Trump indicated that he found it hard to ask Israel to stop airstrikes and hinted he might support a ceasefire. He talked about discussions with Iran, saying that Israel is doing well while Iran is struggling. Trump noted he couldn’t make decisions about Iran but highlighted that sending ground troops would be undesirable. He mentioned progress in talks between Russia and Ukraine, as well as potential trade agreements with India and Pakistan. However, he pointed out that Iran seems hesitant to engage with Europe. Trump speculated that Iran could be weeks or months away from developing a nuclear weapon. He noted a two-week period for evaluating responses, emphasizing it as a maximum time to check decision-making sensibility. While there were no immediate actions suggested, his comments hint at diplomatic opportunities mixed with uncertainty. There might be room for negotiations, but outcomes remain unclear and could change rapidly. What has been shared so far suggests that diplomacy is being considered but not fully embraced, indicating we might be in a pause before any major actions. Trump’s remarks about the airstrikes and reluctance to send ground troops imply a public preference for restraint, even if there might be different intentions behind the scenes. The mention of talks, whether genuine or just for show, highlights ongoing posturing on multiple fronts. By bringing attention to Iran’s potential nuclear capability, and noting Europe’s lack of dialogue with Iran, it’s clear that state actors are trying to reposition their influence. The short timelines for reassessment are typical in volatile periods, but the two-week timeframe to gauge “sensibility” stands out. It shows a search for early indicators, which is crucial when timing matters. His reference to trade opportunities in South Asia seems like an aside, yet it points to changing trade partners, likely as safeguards against wider regional instability. The main implication isn’t about the strength of these deals but about maintaining open supply channels and flexible pricing structures. The market’s reaction will depend on whether the tone remains steady or falters under pressure from the Middle East or energy markets. From our viewpoint, uncertainty may reduce volumes, but volatility could spike if rhetoric escalates without concrete actions to ground expectations. Defence contracts and energy derivatives might see early directional shifts, so we need to watch for changes in hedging behavior. Notable shifts could be indicated by tightening spreads against index volatility. It’s important to note that no new baselines or formal deals have been introduced—no confirmed de-escalations or renewed alliances. This lack of action, combined with vague signals, implies we’re in a delicate phase where overreacting or underreacting could be risky. Traders should consider these updates as part of a bigger picture; what’s not said carries significant weight. In the intersection of positioning and policy, short-dated contracts are likely to be very responsive. They will probably be used as stances shift quickly, especially concerning future military involvement or energy exposure. Derivatives traders should anticipate secondary effects across sectors—not only regional assets—and look out for sudden liquidity crunches that might arise from unexpected news. We must remember this isn’t solely about hedging for individual events. It’s about connecting how related assets—like currency pairs, Brent options, and sovereign credit risks—react when public sentiment shifts. That’s the vital flow to monitor. While no immediate actions were recommended, pricing models will likely begin incorporating low-volume signals without waiting for official announcements. Pay attention to the speed of statements and how they differ from previous tones. Rapid changes in rhetoric can lead to market movement, not just due to the content but also the delivery and follow-up. We’ve seen this pattern before, and signs are emerging that we might witness something similar again.

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The USDJPY recently hit new intraday and multi-week highs, entering a swing zone that previously capped gains in early May (145.92-146.25). The pair is very close to the 61.8% retracement level at 146.148, which is often a key point for market corrections. Recent pullbacks have attracted buyers near the previous day’s high of 145.76. This pattern indicates a bullish market where small dips are seen as buying chances. A drop below this support level and the 50% midpoint of the May range at 145.375 could shift market momentum. However, the current trend hints at a possible rise above 146.24, leading to further increases.

Key Levels For USDJPY

Key levels for USDJPY are vital to watch. Resistance is at 146.148, with the 61.8% retracement and swing-zone top at 146.25. Support levels include the previous highs and short-term floor at 145.76, additional support at 145.375 for the 50% May range, and further support at 145.15, representing the 100-hour moving average. We’ve reached levels not seen since early May. Prices are reacting where past sellers showed interest. The ongoing buying—especially after every dip—suggests that the market remains strong. The fact that buyers keep stepping in above 145.76 daily shows that the market is tilted towards strength. Traders aren’t waiting for significant pullbacks. Instead, smaller pauses are quickly bought up—often before prices test wider support below.

