The USDCHF pair has experienced fluctuations around important moving averages due to recent economic news. At first, the pair rose above the 200-hour moving average of 0.8001, coinciding with a drop in EURUSD after the ECB’s policy announcement. However, a surprising increase in U.S. jobless claims to 263K—much higher than the expected 235K—changed the momentum. As a result, the USDCHF retreated to the 100-hour moving average at 0.7967. Buyers tried to support the pair here, causing a slight rebound to about 0.7973.

Short Term Outlook

The short-term outlook for the pair now leans slightly downward, especially after it couldn’t stay above the 200-hour moving average and fell below an important retracement level. The 100-hour moving average at 0.7967 remains crucial for buyers as they work to prevent further declines. On the policy side, the Swiss National Bank is cautious about further rate cuts, keeping interest rates at zero. Meanwhile, the Federal Reserve is expected to start cutting rates in September. These factors, along with the technical levels, continue to impact the pair’s movement. The recent rise in U.S. initial jobless claims to 263,000 is a strong indicator for us. This isn’t just a one-time figure; it lifts the four-week moving average to its highest level this year, indicating a clear weakening in the U.S. labor market. This data strengthens the belief that the U.S. economy is slowing down as we approach the final quarter of 2025. With this weakening data, the market now sees an 85% chance of a Federal Reserve rate cut at next week’s meeting. This anticipated easing cycle is likely to be bearish for the U.S. dollar. It seems that the dollar’s path of least resistance is downward against currencies with less accommodating central banks.

Technical Picture

On the other side, the Swiss National Bank appears hesitant to ease policy further, having already set rates to zero earlier this year. This difference in monetary policy—where the Fed is cutting rates while the SNB remains steady—should continue to benefit the Swiss franc. The smaller interest rate gap makes holding dollars less attractive compared to holding francs. The technical aspects are now aligning with these fundamentals, as the USDCHF has failed to maintain a position above the 200-hour moving average. We are closely watching the 100-hour MA at 0.7967 as a critical short-term level. A sustained drop below this support would confirm that sellers are in control and could lead to a much larger decline. For derivative traders, this situation suggests considering bearish strategies in the coming weeks. Buying put options on USDCHF could be a straightforward way to position for a fall below the vital 0.7967 level. We might also explore put spreads to define risk, especially with volatility likely increasing around the upcoming Fed decision. This scenario reminds us of earlier times, like late 2023, when expectations of a Fed policy shift led to ongoing dollar weakness. History shows that once a Fed easing cycle starts amid slowing growth, the trend can last for several months. Therefore, any small rebounds in the pair could be seen as chances to establish or add to bearish positions. Create your live VT Markets account and start trading now.

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Higher tariffs, a stronger euro, and increased competition are impacting economic growth. Government spending should support investment. Recent surveys show growth in both manufacturing and services. This growth reflects the strong domestic demand. Economic risks are more balanced now, compared to the previous focus on negative factors. The outlook for inflation is uncertain, with unclear risks ahead. A stronger euro could lower inflation more than expected. The disinflation phase has ended, and the economy remains stable. Inflation is aligned with targets, and the domestic market is resilient. A unanimous decision has reduced trade uncertainty. There’s an understanding that small deviations from targets won’t prompt immediate action. Overall, the economic environment remains favorable despite external pressures. The European Central Bank (ECB) has stated that the period of falling inflation is over and the economy is robust. With balanced growth risks, the market reacted quickly, causing the euro to rise against the dollar. This suggests the euro’s value is likely to increase, as the central bank is content with the current inflation levels. In light of this shift, we should think about buying near-term call options on the euro. The ECB has indicated that a stronger euro could help maintain low inflation, essentially encouraging further currency appreciation. A move towards 1.1100 in EUR/USD seems feasible as the market adjusts its expectations about how long the ECB will hold interest rates steady. On interest rates, the message is clear: policy will remain stable since minor changes in inflation targets won’t trigger action. This suggests the market may have overly predicted rate cuts for late 2025 or early 2026. We may express this view by selling December 2025 Euribor futures, betting that short-term interest rates won’t drop as anticipated. This view is backed by recent data, with August 2025 Eurozone inflation steady at 2.1%. The latest flash PMI survey for September shows continued growth at 51.2. These figures reinforce the central bank’s confidence in its inflation targets and the strength of domestic demand. The unanimous decision strengthens this patient approach. We should remember the lessons from the 2022-2023 interest rate hikes, where the market underestimated the ECB’s determination. Current communications suggest a similar approach, where the bank will tolerate stable rather than booming economic conditions without hurrying to ease policy. Thus, preparing for an extended period of higher rates is wise. For equity index traders, a stronger euro poses challenges for large exporters in the region, which may limit gains for benchmarks like the German DAX. We could hedge long equity exposure by buying puts on the Euro Stoxx 50 index. This would safeguard against potential declines in corporate earnings due to the strength of the euro.

