The Euro remains strong against the US Dollar, holding near its highest point in years. Factors like reduced geopolitical tensions and lower oil prices are helping this stability. Additionally, soft US economic data and the possibility of interest rate cuts by the Federal Reserve are putting the Dollar under strain. The EUR/USD pair is slightly down but close to a high of about 1.1640 from November 2021. The fragile ceasefire between Israel and Iran is allowing some risk appetite, impacting how the Dollar is viewed.

Oil Prices and Geopolitical Tensions

Oil prices are below recent highs since Iranian facilities have not been heavily affected by bombings, and the Strait of Hormuz is functioning normally. Lower oil prices help to ease inflation worries in the Eurozone, which benefits the Euro. Fed Chairman Jerome Powell is taking a cautious approach and is not rushing to cut rates, despite external pressure. Markets are anticipating a rate cut around September, especially since U.S. Consumer Confidence fell short of expectations. In Europe, French Consumer Confidence remains at 88, while Spain’s GDP growth was confirmed at 0.6% quarterly. Germany’s IFO Business Climate Index saw a slight rise, but its impact on the Euro is minimal. Overall, currency movements are influenced by the current risk sentiment, focusing on events in the Middle East and the Fed’s actions.

US Dollar and Risk Sentiment

Currently, the Euro is maintaining high levels due to stable indicators in the Eurozone and weaker short-term data from the U.S. The drop in U.S. consumer confidence suggests a dip in domestic demand expectations. This, alongside slow inflation, is shifting views towards potential monetary easing instead of tight policies. Powell’s cautious remarks seem to reflect a desire to keep options open as more data comes in. Traders should carefully evaluate the gap between market expectations and future guidance. A rate cut isn’t set in stone, but futures indicate growing pressure as we approach the September meeting. If U.S. CPI data or job figures disappoint again, the Dollar may face ongoing challenges, especially against currencies with stronger economic prospects. European data, while not particularly exciting, has held steady. Spain’s quarterly growth provides some stability at the southern part of the Eurozone, while Germany’s slow recovery, indicated by the IFO survey, helps create an overall balanced atmosphere. France, although lagging in market sentiment, has avoided significant decline that could negatively impact the Eurozone. Oil prices remain low after tensions in the Middle East eased and key shipping routes remained unaffected. This situation has two main effects: 1. It lowers headline inflation in Europe, supporting the argument for the European Central Bank (ECB) to pause any further tightening. 2. A drop in the demand for safe-haven dollars could strengthen the Euro. In the short term, futures pricing favors the Euro’s strength. However, more than just weakness in the Dollar is needed for further gains. Investors will be looking for better PMI data or clearer signals about the ECB’s next moves. Tracking interest rate differences closely will be essential. Geopolitical factors also matter; ceasefires can be unstable, and any escalation might increase demand for safe-haven Dollar assets. Therefore, monitoring physical commodities, especially oil, may indicate both volatility and market sentiment. For now, with rate cuts expected and risk appetite remaining steady, we suggest buying dips within established ranges. However, the situation is sensitive, and unexpected developments—whether economic or geopolitical—could change the current dynamics quickly. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The EURUSD currency pair recently hit its highest level since October 2021, coming close to 1.16297, the high from June. However, it stopped just above this point. Today’s trading also approached this peak but fell short, leading to a retreat back to a known resistance area. The overall trend is still upward, as long as it stays above the support range of 1.1569 to 1.1578. This range includes recent lows and the 100-hour moving average at 1.15499. This area has often prompted bullish reversals and acts as a critical short-term control indicator.

What Happens If It Drops Below Support?

