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The blue box shows a support zone for TMUS, where buyers expect to re-enter the stock.
T-Mobile US Inc. is experiencing a pullback while still trending upwards in the long run. This dip is creating a 7-swing pattern that is approaching an important price zone, likely attracting buyers.
T-Mobile is a leading U.S. wireless carrier, having become the third-largest telecommunications provider after merging with Sprint in 2020. Its stock is listed on the NASDAQ-100 and S&P 500. Recently, it reached a record high of $276.46, with potential to rise further to $300-$400.
Since January 2022, the stock has shown strong growth. The latest wave started at a low in January 2022 and surged to new heights, despite some market corrections.
This pullback is seen as part of a double zigzag pattern, expecting a bounce back around the $229.98–$206.41 range. This zone is critical for traders looking to enter for the next upward move.
The AUD/USD currency pair hit new yearly highs before reversing, while the EUR/USD moved past the 1.1400 level early this week. Meanwhile, the U.S. dollar weakened as the U.S. extended the deadline for EU trade negotiations.
Gold is holding around $3,350 per troy ounce amid quiet trading, reflecting better market sentiment. Ripple (XRP) remains stable at $2.33, and Bitcoin is recovering above $109,000 as optimism grows.
T-Mobile’s price shows a clear and measured retracement fitting into a broader upward trend. The current correction phase seems to follow a structured double zigzag pattern, suggesting that the price action is more likely to continue rising than to reverse, especially given its recent strong momentum.
Since early 2022, T-Mobile’s steady rise has resulted from its strong performance after the merger, solid market position, and investor confidence in the telecommunications sector. The temporary drop should not raise concerns as long as it stays within the expected support range of $229.98 to $206.41. Typically, price zones like these align with Fibonacci retracement levels and prior support areas. When these lines up, sharp reversals or rebounds often happen.
In these precise areas, our analytical group sees a chance for medium-term price growth, so monitoring the reactions is essential. Any reversal patterns in this price range should be closely observed. We expect a new surge once the correction is finished, which could push prices towards the upper end of the $300–$400 range in the months ahead. This may indicate the final wave of the current trend, depending on how the impulse structure unfolds.
Shifting to the currency markets, movements in AUD/USD and EUR/USD indicate traders adjusting their risk based on a weaker dollar. The AUD’s reversal after hitting new highs suggests some exhaustion, especially given lower market participation. Conversely, the EUR/USD moving above the 1.1400 resistance level shows growing confidence in the eurozone’s resilience, amid ongoing trade talks. The extended deadline between the U.S. and EU gives traders a short-term opportunity with less macro pressure, allowing a focus on technical setups.
The dollar’s decline is also giving a boost to commodities and cryptocurrencies. Gold’s consolidation near $3,350 per troy ounce shows a lack of short-term triggers rather than a structural issue. We see reduced volatility in gold as inflation fears and interest rate worries ease. This could either be calm before a rise or suggest funds are temporarily reallocating.
Digital assets are also noteworthy. Ripple’s stability at $2.33 coincides with past congestion areas, and Bitcoin’s climb above $109,000 came with increased trading volume, signaling possible renewed institutional interest or buying pressure due to reclaimed technical levels. Such conditions often lead to short-term price acceleration, especially with improved sentiment and weaker fiat currency.
In the coming weeks, we expect sentiment shifts will play a more significant role in shaping actions across equities and FX pairs than new policies. In this type of market, timing matters more than volume—executing trades around recognized zones or psychological round numbers tends to be more effective than chasing breakouts or news-driven swings.
Microsoft ($MSFT) has risen 27% since April from the entry point marked by the blue box.
Microsoft ($MSFT) has risen 27% since April, starting from the Blue Box area. This point marked the end of a downward trend, indicating a potential short-term price drop.
Right now, Microsoft is in a correction phase, following an Elliott Wave Zig Zag Pattern. This hints that we may see some weakness before another buying opportunity arises. The target price is around 355.33, where we expect a bounce in three waves. This level can help with risk management and profit-taking.
Investors who bought in at the Blue Box area have secured their positions after the price climbed from 338 to the 450 range. Our goal is to move stop losses to breakeven and take partial profits as long as the price stays above 338, which suggests more potential for gains.