Market Dynamics And Momentum

The 61.8% retracement at 146.148 can act as a barrier. When prices consistently hold above this level, the next movement tends to extend further than expected. However, it might not happen immediately. There may be days when prices hover just below these levels, almost inviting more participants or shaking off hesitant traders before moving on. We have tested close to 146.25 without much selling pressure, lacking the rejection seen previously. This changes the market’s dynamics. These zones become stronger only when the market respects them. If we continue to move through intraday without pullbacks, we are unlikely to stay below for long. However, if we falter and the area near 145.76 doesn’t attract buyers, the next support will fall to 145.375. This isn’t just a number; it’s the midpoint from a broader retracement and represents the balance of the past month. Dropping below this would take us back to price levels that haven’t supported higher bids—an unfavorable situation. Our focus is on the short-term direction from how prices react just under the recent highs. If upside momentum pauses and shows indecisiveness, that may indicate a need to adjust our short-term bias. As long as dips are seen as buying opportunities, the potential for higher prices remains. Trading volume may decrease into the weekend, but thin trading can still break through technical levels easily, especially if we’re just below a key resistance like 146.25. Pay attention to how these levels behave with low liquidity, especially at the start of next week. If defensive trades set up below 145.76 and follow through beyond 145.375, we may start to question the strength of this upward move. If momentum continues, we could see targets move to higher retracement levels not reached since April, with only minor pullbacks meriting attention. Stay light unless the move fails twice; then defensive trades are more likely to hold. Create your live VT Markets account and start trading now.

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Japan has canceled a trade meeting with the U.S., according to the Financial Times. This decision came after the U.S. asked Japan to raise its defense spending to 3.5% of its GDP. This announcement may have contributed to recent stock market declines. Investors will soon focus back on trade issues, where recent signals have not been encouraging. This situation shows a clear change in diplomatic priorities, impacting both politics and the mood of financial markets. Japan’s choice to step back from talks with the U.S. reflects a larger concern over military spending expectations. The request for 3.5% of GDP is significant by Japan’s postwar standards. It’s not just a budget request; it indicates a shift in strategic responsibilities that Japan may not have expected. Markets have reacted with short-term selling, suggesting that investors are adjusting their strategies anticipating less cooperation on trade as a result of this split. While news often highlights interest rates or inflation, trade diplomacy plays a vital role in market movements, especially when it changes unexpectedly. Nakamura’s withdrawal from the meeting—possibly supported by key policymakers focused on financial stability—suggests that defense policy is now taking precedence over economic negotiations with the U.S. Traders who look for clear trends might see this as a setback, counteracting earlier signs of stability in trade between the world’s largest and third-largest economies. We’re also seeing weak data in areas like export orders and freight readings, which backs the idea that trade dynamics are not improving quickly. If this trend continues in the coming weeks, it wouldn’t be surprising to see lower expectations for regional earnings, especially for producers and container shipping companies on Pacific routes. Bond markets may also respond with expectations of increased government borrowing in Japan if pressure to reach the GDP spending target increases. Tanaka, a notable voice on fiscal matters, has expressed concerns about the inflationary impact of larger defense budgets, especially as Japan continues its monetary stimulus. Traders should monitor Japan’s 10-year bond yields, which often react quickly to changes in budget forecasts. We should note that implied volatility in equity options rose following this report. While this could relate to broader geopolitical tensions, the timing suggests a more direct link. A sudden breakdown in talks between close allies is uncommon and creates uncertainty for sectors sensitive to trade. In the short term, margin desks and volatility traders might raise prices for Japanese and Asia-related contracts. This could make tactical short selling through derivatives less appealing, though hedging strategies might gain popularity among fund managers wanting exposure to the region without taking on full risk. Quantitative analysts examining macro trends may adjust their models since increased defense spending usually ties more closely to government capital spending than consumer growth. Portfolios focusing on government bonds may perform better than those linked to trade metrics. We expect more discussions about this shift in macro briefings from research teams next week. Depending on the upcoming trade data, we might see additional risk premiums in derivatives connected to Pacific-focused companies.