If the EURUSD dips below the 1.1569–1.1578 range, bullish sentiment might weaken, targeting the moving averages at 1.15499 and 1.15367. If these levels break, sellers could take more control. A strong movement above 1.16297 could lead to more buying, confirming the ongoing broader uptrend. Key resistance levels to watch are between 1.16142 and 1.16297, along with the previous high at 1.16355. Support levels include the 1.1569–1.1578 zone and the moving averages at 1.15499 and 1.15367. Buyers remain in control if they stay above 1.1570, but they need a clear breakthrough over 1.16297 for more gains. The situation is simple: the pair has been rising for a while, showing growing optimism, but momentum slowed just below previous highs. The area just under 1.1630 has repeatedly acted as a barrier, stopping upward momentum this week and in June. Even with buyers in charge, the market is hesitant to fully commit unless this level breaks. We are closely monitoring the range between 1.1570 and 1.1580. This is where demand has often returned and where short-term bullish positions have typically held. Below that, other reference points appear, like the hourly moving averages, which are just underneath. If these levels break, it usually leads to more significant retreats—though not always sudden—enough to shake confidence and change trading flows.

Resistance Levels and Market Reactions

From a timing standpoint, it’s not uncommon for prices to shoot up, pause, pull back, and then revisit familiar territory. What matters most is which side shows conviction. When prices rise, pause, and fail to break resistance convincingly, hesitation often follows, caught between excitement and caution. Interestingly, the resistance doesn’t need to be exact to matter. The upper range near 1.1630 has several historical points that stopped previous rallies, lending weight to the idea that this isn’t just a one-time rejection. If bulls push above this level decisively and manage to hold the gain, there is potential for movement without major obstacles. On the downside, risk increases quickly if the key support area is broken. The first control zone is just below 1.1570, but the real risk heightens if the moving averages break. Once that zone is lost, selling can accelerate as traders unwind long positions or speculate on declines. We favor a tactical strategy. Keep risk tight against known levels, and avoid chasing prices into resistance. If there’s a clean, high-volume break upwards, we would typically expect increased interest. Otherwise, sideways trading or a deeper drop back to early July’s lows should not be surprising. Patience is key; forcing a view isn’t necessary. Expect the pair to remain active, but wait for signs that one side has truly gained control before acting. With the price positioned near both a ceiling and a floor, quick reactions around known technical markers are more likely. In summary, supply and demand are balanced. We’ve seen this before: prices encounter resistances, buyers pause, sellers test, but true conviction emerges only when key levels are crossed. For now, we’re observing price behavior at these critical zones, as they tend to shape the tone for upcoming sessions. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The Pound Sterling is holding strong at around 1.3650 against the US Dollar, thanks to a truce between Israel and Iran. Despite Fed Chair Jerome Powell highlighting the need to consider how tariffs affect inflation, the US Dollar is struggling, allowing GBP/USD to rise. The US Dollar Index is hovering around 98.00, its lowest point this week, during the European trading session. President Trump announced the ceasefire and warned against violating it, but support for steady interest rates did not help the Dollar.

BoE Signals and Employment Surveys

BoE Governor Andrew Bailey pointed out a weakening job market in the UK and suggested gradual interest rate cuts. Recent employment surveys show a drop in job vacancies, with Indeed reporting a 5% decline in mid-June. Inflation will likely remain a concern in the upcoming US PCE news, which will significantly affect market trends. The GBP/USD continues to rise as EMA and RSI indicators suggest more strength ahead, with 1.3750 as a potential resistance level. The health of the labour market is crucial for determining currency values. A tight job market and rising wages can impact inflation and monetary policies. This is essential for central banks like the Fed, which aims for employment and price stability. This article highlights key market trends and policy signals shaping the GBP/USD pair. Let’s explore what is boosting the Pound and holding back the Dollar, and what this means for future price movements.