We provide specific buy and sell setups, with clear stamps and zones to help guide trading decisions. Our risk disclosures highlight the challenges involved in trading, reminding everyone to be informed and cautious. Trading advice is available to paid subscribers, and strict copyright protections are in place against unauthorized sharing.
Microsoft’s recent 27% rise, which followed accumulation near an exhaustion zone, has yielded significant profits. This strengthens the case for entering high-probability areas that align with pattern completions. The bounce from 338 to around 450 supports our initial bullish outlook. However, we now need to focus on managing risks as short-term weakness appears.
The current pullback shows characteristics of a classic Elliott Wave Zig Zag correction, suggesting that price action may remain low in the near future. The expected three-wave structure usually provides temporary relief in broader trends, indicating a potential retracement to 355.33. This level is where buyers may return, though likely not with the same energy we saw in April.
Since long positions are now risk-free after strong upward movement, it makes sense to consider reducing partial positions or adjusting stop losses to lock in profits while allowing price some room to move. Protecting the 338 area is crucial for maintaining a bullish view going forward. If the price convincingly breaks below this level, the correction may deepen, making flexibility more important than sticking rigidly to prior trading plans.
Short-term traders should watch for fresh setups as prices drop towards our identified zone. We anticipate that the upcoming bounce will create opportunities for tight management—emphasizing quick trades and partial re-engagements rather than aggressive accumulation. In these situations, knowing your exit strategy is just as critical as the entry point.
This corrective move does not signal a total collapse, but it shouldn’t be mistaken for a strong bottom either. Corrections like this often unfold in overlapping waves that slow momentum and invite early re-entries. We will wait for clearer signals from price action near expected retracement levels instead of acting prematurely.
Every move and wave brings its own probabilities. Recent market behavior, particularly how price respects planned zones, highlights the value of pre-arranged trade areas with timing labels. As the market shifts, our focus will be on evaluating each signal against new price movements. We remain observant and adaptable rather than rushing into decisions.
Establishing trading rules ahead of time—and sticking to them when levels are reached—shows the highest discipline. Holding tightly as prices approach invalidation zones has often been unwise. Our attention is on the next key level, allowing market structure to guide our actions. Sensible stop placements and proper position sizing will be vital in the next phases of this correction.
USD/CAD remains stable above 1.3700 as trade tensions ease and trading volumes decrease
The Canadian Dollar has lost some initial gains against the US Dollar. Currently, USD/CAD is trading around 1.3720 after hitting a low of 1.3686. This change comes after US President Donald Trump decided to delay a 50% tariff on EU goods until July 9.
On Friday, the Canadian Dollar reached a seven-month high, boosted by positive Retail Sales data for March, which showed a 0.8% increase that surpassed expectations. This suggests strong consumer spending in Canada, despite mixed signs in the broader economy.
Canadian Inflation and Rate Predictions
While Canada’s headline inflation has decreased, core inflation remains steady. This could lead to cautious projections for the Bank of Canada’s upcoming meeting in June. Although inflation and spending are high, markets are still factoring in a 32% chance of a 25 basis point rate cut. The US Dollar is facing challenges, with the Dollar Index at a four-week low. Still, hopes of reduced trade tensions are providing some support. Trading on Monday is expected to be light because of holidays, and attention will shift to the upcoming Federal Reserve minutes and Canada’s GDP data later this week. This week started with the Canadian Dollar giving back some of its earlier strength. USD/CAD is once again hovering near 1.3720 after briefly dropping to 1.3686. This shift is related to a sudden easing in trade tensions, especially after Trump announced the delay of his proposed 50% tariffs on EU goods to July 9. This development reduces immediate pressure on global currency markets, allowing for more risk-taking in the short term. On Friday, the CAD reached levels not seen in seven months. This surge was driven by unexpected strength in Canada’s retail figures, with March sales rising 0.8%, significantly surpassing forecasts. This indicates that consumer activity remains strong, despite mixed signals from other parts of the economy. Canadian households continue to spend, even with current interest rates. However, inflation rates have eased slightly, mainly due to lower energy prices. Yet, core inflation—excluding volatile items—remains stubbornly high. This puts the Bank of Canada in a delicate position. Investors seem to be aware of this tension, with the market still implying about a one in three chance of a rate cut in June. While many don’t view this outcome as likely, it certainly isn’t off the table.Market Reactions and Expectations
