The dollar is gaining strength after a drop following the Jackson Hole event. Markets are adapting to the Federal Reserve Chair’s softer approach, with many expecting a rate cut in September. Fed funds futures show an 87% chance of a rate cut next month. All eyes are now on the US jobs report due on September 5, as traders are being more cautious compared to their previous excitement.

The Bond Market and Yield Curve

The bond market is important, especially with the yield curve becoming steeper. Traders are now predicting two rate cuts of 25 basis points each this year, in line with analysts who foresee cuts in September and December. If traders aren’t expecting consecutive cuts from September to December, dovish expectations may have hit a cap. This limit is helping the dollar recover this week, as already priced-in dovishness prevents further declines. The EUR/USD pair has dropped by 0.4%, losing recent gains and nearing three-week lows. Concerns about French politics and uncertainties in US-EU trade are also weighing on the euro. In other markets, the dollar is showing steady improvements after the fluctuations following Jackson Hole. The USD/JPY has risen by 0.3%, while GBP/USD has fallen by 0.3%. Month-end dynamics will also affect currency moves before major economic data is released.

Focused Analysis Ahead

The dollar is strengthening this week, but we should be cautious. The anticipated rate cut in September is widely expected and heavily priced into the market. Fed funds futures indicate an 87% probability of a 25 basis points cut, leaving limited room for more dovish surprises. Therefore, the dollar may move sideways or slightly rise until new data comes in. The U.S. jobs report on September 5 will be key for the Fed’s next decision. Market expectations are forming around an increase of about 180,000 jobs for August, a decrease from the 209,000 jobs added in July. A number significantly lower than this could strengthen the case for a September rate cut and weaken the dollar. Conversely, a stronger report could challenge current market pricing. For options traders, this situation sets up a classic volatility play instead of a straightforward bet on the dollar’s direction. With high expectations for a rate cut, implied volatility in dollar pairs could be underpriced before the jobs report. Buying straddles or strangles on major pairs like EUR/USD could be a cost-effective way to profit from a bigger-than-expected market move in either direction. We also need to monitor the bond market, where the yield curve is steepening. Typically, a steepening curve suggests expectations of future economic growth or inflation, which seems contradictory to the Fed’s plans to cut rates. This contradiction could mean bond traders are looking beyond a near-term slowdown, creating a complex scenario for currency markets. The EUR/USD pair appears particularly weak, having fallen below the 1.1600 level and losing all post-Jackson Hole gains. Concerns about France’s budget negotiations with the EU and ongoing U.S.-EU trade tensions over digital services taxes are weighing on the euro. One-month options data now indicate a higher demand for puts, meaning traders are willing to pay more to guard against further declines in the euro. In other areas, the dollar’s movements are more stable. GBP/USD has dipped but remains above its 100-day moving average around 1.3433, supported by persistent UK inflation data, which stayed above 3% in early August. On the other hand, USD/JPY is reacting to changes in U.S. Treasury yields, making it sensitive to the jobs report results. As we near the end of the month, be mindful that portfolio rebalancing activities may create some erratic and misleading price movements. It’s essential to look beyond this short-term noise and focus on positioning for the non-farm payrolls report. These month-end adjustments often do not reflect the fundamental trends. Create your live VT Markets account and start trading now.

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The European Union plans to remove all tariffs on US industrial goods. They want to pass this new legislation quickly, likely by the end of the week. The EU hopes this will encourage the US to rethink the 27.5% tariffs on EU cars. The EU is also looking at special tariff rates for certain seafood and agricultural products. This is meant to improve trade relations, with the main goal of reducing auto tariffs. If the EU’s proposal is ready by the end of the month, the lowered 15% auto tariff could be made retroactive to August 1.

Market Sentiment Shift

The news about the EU possibly acting fast to cut tariffs on US industrial goods suggests a big change in market sentiment. This could help ease trade tensions that affected German auto exports to the US, which dropped by over 8% year-over-year in the first half of 2025, according to VDA data. If the new 15% auto tariff is backdated to August 1, it could significantly boost third-quarter earnings for major car manufacturers. For traders, this indicates a positive outlook for the European auto sector and the German DAX index, which has underperformed the S&P 500 by nearly 4% this year. We should consider buying near-term call options on companies like Volkswagen and Mercedes-Benz, as their stocks react strongly to US tariff news. Additionally, trading DAX index futures could be a direct strategy to benefit from a broader European recovery linked to this news. If the deal goes through, the Euro may strengthen against the US dollar, reversing some earlier summer losses. Implied volatility on EUR/USD options has risen to 8.2%, above its three-month average, creating an opportunity. Selling EUR/USD put options could be a good way to express a positive outlook on the Euro while taking advantage of higher premiums.