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The USDCHF pair showed a steady upward trend during the week, moving between 0.8055 and 0.8213 from Monday to Thursday. Buyers faced resistance just below the 38.2% retracement level of the drop from April to May, causing a slight pullback to around 0.8150 to 0.8160. Currently, there is a key technical level near 0.8170, where the 100-hour and 200-hour moving averages meet. Prices fell briefly below the 100-hour average but quickly bounced back, indicating a short-term bias towards rising prices.

Upcoming Week Expectations

As we enter the next week, the pair is at a crucial point. If it breaks above 0.8213 and the 38.2% retracement level, it may lead to further upward movement. However, if prices drop below the converged moving averages, we could see a decline, with 0.8146 serving as the last support before a more significant drop. Important resistance levels are at 0.8213 to 0.8216 and 0.8249, which are previous highs. Key support levels include 0.8163, 0.8158, and 0.8146. A further decline could challenge levels at 0.8091 and 0.8055. Overall, this week showed a slow and steady rise in USDCHF. The price remained in a narrow range, hitting a ceiling just below 0.8213, close to the retracement level from the overall decline in April and May. Buyers faced a technical barrier, which caused a temporary dip. Right now, the pair is just above a point where two important moving averages meet—the 100-hour and 200-hour averages. This area acts as temporary support. Although prices briefly dipped below, they quickly recovered, suggesting a moderate inclination towards higher prices for now.

Potential Scenarios

From this point, two main scenarios could unfold. If the price decisively breaks above 0.8213 without getting stuck near the next retracement level at 0.8216, there could be stronger buying. The next target above that is 0.8249, where the price previously hesitated. Conversely, if the price falls back below the converging averages, we’ll need to watch for signs of a reversal. If support at 0.8146 fails, tighter conditions or greater volatility could arise, especially if levels near 0.8091 don’t hold. This situation is quite narrow, as the defined range allows for clear entry and exit points. Timing will be crucial. Since movements are small and measured at the moment, we should pay attention to how long the price remains around the lower edge of 0.8150. If higher lows stop happening, a stronger downward move may occur. The price hasn’t touched 0.8055 since the start of the week, so a new dip to that level could indicate weaker buying strength. For now, the 0.8170 area remains critical; it protects the potential for upward movement while also anchoring broader expectations. A break in either direction could lead to significant price action. Create your live VT Markets account and start trading now.

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NZD/USD is struggling as risk aversion and different central bank policies push it below the 0.6000 level. The US Dollar gains strength amid tensions in the Middle East and delays in expected interest rate cuts from the US Federal Reserve. The reduced liquidity from New Zealand’s Matariki holiday also affects the NZD. US markets resumed trading after Juneteenth, and full liquidity is expected by Monday.

Market Influences

The movements of NZD/USD depend on New Zealand’s GDP data and the Federal Reserve’s interest rate decisions. Ongoing Middle East conflicts influence market risk, while expectations of delayed rate cuts favor the USD. New Zealand’s GDP grew by 0.8% in Q1, surpassing the 0.7% prediction, but this did not boost the Kiwi because traders are focused on Fed policies. The Fed’s steady interest rates and inflation warnings strengthen the USD. The Reserve Bank of New Zealand hinted at potential rate cuts, which contrasts with the US’s signs of economic strength. This difference in policy favors the USD and affects the NZD. NZD/USD is nearing the lower end of its upward channel, with technical indicators showing various levels of resistance. To stabilize, bulls need to push above 0.6011.