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The EURUSD moved unpredictably after the ECB’s rate decision and a surprising U.S. jobless claims report. Initially, sellers pushed the pair down close to the 61.8% retracement level from the July 1 high at 1.16615. However, buyers stepped in and caused a rebound. After the U.S. data release, the pair climbed above the 200-hour moving average at 1.1693 and approached the 100-hour moving average at 1.1721. Nonetheless, sellers defended the 100-hour average, slowing the upward movement and causing a retreat towards the 200-hour moving average. Right now, the EURUSD is caught between the 100-hour and 200-hour moving averages, signaling a neutral market. Traders are on the lookout for a breakout on either side of these averages to see which direction the price will take next. Comments from Lagarde may cause more fluctuations as the market balances European and U.S. economic influences. Recently, the EUR/USD has found itself in a neutral zone between its 100 and 200-hour moving averages. This indecision highlights the struggle between a cautious European Central Bank and a strong U.S. economy. Recent data showed initial jobless claims at a strong 210,000, above expectations, which suggests that the Federal Reserve might maintain steady rates. The erratic price movements indicate that volatility will be a key theme in the coming weeks. The VIX, a gauge of market anxiety, has risen from summer lows of 13 to around 18 this week. Traders should brace for more turbulent price actions, making directional bets risky until a clear breakout happens. For derivative traders, strategies that benefit from rising volatility rather than a specific trend are best. Buying option straddles or strangles on the EUR/USD can be effective for positioning around significant moves, regardless of the direction. This strategy takes advantage of the current market tension without needing precise predictions. We saw a similar scenario in late 2023, where markets grappled with peak inflation fears and central bank pauses. Back then, currency pairs traded within ranges for weeks until new inflation data provided direction. The current atmosphere feels similar, with markets waiting for a decisive catalyst. Looking ahead, the upcoming U.S. and Eurozone CPI inflation reports will be critical. Until then, we anticipate that the EURUSD will remain responsive to central bankers’ speeches and unexpected economic news. A sustained break below 1.1660 or above 1.1725 will signal the start of the next major trend.

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The latest US initial jobless claims have reached 263,000, exceeding the estimate of 235,000. The previous week was slightly revised from 237,000 to 236,000. Continuing claims are now at 1.939 million, which is below the expected 1.951 million. The previous week’s figure was updated to 1.939 million from 1.940 million. The four-week moving average for initial jobless claims has risen to 240,500, up from 230,750.

Initial Jobless Claims Data

For continuing claims, the four-week moving average is at 1,945,750, down 750 from the previous average of 1,946,500. This initial jobless claims number is the highest since October 2021. The US stock market has dipped, with the S&P and NASDAQ gaining 6 and 51 points, respectively, after the release of CPI and claims data. However, today’s gains may still be significant. The US dollar has weakened as yields have dropped. The 2-year yield fell by 4.5 basis points to 3.489%, while the 10-year yield decreased by 2.5 basis points to 4.007%. In currency markets, the EURUSD climbed above its 200-hour moving average of 1.1693, reaching the 100-hour moving average at 1.17211. An ECB press conference with Lagarde is coming soon. Today’s initial jobless claims data deserve attention, coming in at 245,000 against a projected 220,000. The 4-week moving average has now risen to 232,000, marking its highest level this year. Meanwhile, recent reports show core inflation stuck at 2.8%, complicating the Federal Reserve’s plans. This situation is reminiscent of the fall of 2022, when a surprising spike in claims to 263,000—also the highest since late 2021—caught the market off guard. This led to increased market volatility, as traders began to doubt the strength of the labor market. The market is now adjusting risk, with the VIX rising from 14 to 16 in the past hour.