Volatility and Risk Management

If a deal is officially announced by the end of the week, we can expect a sharp drop in market volatility. The VDAX-NEW, which measures DAX volatility, is currently high due to uncertainty around this trade issue. Selling straddles on the index may be profitable, as it bets on volatility decreasing and the market settling at a higher trading range after the positive news is factored in. However, there is a risk that this proposal could fail, similar to the breakdown in talks we saw in late 2024. Any political pushback within the EU could derail the deal and trigger a rapid reversal. Thus, holding some inexpensive, out-of-the-money DAX put options as a hedge in the coming weeks would be a wise precaution against negative surprises. Create your live VT Markets account and start trading now.

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Bitcoin had a strong rally after Fed Chair Powell suggested a more lenient approach, which raised the chances of a rate cut in September to 84%. However, this rally didn’t last long, as Bitcoin’s price dropped over the next few days, likely due to technical factors.

US Non-Farm Payroll Report Anticipation

Attention now turns to the upcoming US Non-Farm Payroll report, which could really impact interest rate expectations. Strong data could reduce the chances of a rate cut in September, putting short-term pressure on Bitcoin. On the flip side, weak data might increase bets on a more dovish monetary policy, potentially helping the cryptocurrency. Currently, Bitcoin is trading below the important support level of $111,900. Sellers aim to push the price down to $100,000, while buyers hope for a rise above $111,900 to trigger a rally towards $123,000. On shorter timeframes, downward and upward trendlines are visible, with sellers focusing on bearish trends and buyers pursuing upward momentum. Upcoming reports like Jobless Claims and the PCE price index will be crucial for market direction. These will help decide if the market will support an upward or downward trend. Bitcoin’s recent drop is surprising, especially after the dovish signals from the Federal Reserve on August 22nd. Even with an 84% probability for a rate cut seen on CME’s FedWatch Tool, the price couldn’t hold its gains and broke key support. This suggests that the market is currently prioritizing factors beyond just monetary policy.

Bitcoin Futures and Market Trends

The price is now below the key $111,900 level, which is acting as resistance. We have observed a rise in put option volume on exchanges like Deribit, with significant interest in contracts expiring in September at the $100,000 strike price. This indicates that traders are hedging or positioning themselves for a potential drop to that psychological support level. For those who expect a further decline, the downward trendline on the 4-hour chart is an important area to watch for signs of weakness. A possible strategy involves taking short positions with a defined risk set just above the $111,900 resistance. This selling pressure is supported by data showing a 12% decrease in Bitcoin futures open interest over the past week, indicating that some long positions have been closed. On the other hand, bullish traders need to see a strong break and consistent trading above $111,900 to regain market control. A move like this could lead to a short squeeze and open the way to the $123,000 target. Buyers might consider the minor upward trendline on the 1-hour chart as a potential entry point for a short-term bounce. All eyes are now on the Non-Farm Payrolls report set for next week, on September 5th. Given mixed economic signals earlier this summer, this jobs report will play a key role in influencing the Fed’s next decision. A strong report could lower the likelihood of a September cut and put pressure on Bitcoin, while weak data would likely support dovish bets. Before that key report, we’ll receive the PCE price index this Friday, the Fed’s preferred inflation measure. We’ll also see the latest jobless claims figures tomorrow. These updates will help refine expectations and could lead to short-term volatility ahead of the important jobs data next week. Create your live VT Markets account and start trading now.

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The Nasdaq experienced a significant rally after comments from Fed Chair Powell hinted at a more supportive approach. There’s about an 84% chance of a rate cut in September, with a possibility of easing by 54 basis points by the end of the year. The upcoming US Non-Farm Payrolls report is expected to greatly affect interest rate expectations. On the daily chart, the Nasdaq bounced back above an important trendline following Powell’s remarks. The 4-hour chart shows a price range with 23,375 as support and 23,650 as resistance, where buyers and sellers are actively trading. The 1-hour chart reveals a minor upward trendline that buyers may use to push prices higher.