The US Dollar is now under increased pressure. Its broader index against major currencies has fallen to a four-week low. Expectations for further tightening by the Federal Reserve have diminished. However, easing trade tensions between the US and EU have provided some relief, limiting the Dollar’s drop as the weekend approached. Monday’s trading may be less active due to public holidays, making market direction unclear until later in the week. We’ll be watching two critical events. First, the minutes from the last Federal Reserve meeting will likely provide insight into future policy discussions. Second, Canadian GDP data at the end of the week will capture traders’ attention as they reassess the Bank of Canada’s outlook for summer. For those engaged in derivatives markets, a measured approach is essential during this setup. There remains room for yield expectations to shift on both sides of the border. Canada’s inflation outlook is complex, and while retail data shows positive signs, it doesn’t guarantee sustained economic growth. Meanwhile, the US Dollar’s decline highlights how quickly market sentiment can change. Short-term FX volatility pricing may present opportunities if positioned ahead of impactful data, while rate-sensitive instruments could respond to further hawkish or dovish signals from the Federal Open Market Committee. It’s less about a significant policy shift and more about discerning which scenario seems most persuasive to central bankers—and importantly, to the markets. Create your live VT Markets account and start trading now.Gold prices decline towards $3,333 as US markets remain closed for a public holiday
Gold Price Movement
Gold prices stayed below $3,340 during the European trading session on Monday. The price dipped to about $3,333 while US markets were closed for Memorial Day. This decrease followed President Trump’s announcement that tariffs on the EU would be delayed until July 9. Although the news briefly lowered demand for safe-haven assets, worries remain about the US government’s financial situation. Citigroup raised its three-month gold price forecast to $3,500 per ounce, citing concerns about tariffs and global economic challenges. The US Dollar weakened further, reflecting ongoing fiscal anxieties in the market. Speculators reduced their positions, bringing their US Dollar exposure down from $16.5 billion to $12.4 billion. Trump’s tariff delay provided temporary relief for riskier assets. Gold support is seen at $3,307 and $3,258, with a chance to rebound to higher levels if it breaks through resistance at $3,386 and $3,415. Interest rates influence gold by affecting opportunity costs and the strength of the US Dollar. When rates rise, gold prices usually fall as the Dollar gains strength. The Fed Funds rate is a crucial economic indicator that affects financial markets.Gold Market Sentiment
On Monday, gold remained just under $3,340 in European trading, eventually dropping slightly to around $3,333. US markets were closed for Memorial Day, leading to less trading activity. Much of the uncertainty came from Trump’s announcement delaying EU tariffs until early July. This news briefly cooled demand for gold but did not ease overall concerns about the US fiscal situation, which still impacts currency sentiment. Citigroup has revised its three-month gold price forecast upward to $3,500 per ounce. This adjustment reflects ongoing global risks and trade concerns. The currency markets seem cautious, and this is evident in recent trading positions. Hedge funds and large speculators are reducing their net long US dollar holdings, dropping from $16.5 billion to $12.4 billion, indicating a change in outlook or a desire to lessen exposure. As for the market’s overall response, equities and riskier assets experienced mild relief due to the trade news. Investors shifted their focus toward riskier investments after the tariff delay. Although this provided some support, it was not enough for gold to break through resistance levels at $3,386 and $3,415. We will monitor these levels closely; a significant break above them could lead gold towards the mid-$3,400s. On the downside, gold has support levels around $3,307 and more firmly at $3,258. If prices reach these levels again, traders short on gold may want to take profits, while those looking to buy could find good entry points. Price movements around these areas often present chances for well-timed trades—if market liquidity allows. Interest rates remain a crucial factor here. They directly affect the opportunity cost of holding gold—when rates rise, gold typically underperforms since it doesn’t yield interest. Interest rate differences also influence currency flows, which is important because gold is priced in US Dollars. The strength or weakness of the Dollar can significantly impact gold prices, and its recent softness has been supportive for gold, even amid daily price fluctuations. We are particularly attentive to the Fed Funds rate. This benchmark not only indicates the direction of monetary policy but also affects returns across asset classes. When the Federal Reserve tightens conditions, it usually strengthens the US Dollar. Conversely, easing or expectations of easing can help gold rise. During this quieter week, even small shifts in rate expectations could influence market sentiment more than usual. As we look ahead, navigating positions around rate expectations and geopolitical developments will require precise timing. The coming days may seem relatively calm, but that should not be mistaken for stability—changes can happen quickly, and the premiums in many volatility structures remain sensitive. We’re closely watching implied volatility across gold and US Dollar pairs. Spread dynamics are showing some tension, affecting delta risk and gamma hedging strategies. Any sharp market movement, particularly resulting from fiscal news or unexpected economic data, will likely test the readiness of those holding short volatility or aggressive carry positions. Stay alert. Create your live VT Markets account and start trading now.GBP/USD starts strong near 1.3600 but could see a downward correction soon
GBP/USD started the week on a strong note, reaching its highest level since February 2022, close to 1.3600. However, it later pulled back as it appeared overbought according to technical analysis.