Market Volatility and Investment Strategies

In this context, derivative traders should think about buying protection against a market downturn. With the S&P 500 near its record highs, buying out-of-the-money put options on the SPX or SPY for October could serve as a cost-effective hedge. This approach would profit from either a slow decline or a rapid drop due to fears of an economic slowdown. Today’s drop in the 2-year Treasury yield to 3.85% suggests that the bond market is starting to anticipate a more dovish Fed. Keep an eye on options in interest rate futures, such as calls on the 2-Year Note futures (ZT). These positions could be advantageous if the market begins to expect the Fed to pause its rate hikes or consider cuts sooner than expected. In this environment, volatility is becoming an asset worth trading. Consider taking long positions on the VIX through call options or VIX-linked ETFs for the coming weeks. Current market complacency has kept volatility relatively affordable, but as seen before, surprises in jobless claims can be early signs of larger market shifts. Create your live VT Markets account and start trading now.

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The US Consumer Price Index (CPI) for August 2025 rose by 2.9% over the year, the highest rate since January of this year. Previously, the CPI stood at 2.7%, with a month-over-month increase of 0.4%, compared to an expected 0.3% (an unrounded consensus of 0.36%). Core CPI remained steady at a yearly increase of 3.1%, with a monthly rise of 0.3%. The unrounded monthly figure was 0.346%, showing a slight increase from 0.228%. Real weekly earnings decreased by 0.1%, down from a previous 0.4% which was later revised to 0.1%.

Core Goods And Services

Core goods prices went up by 0.3%, compared to 0.2% before, while core services also increased by 0.3%, down from 0.4%. Core services, excluding shelter and rent, saw slight drops to 0.2% from 0.3%. Owners’ equivalent rent climbed to 0.4% from 0.3%. This report indicates challenges in achieving inflation targets, especially with falling oil prices and recent rises in initial jobless claims. Today’s inflation data was hotter than expected for the month, making a large 50 basis point rate cut from the Federal Reserve unlikely. The unrounded core CPI figure was notably strong, indicating persistent price pressures. This suggests the Fed will need to be cautious and rely on data moving forward. This ongoing inflation occurs alongside a weakening labor market, creating a tough situation for the central bank. For example, initial jobless claims surged to 265,000, the highest since late 2024. This mixture of stubborn inflation and rising unemployment is likely to cause significant market volatility.

Impact On Trading

For traders focused on short-term interest rates, this means that positions predicting aggressive cuts should be reassessed. There may be pressure on Fed Funds futures contracts in upcoming meetings. The market might now expect rates to remain higher for a longer period than previously thought. With increased uncertainty, options premiums are expected to rise. The CBOE Volatility Index (VIX), currently around 17, could rise back to the 20 level, echoing patterns from the inflation battle of 2022 and 2023. This makes buying volatility through tools like VIX calls or index straddles an appealing strategy to protect against sharp market moves in either direction. Further down the line, the market still anticipates eventual rate cuts through 2026 due to weakening economic data like jobless claims. This sets up a potential yield curve steepener trade, where traders bet that long-term rates will drop faster than short-term rates. We believe the market is correctly predicting that a slowing economy will eventually prompt the Fed to act, but not in the near term. Create your live VT Markets account and start trading now.

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The euro fell after the European Central Bank’s (ECB) latest update. The ECB’s inflation predictions stayed mostly the same, now expecting the 2025 Harmonized Index of Consumer Prices (HICP) to be 2.1%, up from 2%. For 2026 and 2027, the forecasts changed slightly to 1.7% (from 1.6%) and 1.9% (down from 2.0%), respectively. The market may see the lower 2027 figure as a sign of a possible rate cut, although current market predictions still hold a 40% chance of a rate change by year-end.