Policy Outlook Tensions

There is a growing tension between the policy outlooks in Wellington and Washington that is putting pressure on the Kiwi Dollar. While New Zealand’s economy grew slightly more than expected in Q1, markets largely ignored this. This reaction is typical—traders often react more to signals from central banks than past data. The Reserve Bank of New Zealand’s hints at possible future rate cuts undermine any temporary boost from GDP numbers. Meanwhile, US policymakers have taken a firmer stance. Powell and his team have made it clear they are not happy with the current inflation trends. Their reluctance to cut rates while inflation remains high has strengthened the US Dollar, especially as risk-averse sentiment grows. Increased tensions in the Middle East further reinforce this, driving capital towards safer investments like the US Dollar. This week, volatility was seen not just in charts but also on trading desks, as liquidity fluctuated. New Zealand’s Matariki holiday reduced local trading volumes, while US desks were still adjusting after the Juneteenth closure, making price movements unpredictable at times. However, with both sides expected to be fully active by Monday, more orderly trading may return—though this may not be comforting for Kiwi bulls. Technically, NZD/USD is testing the lower limits of its upward channel. While this doesn’t guarantee a breakdown, it increases vulnerability to any negative pressure. So far, attempts to regain levels above 0.6011 have not succeeded, making it a key point for short-term traders. If the price stays below this level, downward momentum could increase. Oscillators confirm this pattern, indicating multiple resistance levels above. For those observing derivatives based on short-term Kiwi movements, it’s crucial to focus on specific events. If inflation trends in the US continue as they are and the Fed maintains its current stance on rates, the upside for the NZD is likely to remain limited. Renewed hawkishness from US officials could further reduce demand for the NZD, especially in light of a potentially softer RBNZ approach. Trading desks should keep a close watch on data releases and central bank meetings. The differing communications from the two countries’ economic authorities create imbalances, which can present opportunities. However, distinguishing between noise and actual policy direction is essential. The fact that the Kiwi could not gain traction even after positive GDP numbers highlights where sentiment currently lies. We should also keep broader trends in mind—risk appetite is not improving. In this environment, currencies linked to growth, like the NZD, often struggle. The overall direction favors the USD, particularly if Treasury yields remain strong and Fed officials don’t rush to change rates. Those looking to trade this pair should proceed carefully. Pay close attention to the timing and framing of rate decisions—not just the numbers but how officials discuss them afterward. Comments from policy board members are more impactful amid a clear divergence in views. If Powell emphasizes a commitment to hold rates longer while Conway’s team hints at easing, pressure on NZD/USD could increasingly build. That’s where we see probabilities starting to gather. Create your live VT Markets account and start trading now.

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US stock indices began the day with a 0.5% rise but quickly became volatile. This was the second *Triple Witching Day* of the year, with $6.5 billion in options trades expiring, leading to increased market fluctuations. Federal Reserve Governor Christopher Waller’s statement hinted at possible interest rate cuts in July. At the time of this report, the Dow was up 0.26%, the NASDAQ had a slight 0.1% loss, and the S&P 500 was unchanged.

Company Performance and Earnings

In company news, Kroger exceeded earnings expectations with a 3.2% year-on-year rise in identical sales (excluding fuel) and a gross margin of 23%. Accenture, however, faced a decline as its bookings fell compared to last year, negatively affecting its stock. Home Depot is exploring a $5 billion acquisition of GMS, boosting its stock price. Meanwhile, CarMax’s stock rose over 5% after it beat Wall Street’s earnings forecasts for its fiscal first quarter, despite a 1.5% drop in average prices. The S&P 500 has remained steady below resistance levels since December, with analysts divided on its future. Some believe new highs are possible, while others are cautious due to ongoing tariff policies. As we move past the second *Triple Witching Day* of the year, the expiration of $6.5 billion worth of options contracts has heightened market volatility. Historical patterns show that such expirations influence market direction, often resulting in sudden changes. The trading day started positively, but major US indices showed varied results by the end: the Dow gained slightly, NASDAQ dipped, and the S&P 500 remained flat. Waller’s comments are significant, as they suggest potential interest rate cuts in July, which could signal a shift in Federal Reserve policy. Markets tend to react quickly to changes in monetary policy expectations. While he did not indicate a strong dovish stance, his comments on slowing economic indicators could allow for near-term actions, impacting interest rate positions. In earnings news, Kroger’s strong performance was largely due to solid sales growth and improved margins. While this may not apply to all sectors, similar retail companies may benefit from stable input costs and efficient operations. Accenture’s decline in bookings, on the other hand, is concerning. Booking slowdowns can signal future challenges, especially for consulting firms like Accenture with significant IT contracts. Home Depot’s potential $5 billion deal for GMS reflects ongoing confidence in the building materials sector, possibly indicating steady construction demand amid economic uncertainty. This could impact related sectors, making it worth exploring spread trades in those areas. CarMax surpassed profit expectations, demonstrating resilience despite soft used vehicle pricing. This type of performance is often welcomed in the consumer discretionary market, but the dip in average selling prices shouldn’t be overlooked. Reduced pricing power and tighter credit could affect consumer credit, particularly for auto loans.