The US Dollar fell due to significant selling pressure. President Donald Trump’s warning of 50% tariffs on EU imports worsened the situation for the Dollar. This allowed GBP/USD to rally notably leading into the weekend.
Technical Analysis of GBP/USD
The technical analysis shows a bullish trend for GBP/USD based on the Elliott Wave theory, suggesting an ongoing upward movement. The pair is in an aggressive upward phase with positive long-term projections. During the week, the British Pound (Sterling) remained strong, staying above 1.3500. This strength was fueled by continued pressure on the US Dollar, intensified by Trump’s tariff threats. We saw GBP/USD reach levels not seen since early 2022, peaking near 1.3600 before a slight pullback. While the pair showed strong momentum at the start of the week, it showed signs of fatigue later on, at least in the short term. Indicators like the Relative Strength Index indicated overbought conditions, suggesting the rally was overstretched and possibly driven by speculation rather than solid economic fundamentals. The drop that followed aligned with prior technical signals. Overextensions often trigger profit-taking, especially amidst volatile macro headlines. This time, the Dollar faced ongoing trade policy risks. Trump’s harsh rhetoric regarding the EU led to decreased demand for the Dollar, allowing the Pound to extend its gains.Market Sensitivity Dynamics
The market is currently influenced as much by political events as by economic factors. The tariff threat further weakened the Dollar, providing more opportunity for Sterling to rise. This wasn’t merely reactive trading; it was strategic positioning in response to fears of broader economic consequences. From a wave analysis perspective, Elliott Wave structures indicate a definite upward trend. The current cycle appears to be in its active phase. This doesn’t mean a straight rise, but it suggests the likelihood of growth until these formations either complete or show signs of decline beyond minor technical setbacks. For short-term traders, finding the right balance is crucial. We’re in a phase that presents both opportunities and risks. While momentum remains strong, the potential for reversals is higher. Now is not the time to chase gains without caution. Utilizing tighter stop-loss orders and clear setups is essential, especially when political headlines can quickly change the landscape. Monitoring volume changes, breakout confirmations, or market divergences should take precedence over making decisions based solely on headlines. Price movements will react to both US data and trade announcements. If tensions escalate, the Dollar may weaken further, but any easing could quickly reverse market sensitivity. Positions with longer timeframes should consider the upside as still valid, particularly within established bullish trends, but they must also be ready for swings, given changing political factors. Tactically, we should prepare for sudden pullbacks, even with an overall positive outlook. Using layered entries and weighing risks from both Dollar and Sterling sides can provide more flexibility in unpredictable market conditions. Although Sterling has recently outperformed many peers, traders should keep their perspective. A significant move in currency over a short time can trigger adjustments—especially when the underlying fundamentals remain generally supportive. Signs of such adjustments are starting to emerge. Expectations around monetary policy are also coming into play. In the coming weeks, the market may be more sensitive to commentary from the Fed or BoE than to economic data. Traders need to be adaptable, as the focus could quickly shift from trade issues to central bank narratives. We should prepare for periods where technical indicators suggest strength, despite external factors that call for caution. Drawing insights from various sources, being patient with re-entries, and avoiding forced directional bets will be crucial as the next wave unfolds. Create your live VT Markets account and start trading now.EUR/JPY rises to around 163.00 as trade tensions between the EU and US ease
The EUR/JPY pair has increased by 0.45% to 162.60 during European trading, hitting a high of 163.00. This rise comes as trade tensions between the US and the EU have eased, with President Trump delaying a proposed 50% tariff until July 9.