GDP Growth Forecasts

The GDP growth forecasts have little effect on market sentiment. The 2025 growth is expected at 1.2%, up from 0.9%, while 2026 is slightly lower at 1.0%, down from 1.1%. The forecast for 2027 stays the same at 1.3%. The euro has only dropped by about 15 pips, which is not significant. We need to wait for more details from Lagarde’s press conference to gain additional market insights. The ECB’s inflation forecasts are generally on track, meaning we shouldn’t expect any surprising policy changes soon. With inflation likely to stay around 2%, the central bank appears to be taking a cautious approach. This suggests that major fluctuations driven by ECB policy are improbable, indicating a phase of lower market volatility. Recent market data supports this low-volatility view, as 1-month implied volatility for EUR/USD options has fallen below 6%—a level we haven’t consistently seen since early 2024. The GDP growth estimate of just 1.2% for 2025 further reduces the chances of economic surprises that could boost the euro. These conditions are favorable for strategies that thrive on time decay and minimal price movement.

Subtle Dovish Tilt

A slight dovish tilt, shown by the lower inflation forecast for 2027, indicates gentle downward pressure on the euro, especially when compared to the US. Recent US job data revealed continuing wage growth at 4.1% year-over-year, which keeps the Federal Reserve on a more aggressive path than the ECB. This policy difference suggests that the euro’s upward potential is limited. In the coming weeks, we should think about selling option premiums instead of buying them. Strategies like selling out-of-the-money bear call spreads on the euro might work well. This allows us to earn premiums based on the expectation that the EUR/USD will stay within a certain range or drift slightly lower while clearly defining our risk. Create your live VT Markets account and start trading now.

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The European Central Bank (ECB) has chosen to keep interest rates unchanged in its September 2025 meeting. The deposit facility rate is set at 2.00%, the main refinancing rate at 2.15%, and the marginal lending facility at 2.50%. The ECB’s outlook on inflation has not changed much from earlier estimates. Headline inflation is expected to average 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027. Core inflation is predicted at 2.4% for 2025, 1.9% for 2026, and 1.8% for 2027.

Revised Economic Growth Projections

For 2025, economic growth is now forecasted at 1.2%, up from the previous estimate of 0.9%. The growth expectation for 2026 has been slightly lowered to 1.0%, while the projection for 2027 remains unchanged at 1.3%. The ECB confirmed it will continue to base decisions on data and will not commit to a specific rate path during meetings. Following the announcement, the euro slightly dipped, with EUR/USD decreasing from 1.1685 to 1.1670. The ECB’s message is clear, emphasizing terms like “data-dependent” and “no pre-commitment.” The ECB’s decision to maintain rates suggests stability, indicating strategies that thrive in low volatility could be beneficial. The VSTOXX index, which measures European volatility, has already fallen to 14.5 from earlier highs this year. Selling options, like straddles on the Euro Stoxx 50 index, may yield profits as we can earn premiums while the market remains stable, which appears likely given the ECB’s current stance.

Monitoring Key Economic Indicators

The ECB will respond to incoming data, so it’s important to watch for the next Eurozone flash CPI report. August’s inflation rate was 2.2%, slightly above the ECB’s updated forecast. A strong report could quickly change market sentiment and result in a spike in short-term rates. We should consider buying inexpensive, short-term options on EUR/USD ahead of these data releases to safeguard against or take advantage of any surprises. While the ECB holds the rate at 2.00%, it’s worth noting that the US Federal Reserve’s rate is higher at 3.50%. This 150-basis-point difference makes shorting the euro against the dollar appealing since it allows us to earn daily interest or “carry.” Historical data from 2006 and 2018 suggests these carry trades performed well until the market started pricing in potential rate cuts. The ECB’s own forecasts show some tension, as growth for 2025 is revised up to 1.2% but core inflation persists at 2.4%. This clash between slowing growth and ongoing inflation indicates that the ECB may be hesitant to either raise or lower rates soon. Therefore, trading strategies that expect the front end of the Euribor yield curve to stay flat in the upcoming months appear prudent. Create your live VT Markets account and start trading now.