Technical Levels and Market Predictions

Now, looking at technical levels, the S&P 500 remains below resistance levels seen over the winter months. Its failure to push beyond these highs suggests indecision among investors. Analysts are split; some believe new record highs are possible if monetary easing occurs and corporate profits remain strong. Others caution that renewed trade tensions could pose risks and pull prices down further. It’s wise to reassess delta exposures and implied volatility across major indices, especially over weekly and monthly timelines. Current skew patterns may not fully reflect a shift in policy expectations or trade outcomes. Analysis of skew and term structure could help identify opportunities for calendar spreads or butterfly strategies. However, caution is advised. Just as large volumes expired recently, upcoming positioning may reveal new market direction. Opportunities will likely surface once there is clear momentum supported by volume or if macro indicators point in a definite direction. It’s better to react to market movements than to anticipate them prematurely. Create your live VT Markets account and start trading now.

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The euro has risen by half a cent today, reaching its highest level since Monday. This increase has nearly balanced its position for the week. Earlier, the US dollar was highly sought after as a safe-haven asset due to concerns about conflicts in the Middle East. However, it is now losing some of those gains, helping the euro.

Inverted Head And Shoulders Pattern

On the chart, the euro has formed an inverted head-and-shoulders pattern, which suggests it may retest recent highs around 1.1615. This movement has strengthened the euro compared to its position at the week’s start when risk sentiment weakened, causing safe assets like the dollar to gain favor. The inverted head-and-shoulders pattern shouldn’t be ignored because it often signals renewed strength. While it may not always follow the textbook example, our current scenario, along with the momentum building towards 1.1615, indicates that market participants are beginning to prepare for further gains. As the dollar lost some of its recent strength due to safe-haven demand, it wasn’t just because geopolitical fears have eased. The rates market has also played a role, with yields softening in some areas of the Treasury curve. This alleviates pressure on dollar-based assets, which struggled to attract investment without the strong yields seen earlier this week. If nothing new introduces uncertainty into the markets, this dollar pullback could provide room for the euro to stabilize, especially if risk appetite stays strong. Upcoming economic reports next week could shift sentiment again, but right now, technical indicators do not oppose euro strength.

Monitoring Market Positioning

We believe it is crucial to closely track market positioning. Open interest has increased near key resistance levels, often signaling that short-term traders are trying to capture breakout momentum. However, spreads have narrowed slightly, indicating some caution. This type of divergence can create a push-and-pull between traders confident in their positions and those hedging against sudden market shifts due to news. As traders, it’s wise to not only focus on key levels but also to closely monitor execution. Moves toward 1.1615 are likely to attract more activity. If that level starts acting more like a magnet than a ceiling, strategies favoring a continuous trend may perform better in the short term. We also note that speculative flows often thin out toward the weekend, leading to reduced market depth and sharp moves on low volume. This can accentuate what might seem like routine price adjustments. Stop placements are more crucial in these conditions, serving as strategic tools rather than blunt instruments. In summary, recent gains are not occurring in isolation. They follow earlier compression, and with price ranges widening once again, it’s important to act purposefully rather than react to noise. Create your live VT Markets account and start trading now.