Impact of Geopolitical Tensions and Market Dynamics

Following the announcement of the ceasefire between Israel and Iran, global risk sentiment improved. Generally, when geopolitical tensions ease, demand for safe-haven currencies like the US Dollar decreases. This explains why the Dollar is under pressure. Although the Dollar’s appeal isn’t gone, the urgency to hold it has lessened. Despite Powell’s reminders about evaluating the inflationary effects of tariffs, the Dollar Index remains near its weekly lows. This suggests a gap between worry and action—markets are listening to the Fed but haven’t fully adjusted their pricing yet. Trump’s comments about the ceasefire and his warning about potential violations might have boosted the Dollar if geopolitical concerns had resurged. However, with Treasury yields under pressure and the Fed leaning towards patience on rates, the current dynamics support a stronger Pound rather than a rising Dollar. In the UK, Bailey noted challenges in the job market, such as fewer job postings and less hiring interest. Indeed’s data showing a decline in vacancies reflects this trend. However, this doesn’t mean the BoE plans to cut rates quickly. The focus seems to be on gradual adjustments, which can support Sterling, especially as the Fed likely keeps rates steady longer amid ongoing inflation. The recent movements of GBP/USD show a steady upward trend. Technical indicators like the EMA slope and RSI suggest more upward potential, possibly reaching around 1.3750. It’s important to closely monitor reactions near resistance levels. With minimal Dollar strength to fight against, any positive UK data or even neutral news could keep buyers engaged. From our perspective, job market weaknesses on both sides remain a significant factor. In the US, we expect core PCE inflation to stick around enough to complicate the Fed’s decisions. Since the Fed must manage both inflation and employment, any unexpected rise in jobless claims or slow wage growth could lead to renewed expectations for rate cuts. This divergence will benefit Sterling, especially as UK rates edge ahead. In summary, for those focused on macroeconomic factors, the key takeaway is clear: when two major central banks are cautious, attention shifts to economic data—focusing on who can make moves first or who seems more assured about their next steps. Currently, despite some job market softness, the UK’s rate outlook appears slightly stronger than that of the US, and this small advantage is significant. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Jerome Powell recently spoke about the economy and inflation. He mentioned that the markets are facing tough conditions but also highlighted the advantages of the dollar as a reserve currency. Powell acknowledged the ups and downs of the USD and recognized that the effects of tariffs on inflation might not match expectations. The bond market seems to be functioning well, but Powell is waiting to see how inflation trends develop. He suggested that tariffs might cause a one-time rise in inflation and warned that if inflation predictions are wrong, there could be long-term consequences. Although stagflation is not expected right now, if it were to happen, it could complicate the Federal Reserve’s situation. Powell was cautious in giving future guidance, emphasizing the need to be careful given the uncertainty. He pointed out that the economy is growing and inflation is stable, while he monitors the labor market closely. Despite his comments, the market’s reaction has been minimal, with expectations of a 60.6 basis points easing by the end of the year. The ideas we’ve discussed are clear, but some details are easy to overlook. The chairman’s words reflect a key challenge for monetary policymakers — while some data are stabilizing, others remain uncertain. Inflation is not behaving erratically, but it is also not returning to desired levels quickly. Market participants should note that calling inflation “stable” does not mean that they are satisfied; it indicates a wish to observe more before taking action. His comments on tariffs suggest the risks of underestimating temporary price increases. If these are mistakenly viewed as long-term trends, policy responses could be too strong or delayed. Understanding this difference is vital. A one-time spike in prices from tariffs does not warrant the same response as persistent inflation expectations shifting across the economy. This likely explains why we are adopting a cautious approach now. As businesses adjust to new price levels, initial spikes rarely lead to uncontrollable inflation unless confidence begins to falter. Regarding the dollar, Powell acknowledged its broader role, but he didn’t dwell on it. His acceptance of currency fluctuations shows some tolerance for necessary readjustments. For traders, this suggests fewer surprises when planning medium-term moves. Changes in currency values often affect related rate markets, although not always in a direct way. When exchange rates affect imported goods and overall inflation, decision-making becomes more complex, highlighting current hesitations. In terms of the US sovereign debt market, Powell’s reassurance seems aimed at calming nerves for now. However, just because the market is functioning well doesn’t mean there will be no bumps ahead if long-term yields remain stubborn. Traders will likely want to closely monitor bidding activity before upcoming bond issues. Key metrics like bid-to-cover ratios and indirect demand will be crucial. If confidence in rate policies starts to slip, this may first show up subtly through higher term premiums, rather than immediately impacting stock markets. Although Powell dismissed stagflation for now, mentioning it is significant and not done lightly. Such a scenario presents challenges since it limits the options for rate setters. Bringing it up indicates awareness of possible risks, even if they seem far off. For our strategies, it serves as a reminder to reassess hedges in inflation-linked instruments and remain cautious about potential economic slowdowns. The absence of forward guidance indicates a change from past communication styles. Instead of clearly outlining future steps, the central bank appears more focused on data than on shaping expectations. This likely means less clarity about policy intentions moving forward. We will need to pay closer attention to inflation reports and labor market data; waiting for policy signals is no longer sufficient. With swaps markets currently suggesting over 60 basis points in cuts by December, it’s important to explore whether these views stem from healthy skepticism or a repeat of earlier optimism cycles. The macro data does not decisively push us in either direction yet. However, the lack of market reaction to Powell’s cautious tone suggests traders may doubt further cuts or think other tools will be used first. We continue to watch for signs of stress in short-term funding, as this often precedes reactive measures. While nothing is broken, nothing is fully resolved either. The upcoming weekly data — especially on core inflation and jobless claims — will be crucial. It’s wise to stay flexible, limit duration exposure, and account for near-term uncertainty in positioning.