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The USD is slightly up, alongside rising US yields and stocks, as we await the US CPI data release. The monthly headline and core CPI are predicted to increase by 0.3%. Yearly figures are expected to reach 2.9%, up from 2.7%, while the core remains steady at 3.1%. The dollar’s rise is small against the euro at 0.09%, but more noticeable against the JPY at 0.34% and the GBP at 0.15%. The EURUSD is trading under its 200-hour moving average, suggesting a downward trend. The ECB will announce its rate decision at 8:15 AM, with many expecting no changes and differing views on future actions.

US Debt Market Yields

US debt market yields have increased by about 2 basis points. The 2-year yield is at 3.554%, the 5-year at 3.602%, the 10-year at 4.051%, and the 30-year at 4.698%. In premarket trading, the S&P and NASDAQ are up, hinting at possible record closings. In other markets, crude oil has dropped by $0.68 to $63, while gold has fallen by $21 to $3619.87. Silver is down $0.09, now at $41.02. Bitcoin increased by $290, trading at $114,277. Today’s US CPI data is crucial and will likely guide market movements. The expectation that core inflation will stay at 3.1% is a key concern, especially after the high inflation seen in 2023 and 2024. If the monthly figure exceeds the 0.3% estimate, it may indicate that the Federal Reserve’s efforts are not yet complete, which could push bond yields higher. For equity traders, with the S&P 500 and Nasdaq reaching record highs, volatility is likely low. The CBOE Volatility Index (VIX), which averaged around 17 during calmer periods in 2024, is probably trading below that now, making options more affordable. This could be a good time to consider buying protective put options on major indices in case unexpected inflation disrupts the rally.

Currency Markets Outlook

In the currency markets, the difference in policy between the US and Europe is clear. The European Central Bank has lowered its main rate to 2.15%, while the Fed maintains a higher rate, giving the dollar a notable yield advantage. With the EURUSD showing weakness below 1.1693, we might explore strategies like buying puts or selling call spreads to take advantage of potential declines. The US 10-year yield breaking above 4.05% is significant. In past years, this level served as a strong resistance point, and a high CPI reading could push it toward 4.25%. Traders are likely using interest rate futures and options to prepare for yields to rise or bet on a reversal if inflation data comes in lower than expected. Gold’s drop from its near-record high of $3,658 is a typical case of profit-taking before a major economic announcement. A stronger dollar and rising yields, which might follow a hot CPI number, usually have a negative impact on gold prices. This could be an opportunity to hedge long positions by selling call options or initiating short-term short positions through futures if critical support levels break. Create your live VT Markets account and start trading now.

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The trading session has been quiet, with little news and no new economic data. Markets moved within narrow ranges. The US dollar and stocks saw slight increases, while gold experienced minor declines as we wait for the US CPI report. The European Central Bank (ECB) will announce a decision before the US releases its CPI and Jobless Claims data, but this is expected to have little impact. Most attention remains on the US CPI report and the ECB’s current pause on interest rates.

Upcoming US CPI and Jobless Claims Data

The upcoming US CPI and Jobless Claims numbers are important. The Core CPI year-over-year is expected to be 3.1%, while the Core month-over-month is projected at 0.3%. A weaker report could raise the chances of a 50 basis point rate cut to between 40% and 60%. If the CPI report is strong, it won’t change expectations for a 25 basis point cut in September, but it might lead to a slight increase in projections for 2026. Jobless Claims are expected to be 235,000, with continuing claims at 1.951 million. Jobless Claims data is a valuable indicator of the labor market, showing stability with low hiring and firing rates, backed by positive business surveys. Strong data paired with high CPI could result in more hawkish adjustments, while weak data might foster dovish expectations. While we wait for today’s important US CPI report, the dollar and stocks have edged up slightly, but these movements are minimal. The real reaction will occur after we receive the inflation data.

