trend in the weeks ahead. The geopolitical issues, especially related to tariffs, are becoming more real. The Biden administration’s recent tariffs on Chinese electric vehicles and semiconductors, starting August 1, have been mostly factored into the market. However, the possibility of retaliatory actions from Beijing keeps the safe-haven demand for Gold active, providing a price floor. The main driver remains the Federal Reserve’s struggle with inflation.

Technical Analysis And Strategy

The most recent Consumer Price Index (CPI) report revealed inflation dropping to 3.3% in May, which initially seemed positive for Gold. However, the Federal Reserve later indicated only one potential rate cut this year, down from three anticipated in March. This “higher for longer” approach limits Gold’s upside potential since it makes holding non-yielding assets less appealing. We find ourselves caught between a geopolitical support and monetary resistance. Traditionally, Gold tends to perform well after the last rate hike in a cycle, but the ongoing pause is creating uncertainty. From a technical viewpoint, Gold appears to be coiling. After failing to maintain record highs above $2,400, it is now in a consolidation phase. The price is currently hovering around its 50-day moving average, which is a crucial test of short-term confidence. The Relative Strength Index in the low 50s supports this neutrality, indicating potential movement in either direction before overbought or oversold conditions arise. Therefore, our strategy has shifted from focusing on a specific direction to trading on volatility. For traders expecting a sharp move after the upcoming economic data, a long strangle (buying an out-of-the-money call and an out-of-the-money put) for August expiration could be wise. This strategy benefits from significant price fluctuations, regardless of direction. For those with a slightly bullish bias who want to reduce costs, we suggest bull call spreads, like buying the August $2,350 call and selling the $2,425 call. This approach limits risk and potential rewards while aiming for movement toward the higher end of the current range without needing a full breakout above the tough resistance established by the June high. Alternatively, those holding long positions might consider collars, which involve buying protective puts financed by selling covered calls to protect against a drop below critical support around the $2,300 level. Create your live VT Markets account and start trading now.

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