here to set up a live account on VT Markets now

The EUR/GBP is currently trading at around 0.8525 as expectations for the Bank of England’s (BoE) monetary policy shift. Concerns about the UK’s labor market continue, with BoE Governor Andrew Bailey highlighting weaknesses related to employer contributions to National Insurance. Recent UK labor data shows the ILO Unemployment Rate rose to 4.6% for the three months ending in April, the highest level since July 2021. Market participants are now waiting for the UK’s revised Q1 GDP data, which is expected to show a 0.7% economic growth.

Eurozone Inflation Data

In the Eurozone, preliminary data for June’s Harmonized Index of Consumer Prices (HICP) will indicate possible future interest rate changes from the European Central Bank (ECB). ECB Chief Economist Philip Lane mentioned that inflation is under control, and the bank is focusing on “material” changes in inflation for its next meeting in July. The Pound Sterling, the oldest currency still in use, fluctuates based on BoE decisions. Economic indicators like GDP, PMIs, and employment data, as well as the UK’s trade balance, affect its value. A positive trade balance often strengthens the currency. The EUR/GBP pair staying near 0.8525 suggests a shift in market sentiment regarding the Bank of England’s policy. With unemployment rising and Bailey pointing out the increasing costs for employers through National Insurance, the fragility of the labor market is becoming more apparent. The increase in the ILO Unemployment Rate to 4.6% is significant and cannot be overlooked. This is the highest level in nearly three years and could influence the BoE’s future actions. If this trend continues alongside stagnant wage growth, it is unlikely the BoE will tighten policies in the short term.

Eurozone Policy Outlook

The Q1 GDP is expected to show a 0.7% increase in the final revision. While this isn’t rapid growth, it does alleviate concerns about a technical recession, which we’ve been monitoring closely. How traders react to this data will be important for assessing Sterling volatility. Calendar spreads reflecting rate expectations right after the release should indicate any surprises. In the Eurozone, preliminary inflation figures will greatly inform the ECB’s rate plans. With Lane suggesting inflation is largely under control, markets are leaning towards maintaining current policy unless new data suggests otherwise. His use of “material” sets a high threshold for any potential rate changes, which could limit flexibility in near-dated options pricing. Euro support has faced some pressure but hasn’t broken through established ranges this quarter. Unless inflation unexpectedly rises, a significant policy shift to boost the euro seems unlikely this week. For derivatives traders, the differences in upcoming central bank actions—where the BoE appears more cautious and the ECB is in a holding pattern—provide important cues for positioning. Implied volatilities are still low, but there are signs of directional bias. Traders focusing on tail risks should closely evaluate risk reversals, especially as EUR/GBP skew starts pointing downward. Short-dated options now offer a cost-effective way to speculate on potential policy surprises. However, we believe that directional strategies should consider the current range that this cross has been unable to break. A patient approach with moderate delta exposure, supported by defensive gamma, remains preferred, especially as the data flow slows down toward month-end. While it might be tempting to anticipate central bank decisions with strong predictions, recent market behavior suggests that traders are uncertain about clear future commitments from either bank. It’s likely that incoming data will have the greatest influence moving forward. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Mixed Results in the Financial Sector