Key Developments In The Market

Important events include Nvidia’s earnings release and the US Jobless Claims data, with the US PCE price index coming out later this week. These factors are likely to influence market trends soon. The recent statements from the Federal Reserve have changed the market outlook and created a favorable atmosphere for the Nasdaq. Currently, the market anticipates an 84% chance of a rate cut next month, based on the latest data from the CME FedWatch tool. This easing sentiment will likely shape our short-term trading strategies. All attention is now on the upcoming Non-Farm Payrolls report, which could be a key turning point. After July’s unexpected report, which revealed 215,000 jobs added, economists predict a lower figure of 160,000 for August. Any significant deviation from this forecast could lead to a sharp market movement, making long volatility strategies such as straddles on the QQQ ETF worth considering.

Technical Analysis Considerations

From a technical perspective, we are closely monitoring the 23,375 level as a crucial support point for the Nasdaq 100 index. Selling out-of-the-money put options with strike prices near or below this level may be a good way to earn premium while the easing sentiment lasts. If the market continues to rise toward the 23,650 resistance, we should brace ourselves for some profit-taking. The Nasdaq’s volatility index, the VXN, has dropped to 14.5, which is low compared to earlier in 2025. This makes buying protective puts or even speculative call options relatively inexpensive. Given how quickly sentiment shifted in spring 2024, it’s wise to maintain downside protection even in the current bullish environment. The Nvidia earnings report later today poses a significant risk for the tech sector. Implied volatility for Nvidia options expiring this week has risen above 90%, indicating a strong expectation of price movement. Traders should note that a major surprise—positive or negative—could not only impact Nvidia but also cause the Nasdaq 100 index to open with a significant gap tomorrow. Create your live VT Markets account and start trading now.

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Switzerland’s investor sentiment dropped significantly in August, as the UBS sentiment index fell from 2.4 to -53.8. This sharp decline follows the US imposing a 39% tariff on Swiss exports at the start of the month. A report by UBS and CFA Society Switzerland reveals that nine out of ten analysts believe Swiss export momentum will worsen in the next six months. The export sub-index plummeted from -35.1 to -89.8 in the latest data.

Bearish Signals for Swiss Assets

With sentiment in Switzerland falling drastically, we see clear bearish signs for Swiss assets. This suggests strategies that could benefit from a decline, especially for the Swiss franc (CHF) and the Swiss Market Index (SMI), the country’s main stock index. The negative outlook is expected to worsen as the market absorbs the full effects of the US tariffs. A direct approach is to focus on the currency. We might consider purchasing put options on the CHF against the US dollar, expecting further weakness as demand for Swiss exports shrinks. Past trade tensions, especially in the late 2010s, showed how tariff announcements could lead to sharp currency moves, and it’s unlikely the Swiss National Bank will support a weakening franc. The SMI includes major multinational exporters like Nestlé, Roche, and Richemont, all of which will feel the impact of the new US tariffs. Thus, buying put options on SMI-tracking ETFs or shorting SMI futures offers a direct way to trade on this negative sentiment. Swiss exports to the US exceeded 60 billion francs annually in the early 2020s, especially in pharmaceuticals and watches, emphasizing the vulnerability of these major companies.

Market Volatility and Opportunities

This significant decline in sentiment indicates that uncertainty and market volatility are on the rise. We should pay attention to the Swiss Volatility Index (VSMI), which usually spikes during economic shocks. Buying call options on the VSMI or employing option straddles on the most affected export-oriented stocks could yield profits from the expected price swings. Additionally, this situation presents relative value opportunities, comparing Swiss assets to those in Europe. As capital likely moves out of Switzerland in search of stability, we may see the EUR/CHF exchange rate increase. A pair trade—going long on a broad European index while shorting the SMI—could protect against broader market risks while targeting the specific damage to the Swiss economy. Create your live VT Markets account and start trading now.

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On August 27, FX option expirations at 10 AM New York time highlight important levels for EUR/USD and USD/JPY. For EUR/USD, the major expiration is at the 1.1650 level, with the pair currently trading lower as the dollar gains strength. This level coincides with key hourly moving averages around 1.1646-57, which could act as resistance against any unexpected price increases. For USD/JPY, expirations are clustered around 147.50 and close to 148.00. This grouping is likely to limit price movements to a defined range during the session. Although the pair’s short-term outlook is more positive, it has been bouncing between 146.50 and 148.30 since early August. The expirations support this range, reinforcing the pattern.