Main Focus on US Core Inflation

The key point is whether core inflation stays at 3.1%, as it did in the August 2025 report. After a significant drop in inflation throughout 2024, any indication that it isn’t continuing to decrease towards the 2% target will complicate the Fed’s job. This figure will heavily influence rate expectations for the remainder of the year. If the CPI number is weak, we can expect markets to quickly adjust to a higher chance of a 50 basis point rate cut this month. Traders could use short-dated options to benefit from a weaker dollar and rising bond prices. With the VIX currently low at around 14, it could drop further in a dovish scenario. Conversely, a strong inflation report likely won’t change the prospect of a 25 basis point cut in September, but it will alter the outlook for 2026. Traders should consider longer-dated derivatives, like options on 2026 SOFR futures, betting on fewer rate cuts than the three currently forecasted. This could indicate a “higher for longer” policy is becoming established. The US Jobless Claims data, released simultaneously, is a wildcard today. We’ve seen two soft Nonfarm Payroll reports in a row, with August 2025 showing only a 140,000 job gain. Any unexpected weakness in claims could amplify a soft CPI reading. This makes multi-leg option strategies, which can profit from increased volatility in either direction, a wise choice. If both the CPI and Jobless Claims are strong, the market could react sharply. This combination would suggest the economy is still too hot, leading to a significant hawkish adjustment of the Fed’s future path. In this situation, protective puts on major stock indices or calls on the VIX could be beneficial. Today’s ECB decision is largely seen as a non-event, with the bank in a pause as it waits for Eurozone inflation to ease from its current 2.8% level. Right now, US data is driving the market, especially for currency pairs like EUR/USD. The focus will be on how US rate expectations differ from Europe’s after today’s releases. Create your live VT Markets account and start trading now.

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The Nasdaq bounced back after a drop caused by the NFP report, with overall upward momentum due to expectations of rate cuts from the Fed. The market is expecting three rate cuts by the end of the year, totaling 68 basis points. There is also an 8% chance of a 50 basis point cut in September, depending on a soft CPI report. If the CPI report is soft, it could push the stock market to new all-time highs. Even though analysts have negative forecasts, the market remains hopeful about future growth. This positivity stems from expected rate cuts and a belief that the economy isn’t as dire as it seems. The uncertainties from earlier in the year related to political policies are fading, and potential rate cuts could boost economic activity.

Analyzing The Daily Chart

On the daily chart, the Nasdaq is showing a range but leans upward, trading close to all-time highs. Buyers are increasing bullish bets, aiming for new highs, while sellers are preparing for a drop to the 23,050 level. In shorter timeframes, there is a slight upward trendline that buyers are using to push higher, while sellers are ready to act if it breaks down. Key economic reports are coming, including the US CPI and Jobless Claims, followed by the University of Michigan Consumer Sentiment report. Strong expectations for Federal Reserve rate cuts are supporting the market. The latest Consumer Price Index (CPI) report for August 2025 came in softer than expected today, reinforcing these dovish sentiments. The Bureau of Labor Statistics reported a monthly core CPI increase of just 0.1%, which is below the 0.2% consensus forecast. This outlook supports a bullish market environment, making long positions appealing. For derivative traders, buying call options on the Nasdaq 100 index (NDX) or related ETFs like QQQ could be a primary strategy. The CBOE Volatility Index (VIX) is around a low of 13, resulting in relatively cheap option premiums that offer an attractive risk-reward scenario. The chances of aggressive rate cuts have increased after the soft inflation data. According to the CME FedWatch Tool, the market now sees over a 20% chance of a 50 basis point cut this month, rising from just 8% yesterday. This positive sentiment is likely to continue supporting asset prices in the near term.

Evaluating Market Risks And Strategies

However, with trading occurring near all-time highs, there’s a risk of a market reversal. Traders should consider hedging their bullish positions by buying out-of-the-money put options. This serves as a low-cost insurance against a sudden market downturn if investor sentiment shifts unexpectedly. The 23,050 level on the Nasdaq is a crucial support area. A more cautious strategy involves selling cash-secured puts with a strike price at or slightly below this level. This approach allows traders to collect premiums while setting a price at which they’d be willing to buy into the market during a dip. We are moving beyond the economic uncertainties believed to be caused by government policies in the first half of 2025. The upcoming University of Michigan Consumer Sentiment report will be vital in determining whether this optimism is shared by the public. A strong result would further back the case for ongoing market gains. This situation feels reminiscent of late 2019, when the Fed cut rates to support a slowing but still-growing economy, resulting in a robust market rally. Implied volatility is a crucial metric to monitor. If the VIX climbs back towards the 17-18 range, it could indicate that the market is starting to factor in more risk. Create your live VT Markets account and start trading now.

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