Today’s trading session showed a mix of market trends, especially with technology stocks performing well. Nvidia jumped by +3.07%, indicating growing confidence in semiconductors. Microsoft rose by +0.70%, and Apple climbed by +1.07%, boosting optimism in tech products. On the other hand, the electric vehicle sector struggled. Tesla dropped by -5.31%, highlighting challenges the industry faces. In communication services, Google increased by +2.88% due to strong earnings, while Netflix gained +0.92% thanks to positive forecasts. In the financial sector, results varied. JPMorgan Chase saw a slight increase of +0.26%, suggesting stable banking performance. In contrast, Visa fell by -0.88%, possibly because of changing consumer spending patterns. Overall, today’s market showed mixed feelings. While technology stocks thrived, sectors like electric vehicles fell behind. This signals a growing focus on tech performance, indicating a potential shift for investment opportunities, especially in undervalued sectors. For ongoing updates, check reliable financial sources.

Broader Market Observations

The market mood is shifting, driven mainly by strength in technology, especially semiconductors and well-known software companies. There’s clear optimism for firms benefiting from data center demand and AI workloads, but this enthusiasm isn’t spread evenly across all sectors. While some big-name tech companies enjoyed further gains, other areas struggled to find direction, indicating selective money flows. Nvidia’s significant rise signals confidence in earnings and a belief in increased spending on AI-related infrastructure. This kind of movement usually suggests that institutions will continue to buy over multiple sessions. Microsoft and Apple both climbed, showing support for large-cap growth, but the increase was more measured—possibly indicating that some of this excitement is already reflected in their prices. In contrast, Tesla’s decline shows that risk associated with consumer sensitivity in electric vehicles isn’t being appreciated right now. It suggests a divide, as capital moves away from sectors with shrinking profit margins and lowered growth forecasts, especially when expansion hopes can’t justify high valuations. Alphabet, however, performed better, with results that improved the advertising outlook. This rise, based on actual performance rather than speculation, lends credibility to a shift back toward established growth stories. Netflix also had a modest gain, yet its small rise indicates that the market is being discerning rather than broad-brush in approaches. In financials, we’re starting to see differences emerge. JPMorgan’s slight increase indicates the market appreciates firms with diverse revenue and stable income from interest. Meanwhile, Visa’s decline may stem from wider concerns about weakening demand. A pullback in payments companies suggests a change in consumer behavior—potentially slower spending or tighter corporate budgets. This situation reveals opportunities. When sectors that typically move together begin to diverge, there are chances to find short-term advantages through relative value strategies. With tech stocks leading and some high-beta names declining, volatility is likely to remain high. We encourage looking closely at companies that missed out on the recent tech rally but show promise. Such trades currently may be low-risk but could gain momentum if tech continues to rise. Paying attention to volume profiles and implied volatility trends across sectors can help identify where balance is returning. For those involved in options trading, this current divergence makes strategies based on spreads more appealing than straightforward directional bets. As tech stocks capture attention, the downside risks in underperforming sectors present potential for mean reversion strategies. In the coming days, anticipate greater separation between growth styles and cyclical stocks. Focus on pre-market earnings notes and option flow for high-expectation names. The strategy of leaning toward large-cap tech can be maintained while hedging against stocks showing relative underperformance. When one area strengthens, it often drains liquidity from another, and this weekly shift can create setup opportunities both in price and in volatility. Keep an eye on sector ETFs as they rebalance. Broad outperformance along with mixed internal conditions often signals a winding-down phase where correlations tighten again. That’s when many trading opportunities might fade—or new patterns can emerge on charts, especially if sentiment indicators become overstretched. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The Japanese Yen is currently down 0.5% against the US Dollar, lagging behind all G10 currencies during a mostly calm trading period. This drop is partly due to comments from a Bank of Japan (BoJ) board member, which dampened expectations for interest rate hikes amid ongoing trade discussions. Previous BoJ minutes hinted at an inflation forecast upgrade and possible rate increases, depending on how trade talks with the US unfold.