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The Indian Rupee (INR) ended its three-day decline against the US Dollar (USD) on Friday, showing a small recovery after reaching a three-month low. This rise was helped by a weaker US Dollar and lower Crude Oil prices as traders reacted to US President Trump’s choice to postpone military action in the Israel–Iran conflict. During American trading hours, the USD/INR pair decreased to about 86.60. Although it eased from a multi-month high, the pair is still up over 0.50% for the week due to high Crude Oil prices from the ongoing conflict.

Domestic Economic Factors

Several domestic factors also aided the Rupee’s recovery. Strong equity markets and stable global Crude Oil prices improved market sentiment. India’s GDP growth increased to 7.4% in Q4 FY25, inflation stayed below 4% for four consecutive months, and rising GST revenues reflected strong demand and stable formal-sector activity. However, the core sector’s growth fell to 0.7% in May from 6.9% a year earlier, indicating weak performance in heavy industries. On the bright side, India’s stock indices saw a rebound, with the BSE Sensex and NSE Nifty50 both rising by 1.29%, which helped boost sentiment. Crude prices dropped over 2% on Friday but maintained a weekly gain of about 4%, remaining sensitive to developments in the region. The Reserve Bank of India (RBI) cut the repo rate by 50 basis points to 5.5%, keeping its supportive stance. The Rupee also benefited from revised inflation forecasts, predicting CPI at 3.7% for FY26. Retail inflation decreased to a 75-month low of 2.82% in May, thanks to a dip in food inflation below 1%, supporting a more relaxed policy approach. As the Iran–Israel war continued, geopolitical tensions remained high, with US and Israeli leaders considering military actions, while Iranian officials threatened to close the Strait of Hormuz if the conflict escalated. The US Dollar Index fell below 99.00 due to reassessment of risk.

Geopolitical and Market Trends

Manufacturing continues to show signs of weakness, as indicated by the Philadelphia Fed Manufacturing Index, which stayed at -4.0 in June. Traders are now looking forward to upcoming PMI data from India and the US, which could reveal potential changes in economic performance. On the technical side, USD/INR showed signs of a possible pullback after hitting resistance at 87.00, despite earlier bullish indications. The Relative Strength Index cooled a bit but suggested buyers remain in control above 85.80-86.00 unless new pressures arise. The Composite PMI offers insight into India’s business activity, with levels over 50 signaling expansion and a positive outlook for the INR. The next release is set for June 23, 2025. The Rupee found support after a turbulent period, aided by calmer global markets and a temporary dip in energy prices. The Dollar’s weakness on Friday, due to delays in military strategies from Washington, provided immediate relief to the pair, which narrowed from earlier highs but still closed the week positively for the greenback. This situation means buyers are still close to resistance, more so than what fundamental changes might suggest. Home equity markets gained momentum, boosting overall risk sentiment. Coupled with stable oil prices and strong tax collections, there is growing support for domestic demand. These elements create a perception of steady economic activity, particularly in the formal sector. Adding the sub-4% inflation rate and improved GDP figures paints a positive picture. However, the fall in core sector growth—from nearly 7% to below 1%—is concerning for those monitoring industrial output. While broader markets have shrugged off the negativity for now, the weak momentum in capital-intensive sectors can’t be ignored. This suggests risks for industrial production, which could affect sentiment over time. Additionally, oil markets remain sensitive. Though a 2% drop on Friday seems beneficial, the weekly gain stays around 4%. So, while lower energy prices gave temporary relief to the Rupee, the overall situation remains volatile—any escalation in Middle East tensions could reverse these gains. Continued focus on energy prices is critical. Supportive policy from the central bank, with a rate cut of half a percentage point, reassures confidence in managing borrowing costs. This aligns with retail inflation hitting a 75-month low, mainly due to falling food prices. If this trend persists, the current accommodative approach is likely to continue into the next quarter, especially with CPI expected to remain around 3.7%. One key point to watch is whether this monetary and inflation scenario provides strong enough support for the currency. Currently, it offers medium-term backing but won’t fully protect it from sharp geopolitical shifts or Fed-related impacts. Notably, the decline in American manufacturing, as shown in June’s Fed manufacturing index, hints at some resilience in the INR against the USD, at least in the short term. Regarding price movements—important for trade management—the USD/INR pair pulled back after reaching solid resistance at 87.00. Though the RSI has cooled, it still suggests buyers are present above the 85.80–86.00 range. Unless new upward momentum develops, we expect traders to revisit these support levels in the days ahead. Mark your calendars for the June PMIs—both from India and the US—especially if you’re interested in signs of diverging business activity. With Indian composite PMIs last reported above 50, we’re on the lookout for confirmation. Any surprising data, whether higher or lower, could significantly impact short-term positioning. Create your live VT Markets account and start trading now.