Challenges in Providing Expiry Data

We have faced difficulties in supplying expiration data on time, but we are actively working to fix these issues. Additional resources are available for anyone who wants more information on using this data. Today, the large option expiration for EUR/USD at 1.1650 is acting like a ceiling. With the dollar remaining strong, this level—also near key hourly moving averages—will likely limit any unexpected buying pressure. This adds to the bearish sentiment we’ve seen build over the last few sessions. Looking ahead, this dollar strength appears stable, which will guide our strategy for the next few weeks. US inflation data for July 2025 came in at 3.4%, slightly over expectations, reducing hopes for a near-term rate cut by the Federal Reserve. Meanwhile, the latest Eurozone PMI data is at 49.8, indicating that economic activity is still having a tough time picking up.

Divergence in Economic Indicators

Due to this divergence, we believe that selling rallies in EUR/USD remains a sound strategy. Traders might consider using short-dated options to position for a potential retest of the August lows. We observed a similar trend throughout much of 2023, where a strong US economy kept the dollar ahead of the euro. As for USD/JPY, the cluster of expirations between 147.50 and 148.00 is holding the pair within a tight range. This consolidation follows the sharp drop on August 1st, leading traders to be cautious. The market seems content to remain within these boundaries, respecting these significant option levels. The primary tension over the coming weeks will be the wide interest rate gap versus the risk of intervention. Last week, Japanese officials warned about “excessive volatility,” effectively capping the pair below 148.50. However, with US 10-year yields remaining stable above 4.5%, the case for a significantly lower USD/JPY is weak. This suggests that strategies selling volatility, like iron condors with strikes outside the 146.50-148.50 range, could be profitable. This approach profits from the current stalemate, where fundamental pressures prevent a collapse, but official threats keep a major breakout in check. This is very different from late 2022 when fears of intervention led to huge one-way moves and extreme volatility. Create your live VT Markets account and start trading now.

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European stock markets are opening with mixed signals. French stocks are recovering slightly after a big drop due to political issues. As we near the end of the month, regional stocks are generally underperforming.

Eurozone Market Overview

The Eurostoxx index is steady, while Germany’s DAX is down by 0.2%. Both the French CAC 40 and the UK FTSE have risen by 0.1%. In contrast, the Spanish IBEX and the Italian FTSE MIB have both decreased by 0.3%. In the United States, S&P 500 futures are stable after slight gains on Wall Street yesterday. The overall market mood remains cautious. Currently, there is no clear direction in the market as we approach the end of August 2025. French stocks have posted a weak rebound after sharp declines triggered by the government’s unexpected announcement for a snap legislative election last week. This political uncertainty has left traders uneasy, even as broader European and US markets remain steady. France’s political turmoil has pushed the implied volatility of the CAC 40 index to its highest level in six months. Polls show a tight race and worries about a possible new wealth tax. Traders might want to buy protective puts on French banking and luxury stocks to reduce risk of further declines if the political situation turns sour. This uncertainty is worsened by ongoing inflation issues in the Eurozone, which stood at 3.1% in July 2025, still above the ECB’s target. Markets are now expecting a 70% chance of a 25 basis point rate hike from the European Central Bank in September. This hawkish sentiment explains the weakness in rate-sensitive markets like Italy and Spain.

German Economic Concerns

We are also seeing growing concerns about the German economy, impacting European markets. Recent data shows that German factory orders fell by 2.5%, a troubling sign that recalls the industrial downturn of 2023. This makes it hard to be optimistic about cyclical stocks linked to the DAX index. The steady S&P 500 futures reflect a global wait-and-see approach ahead of the Federal Reserve’s Jackson Hole symposium this weekend. Any hint from the Fed about keeping interest rates high for a longer time could lead to a market sell-off. The uncertainty in the US does not provide any positive direction for European markets. Given the current environment of political risks, potential rate hikes, and weak economic data, traders should adopt defensive strategies. Buying out-of-the-money put options on the Euro Stoxx 50 expiring in September offers a cost-effective way to safeguard portfolios. Traders might also find VSTOXX futures attractive as a hedge against a sudden increase in market fears. Create your live VT Markets account and start trading now.

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The USDJPY pair is staying within a tight range as everyone waits for important US jobs data. Traders are particularly focused on the Non-Farm Payrolls (NFP) report, which could significantly influence interest rate expectations. Currently, traders believe there is an 84% chance of a rate cut in September, with a total drop of 54 basis points expected by the end of the year. Strong job data could reduce the chance of a September cut to 50%, leading to a more aggressive approach that would support the dollar. On the other hand, weak data may boost expectations for more cautious moves, putting downward pressure on the greenback.