Shifts in Short-Term Sentiment

The yen’s recent decline indicates a change in short-term sentiment. Even though trading has been mostly steady, remarks from Nakamura, a moderate voice on the BoJ board, have lowered market interest in buying the yen. By cooling expectations for immediate rate increases, Nakamura challenged the earlier optimism derived from BoJ meeting notes. Those notes suggested tentative rate hikes could occur if inflation rises consistently and trade negotiations go favorably. Now, with uncertainty introduced about when—and if—policy changes will happen, traders’ excitement for a strong yen seems to have reversed. This shift is evident in both spot and options markets, where implied volatility has eased and buyers are focusing on higher dollar-yen strikes. We’re also noticing that forward rate differentials, which already disadvantage the yen, are not being challenged by new rate movements. Traders who had been bullish on the yen for the short term are unwinding their positions, especially for one- to three-month contracts. While this unwinding is steady, it’s not aggressive and aligns with a broader trend since US core inflation numbers began enhancing the appeal of dollar carry strategies. Recent trading activity suggests an effort to push dollar-yen higher, but there’s a lack of confidence that it will move significantly above its current levels. Traders appear hesitant to engage in large directional trades in currency pairs, instead shifting towards strategies that provide some protection, with a slight bias toward dollar strength. Risk reversals have flattened, and interest in low-delta calls further down the timeline indicates a readiness to capitalize on any short-term bounce in the yen.

Speculative Yen Buying

This situation sheds light on derivatives trading. The calm in markets doesn’t indicate clarity; rather, traders are choosing to sell volatility because they feel less urgency to protect against rising yen risk. Moving forward, trading positions should consider that directional movements are now heavily reliant on strong US economic data and unclear signals from the BoJ. This isn’t a quiet period; it’s a time when speculative yen buying looks less appealing unless local Consumer Price Index (CPI) readings show a clear shift or expectations around rates become more favorable for Japan. Given current inflation expectations in both the US and Japan, the narrative still favors the dollar, and the risk of shifting trends remains. It’s wise to focus on asymmetrical exposure—looking for opportunities where current volatility allows for upside potential without excessive costs, especially in the short term. At this moment, traders are unlikely to adjust unless Nakamura’s comments are contradicted in the coming weeks, potentially by new wage data or another board member’s differing views. Until then, efforts are focused on leveraging mean reversion in implied volatility and spotting imbalances in skew pricing, rather than chasing outright directional plays. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

The recent ceasefire in the Middle East has eased worries about oil supply, causing oil prices to drop by 16%. The outlook for demand is weakening, making it harder for prices to recover. This situation is made worse by Fed Chairman Powell’s recent comments to Congress. Crude oil is trying to stabilize after falling more than $10 from Monday’s high. With the ceasefire easing supply concerns, West Texas Intermediate (WTI) oil is still below $65.00 per barrel.

Truce Impact on Oil Supply

Tensions remain in the truce between Israel and Iran, but it is holding. Iran’s oil supply is not affected, and threats to the Strait of Hormuz have lessened, bringing prices back to where they were before the conflicts began. Demand uncertainties are growing as the US economy shows signs of slowing. Consumer confidence dropped in June, and the Eurozone is stagnant. China is struggling to recover, and OPEC+ plans to increase supply, which could lead to an excess of oil. Fed Chairman Powell’s recent comments about not signaling rate cuts affect the market. High inflation risks from tariffs are putting further pressure on the economy and oil demand. WTI Oil, or West Texas Intermediate, is a type of crude oil known for its low gravity and low sulphur content, mostly sourced in the US. Its price is influenced by supply and demand, political stability, and OPEC’s production quotas. What’s happening is fairly simple but might have lasting effects. Oil prices have dropped sharply—over 16% recently—primarily due to reduced fears. The ceasefire in the Middle East has eased concerns about supply interruptions. Before this, traders had raised prices based on the potential for disruptions, mainly through the Strait of Hormuz. Now that oil supplies, particularly from Iran, are unaffected, traders are adjusting their risk models. Crude is currently holding steady. The price of WTI shows it’s trying to find a short-term support level similar to what we saw before the regional tensions. This makes sense; the fear-driven buying that pushed prices up earlier is no longer active.