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The EUR/USD pair might be entering a more volatile phase in its rally. Historically, upward trends in the euro can become choppy and are more likely to experience corrections. Current technical indicators, such as bearish momentum divergence and resistance around 1.16, hint at a possible pullback to 1.1200–1.1065 before continuing an upward trend toward long-term goals of 1.18–1.20. Typically, EUR/USD rallies begin with sharp, clear movements, but the final phase often sees increased volatility. The 2023 rally in the euro illustrates this pattern. Analysis of the weekly chart shows RSI divergence, suggesting bullish momentum could be weakening. This often leads to corrections or sideways movement within a larger upward trend. On the daily chart, EUR/USD struggles to maintain levels above 1.16, where selling pressure has built up, reducing short-term upward momentum. Bank of America (BofA) thinks a pullback to 1.1200 or 1.1065 is likely, with 1.1065 being the low from May. Even if prices dip, a higher low than May would support the ongoing bullish trend despite temporary weakness. BofA holds onto its long-term outlook with a target range of 1.18–1.20, supported by the 200-month simple moving average (SMA). This current phase is seen as a time for technical adjustment, with expectations of reaching the target by early 2026. What we are witnessing in EUR/USD is typical for those familiar with these cycles. The initial surge was quick and faced little challenge because sentiment shifted sharply, and early participants jumped in. However, that phase is rarely sustainable. As we approach more congested price areas – such as 1.16 – the rally tends to slow down. It’s like climbing a hill that gets steeper. There are fewer buyers at the top and more sellers looking to sell, causing prices to bump against resistance. When we discuss momentum divergence, particularly with indicators like the RSI, we notice that the engine is losing power. Prices might be trying to push higher, but the underlying strength isn’t there to support it. On the weekly charts, this divergence is significant and tends to lead to pullbacks or sideways movement. While it doesn’t undermine the overall trend if longer-term supports hold, it alters market behavior. Below current levels, the 1.1200 area has served as a good support level in the past, and 1.1065 is important since it marks the May low. If prices drop to these zones, they should be monitored closely as indicators of the trend’s health, not as signs of reversal. It makes sense to strategically position around these levels since the overall structure remains intact. Traders might scale back on strength near the upper range and invest more aggressively closer to those support levels. Anticipating a pullback before further gains is not just a guess; it’s based on historical cycles once momentum slows down. Shifting to a choppier phase often leads to more false starts and sudden reversals. For those managing delta risk, this means being careful about how exposure is managed. Position sizes may need to adjust to account for the increased noise in this trend phase. Holding too much direction can lead to being stopped out at unfortunate times. The 200-month simple moving average continues to support the medium-term outlook, which leans towards a stronger euro over the next couple of years. However, in the shorter term, prices may fluctuate more. Those dealing in options may find premiums more appealing in the near term, especially if implied volatility lags behind realized movements. Looking at this structure, a higher low above the May low would strengthen the uptrend. It’s during moments like these—where the rally falters but doesn’t collapse—that confidence begins to build. Watch for patterns of reaccumulation during the pullback. A gradual adjustment phase before the next upward movement fits historical trends and keeps long-term targets attainable. All this indicates that being mindful of short-term positioning and stop placements is necessary. Recognizing where trailing flows might concentrate—especially near prior highs—can give insight into where short squeezes and exhaustion gaps could emerge. Planning for various scenarios, rather than reacting emotionally to fluctuations, prepares traders best. Timing is crucial in these transitional zones.