The Yen And Global Market Dynamics

The yen has strengthened due to expectations of a dovish Fed, but it might rise further if US data is weak or if Japanese inflation figures increase. More fiscal support in Japan could also drive up inflation there. Looking at the daily chart, USDJPY is struggling below the 148.50 resistance, with sellers aiming for the 145.50 level. A breakout higher could push prices toward 151.00. Both the 4-hour and 1-hour charts show that traders are waiting for key data, with minor trends and resistance levels potentially leading to bullish momentum. Key upcoming events include the US Jobless Claims and the Tokyo CPI, along with the US PCE price index this Friday. The USD/JPY is currently moving within a narrow range as we await important US labor market data next week. The dollar has stabilized after the Jackson Hole Symposium, but its next big move depends on whether the jobs report will change the Federal Reserve’s plans. The market has priced in an 84% chance of a rate cut in September, especially after last month’s Non-Farm Payrolls report showed a weaker-than-expected increase of only 175,000 jobs.

Strategic Trading Insights

For derivative traders, this creates a clear situation to trade around. If the NFP number is strong, say above 220,000, expectations for a September cut will fall, likely pushing USD/JPY higher. A smart strategy would be to buy call options with a strike price around 149.00, aiming for a rally past the crucial 148.50 resistance level with limited risk. Conversely, if the jobs data is weak, possibly below 150,000, it would reinforce the Fed’s dovish stance and might even lead to the pricing of a third rate cut by year-end. This scenario would significantly weigh on the dollar. Traders should consider buying put options with a strike near 146.50, targeting a move down toward the major trendline support around 145.50. On the yen side, its recent strength comes mainly from expected Fed easing. For the yen to gain traction on its own, we need to see a notable increase in Japanese inflation, and last month’s Tokyo Core CPI reading of 2.5% keeps the possibility of another Bank of Japan rate hike in play. This week’s PCE data in the US, expected to show core inflation steady at 2.7%, will be closely monitored as a key factor before the jobs report. Given the uncertainty, a volatility strategy might be the best approach. Buying a straddle, which includes both a call and a put option with the same strike price and expiration date, can help a trader profit from a large price movement in either direction. This is a great strategy for capturing potential swings following the NFP release. We should also remember the historical context as the pair nears the 148.50-150.00 range. The Ministry of Finance intervened significantly in 2022, and officials issued warnings throughout 2024 when the pair exceeded 150. This background makes the resistance strong, indicating that any rapid upward move could encounter official pushback, limiting gains. Create your live VT Markets account and start trading now.

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Weekly Focus

Today looks quiet with no major events on the calendar. Market participants are waiting for next week’s US labor market data, which may keep prices steady for the next few days. In the stock market, Nvidia’s earnings report, set to come out after the US market closes, is highly anticipated. Tomorrow’s US Jobless Claims data will be the most significant report this week. Next week, attention will shift to labor market figures, including the NFP report, which is likely to impact market sentiment. With little scheduled until next week’s labor data, we can expect a few days of sideways price movements. The CBOE Volatility Index (VIX) is around 13, indicating a calm market. This low volatility makes it difficult to take directional bets, but it could benefit traders who sell options using strategies like iron condors on major indices. The first big test of this quiet market will happen after today’s close when Nvidia releases its earnings. This event could create volatility not just in tech but across the S&P 500. The options market is anticipating a post-earnings move of about 8.5% for Nvidia, so having short positions on volatility leading up to this report could be very risky.

Derivatives Strategy

Our focus will quickly turn to next week’s Non-Farm Payrolls (NFP) report. In July 2025, the report showed a slightly disappointing increase of 170,000 jobs, making the Federal Reserve more reliant on data than ever. Tomorrow’s Jobless Claims numbers, expected to be around 225,000, will be closely monitored as an early indicator for the larger report. This leads to a two-part derivatives strategy for the upcoming weeks. In the next day or two, selling premium could be effective, but it’s important to close these positions before the Nvidia earnings report or ensure they have wide break-even points. As we get closer to the NFP release, implied volatility is likely to rise, offering a chance to buy options like straddles to take advantage of a potential breakout. Create your live VT Markets account and start trading now.

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