Powell’s Congressional Remarks

Powell’s comments in Congress didn’t help market sentiment. He avoided giving any hints about possible rate cuts that investors were hoping for. Instead, he firmly stated that fighting inflation is the Fed’s priority. This hawkish tone suggests that borrowing costs will likely remain high. Higher interest rates can slow down economic activity, limit growth, and reduce oil consumption. Tariffs also linger, keeping costs high in many sectors and distorting prices. Consumer sentiment in the US has declined again, further confirming a cooling economy. This trend isn’t limited to the US; China is underperforming post-lockdown, Europe’s economy has stagnated, and economic indicators are missing expectations. Simply put, it’s hard to predict a strong rebound in demand anytime soon. On the supply side, OPEC+ is signaling it may increase output later this year. If that happens without an increase in demand, inventories could rise, putting additional pressure on oil prices. When supplies exceed consumption, it becomes difficult for prices to gain support. From our view, implied volatility has decreased since the ceasefire, although it’s not completely gone. With reduced geopolitical risks and signs of weaker demand, the potential for directional oil trading is narrowing. The price curve is flattening, and trading activity in near-term contracts seems uneasy. Meanwhile, longer-term contracts are moving without strong direction. We are monitoring how the spreads between near-term and deferred contracts behave. If these spreads tighten, it might indicate that excess supply is expected. Conversely, if they widen unexpectedly, it could signify renewed risks in positioning. We should also keep an eye on refining margins, which have contracted, hinting that downstream fuel demand might also be waning. Upcoming events, such as jobs figures, PMI releases, and OPEC statements, will reveal whether this stabilization can last or if further declines are on the horizon. For now, the likelihood of a recovery seems low, unless there are unexpected developments in the economy or global diplomacy. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

NZDUSD found strong support at 0.5882 after the U.S. bombing in Iran triggered selling. It rallied impressively for two days, moving over the 50% retracement level from May’s low at 0.5966 and surpassing both the 100-hour moving average at 0.5984 and the 200-hour moving average at 0.6007. This shift suggests a more positive outlook in the short term. However, resistance at 0.6040 limited further gains. During the U.S. trading session, the pair fell from 0.6040. Yet, the support from the 200-hour moving average re-emerged, drawing interest from buyers during price drops. Staying above this level is crucial for maintaining a bullish view.

Key Support and Resistance Levels

Breaking above 0.6040 is vital to aim for the next resistance level between 0.60558 and 0.60649. If sellers regain control, keep an eye on support at the 38.2% retracement level at 0.59948 and the 100-hour moving average at 0.5984. Falling below these levels would weaken the technical outlook. The market is currently consolidating with a bullish tendency, needing a clear break above 0.6040 for renewed momentum. Key support and resistance levels include 0.6007, 0.59948, 0.5984, 0.6040, 0.60558, and 0.60649. Following recent geopolitical tensions, the currency pair is recovering, especially after bouncing back from 0.5882. This quick rebound, moving through the midpoint of the previous decline and breaking both short- and medium-term moving averages, indicates a shift. It shows that traders are gaining confidence to buy on dips rather than sell on rallies. Still, the response at 0.6040 has shown limits for immediate progress. This level has proven to be strong resistance, marking the upper end of a compression zone over the last two trading sessions. Buyers have pulled back slightly as the price approaches this level, but support at the 200-hour moving average at 0.6007 has consistently held, with buyers coming in almost automatically at this point.