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**Gold Market Update** Gold (XAU/USD) has dropped and is currently trading around $3,368, down from Monday’s high of $3,452. This decline is influenced by a stronger US Dollar and rising Treasury yields, which have reduced gold’s short-term attractiveness. A recent survey by the World Gold Council found increasing interest in gold accumulation. Among 73 participating central banks, 95% expect global gold reserves to grow over the next year, with more than 40% planning to increase their holdings. Major central banks have provided cautious updates, hinting at extended interest rates. The near-term decline in gold prices is affected by lowered expectations for rate cuts from the Fed, paired with a stronger US Dollar. Concerns about Iran’s enriched uranium stockpile have raised global alarms, leading to heightened geopolitical tensions. This situation could disrupt the Strait of Hormuz, impacting global oil shipments and contributing to inflation pressures. From a technical perspective, gold faces resistance levels at $3,371 and $3,400, while support is found at $3,350 and $3,318. These movements reflect a broader Fibonacci retracement, with a declining RSI indicating less buying interest. **Impact of Geopolitical and Economic Factors** Gold is a popular safe-haven asset, particularly during geopolitical risks or fears of recession. Its performance typically moves in the opposite direction of the US Dollar and interest rates. Given the recent drop in gold from Monday’s peak to around $3,368, traders should take a moment to analyze the shifting sentiment. As Treasury yields remain high and the Dollar continues to strengthen, it’s becoming challenging for gold to gain upward traction. This rise in the Dollar, largely driven by reduced expectations for rate cuts from the Federal Reserve, is putting pressure on gold prices. Any pricing models still assuming rate cuts soon may need reassessment. Top policymakers have indicated that borrowing costs will likely stay high for a while. This is less about speculating where rates might go and more about interpreting their statements to ensure inflation remains below target. Consequently, speculative positions in interest-sensitive assets like gold might face more short-term risks than previously thought. However, long-term buying patterns tell a different story. The World Gold Council survey shows strong buying intentions among central banks. A full 95% expect global reserves to rise, and nearly half plan to increase their own holdings. This genuine demand may provide a cushion for gold prices in the coming weeks, even if upward movement is paused. For those tracking capital flows or futures market activity, this institutional behavior could act as a gradual support. Geopolitical instability remains a concern. Iran’s advancements in nuclear capabilities, especially the increase in enriched uranium, have stirred global market worries. Possible disruptions in the Strait of Hormuz add to the concern, as any issues with oil shipments would have immediate effects, including sharp moves in oil prices and other inflation-sensitive assets. These are real threats with significant implications for macro hedging strategies, particularly concerning inflation protection. From a technical angle, resistance sits between $3,371 and $3,400, while support aligns around $3,350 and extends to $3,318. These levels correspond with Fibonacci retracement patterns from recent highs, giving them further significance. The RSI indicates a decreasing willingness to push prices higher, suggesting caution for new long positions in the short term. For trading strategies, it may be wise to fade rallies near the resistance area until yields stabilize or the Dollar eases. While the ‘safe-haven’ appeal of gold holds during geopolitical tensions, interest rate movements and the US Dollar are the key drivers right now. A flexible approach with close monitoring of terminal rate pricing might provide better insights than reacting to headlines alone. We should also keep an eye on real yields, especially at the longer end of the curve. As long as they remain positive and well-supported, it limits enthusiasm for price gains. This doesn’t imply an imminent reversal, but it makes aggressive long positions harder to justify unless new catalysts arise, such as increased conflict or a significant dovish shift. Otherwise, rallies may be brief, and trades based on reactions may perform better than broader trend-following strategies in the near term. Create your live VT Markets account and start trading now.

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