Price Behavior and Actionable Range

This price behavior creates an actionable range. Staying above the 200-hour moving average indicates the market is still ready to test higher levels. For those trading strategically, the range from 0.60558 to 0.60649 is the next area to consider for profit-taking or evaluation. This zone has not been reached recently and may attract short-term interest from risk-averse traders. If sellers attempt to regain control—potentially in response to negative data or a resurgence of overall market risk aversion—then the technical levels below should be seen as short-term checkpoints. Dropping below 0.59948 could change sentiment toward neutral, and any candle closing below the 100-hour moving average would be significant, especially if accompanied by weakening sentiment in commodity-related markets. Currently, we are observing ongoing compression between both sides trying for control. Immediate highs are clearly defined, providing solid markers for further setups. At the same time, the downside remains well-organized, offering safety nets rather than leading to a total decline. For now, price action remains stable within a slightly upward bias, but this holds only as long as key support levels are maintained. The next trading sessions may see attempts to extend these moves, possibly intensified by lower liquidity. Whichever direction it breaks, strong conviction will need confirmation above or below the established zones, rather than through mid-range positions. Let the movement guide our reactions rather than predict and act prematurely. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now

Pound Sterling is holding steady against the US Dollar, trading around 1.36, just below its January 2022 peak. The recent increase in the pound’s value is linked to changes in central bank policies, especially a 15 basis point improvement in the UK-US yield spread that benefits the pound.

US Data Impact

This week, limited economic data from the UK makes the pound more sensitive to US data. GBP/USD risk reversals show a slight advantage for puts, affected by tensions in the Middle East. The pound’s upward trend continues, exhibiting higher lows and highs since January. Current movements bring the pound close to January 2022 levels, with the RSI suggesting potential momentum growth, facing resistance around 1.3750. Statements about future performance come with uncertainties and risks. Market profiles are for informational purposes and should not be seen as buy/sell recommendations. It’s important to do thorough research before making investment decisions. The markets carry risks, including emotional stress. The authors’ views do not reflect official stances, and they bear no responsibility for content linked externally. The article is unaffected by positions or compensations. Errors and omissions are accepted, and this information does not constitute investment advice. Currently, the GBP/USD pair shows stability around the 1.36 mark, near its early-2022 peak. The recent increase in value relates to a modest movement in interest rate differences, particularly in UK bonds compared to US bonds. While a 15 basis point shift may seem small, it can impact derivative pricing and positioning in a short time frame. This week lacks significant domestic economic data, so we are more reliant on signals from the US. Any unexpected changes in inflation or job data could shift the market and potentially pull the pound out of its current range. Slight downward skew in risk reversals suggests a small hedge is forming, driven by geopolitical uncertainties—these factors are not drastically altering momentum but may affect event-driven movements.

Technical Indicators

From a technical standpoint, the current setup encourages trend continuation. The price has been moving in a pattern of higher lows and higher highs, which indicates bullish sentiment. The Relative Strength Index (RSI), a common momentum tool, hasn’t reached overbought levels yet, leaving space for growth. Resistance doesn’t seem close until we reach the 1.3750 area. With GBP/USD in this range, short-term volatility seems low, and unless significant market-changing news occurs—like unexpected data or policy announcements—it appears traders are extending their outlooks. The lack of immediate domestic stress likely means that US economic indicators will significantly influence future volatility and positioning changes. For those managing delta or gamma, this is a chance to reassess open spreads and think about convexity exposures. Options with longer expiries, especially those tied to the next central bank cycle, could see increased volume if discussions about policy divergence pick up. Pay attention to skews, particularly in the 25-delta range. If dealers start adjusting their positions in anticipation of bond market shifts, it might push the pair out of its calm range faster than expected. In practical terms, it’s wise to focus on US data releases before making new delta commitments. Other currency pairs involving the pound are also worth considering, as not all pound movements are linked to the dollar. However, with implied volatility still relatively low and areas of steepening observed on the options surface, it doesn’t take much to revive short volatility from its recent lull. It’s important to keep an eye on where vega exposure lies, especially during weeks of thin liquidity. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now