US-EU trade discussions are ongoing after the EU asked for more time to negotiate a favorable deal by July 9. President Ursula Von der Leyen expressed hope for the talks with Trump, highlighting the EU’s readiness to move forward.
Effect of Germany’s GDP Data
The Euro received additional support from Germany’s first-quarter GDP data, revised to show a 0.4% growth, surpassing initial estimates of 0.2%. Meanwhile, the Yen is losing value, even though Japan reported a National CPI growth of 3.6% in April, which was faster than expected. In local markets, the Japanese Yen has weakened against major currencies, performing the worst against the New Zealand Dollar. The change in CPI numbers raises the possibility of an interest rate hike by the Bank of Japan in July. The Euro plays a crucial role for the 19 countries in the Eurozone, influencing trade balances and interest rates through the European Central Bank (ECB). Key economic indicators like GDP and inflation greatly affect the Euro’s value. Building on these developments, the EUR/JPY pair is currently favored by buyers, with the move toward 163.00 suggesting market participants are leaning toward the Euro in the short term. The postponement of a significant import tariff by the U.S. until early July gives markets some relief. For now, there’s reassurance that immediate disruptions to transatlantic trade have been delayed, if not eliminated. The new timeline offers just over a month of relative stability, which traders are starting to factor in.Impact of Trade Talks and Monetary Policies
Von der Leyen’s positivity has given the Euro more room to grow, especially as her comments show both sides’ willingness to avoid further conflict. Importantly, not only is there a cooperative tone, but the timeline is also key—markets prefer predictability, and the temporary delay suggests better chances for a negotiated resolution. Any sign of progress in these trade talks could further strengthen this trend. Germany’s Q1 GDP boost to 0.4% also provides solid support for the Euro. While the difference between 0.2% and 0.4% growth may seem small, it doubles the previous estimate under current conditions. Since Germany is influential in ECB policy, stronger economic performance could lead to more discussions about normalization in Frankfurt, reducing hesitancy around tightening. Conversely, the Japanese Yen faces opposing forces. April’s national inflation was 3.6%, which should normally support the currency. However, the Yen continues to weaken due to market expectations. Despite the CPI exceeding forecasts, there’s doubt that the Bank of Japan will act quickly or decisively enough to narrow the yield gap with other currencies. Investors are focused on the July meeting, but without a change in tone or pace from Governor Ueda, interest rate differentials will keep putting pressure on the Yen. This Yen weakness isn’t just seen in EUR/JPY; it’s also noticeable against higher-yielding currencies like the New Zealand Dollar. This reflects ongoing carry flows and a narrative where the Bank of Japan seems hesitant to reduce its accommodative stance as quickly as others. The situation is not just about inflation—it also concerns the credibility and timing of future guidance. For those trading derivatives, current movements show a clear direction, but it’s not straightforward. We must analyze how options volatility responds to trade timelines and monetary policy expectations. Implied volatilities on EUR/JPY have remained fairly stable, suggesting the market is anticipating a gradual trend rather than a sharp reversal. However, if political headlines or hawkish signals from the ECB emerge, hedging costs may rise. As we approach July, traders may continue to prefer Euro longs over Yen, assuming no significant changes from Ueda or a quick rise in European inflation. If speculation about a BoJ rate hike gains momentum, shorter expiration options will react quickly as traders adjust their expectations. For now, though, the divergence story remains intact, and the options flow reflects this trend. Some traders are favoring call spreads into next month, focusing on strikes between 163.50 and 165.00, aligning with recent technical patterns. We are closely monitoring the intersection of macroeconomic data and event-driven decisions. This is all happening in a compact six-week timeframe, and markets are not known for their patience. With each data release or political remark, recalibrations start anew. Traders with exposure tied to volatility or directional swings should maintain focus on timing rather than just price levels. Create your live VT Markets account and start trading now.Scotiabank’s Chief FX Strategist says GBP is nearing 1.36, its highest level since early 2022.
Pound Sterling has seen a slight rise, with no significant news over the weekend and no important data released today. The market is largely dismissing the possibility of a rate cut by the Bank of England at its June 19 meeting, and only minor surveys are expected this week.
The pound was trading just under 1.36 last night, reaching its highest level since early 2022. There’s minor resistance at 1.3595, which might limit any short-term gains, but the upward trend seems to be stable.
Technical Momentum
Indicators across different time frames show limited chances for corrections, with strong support during minor dips. Key support levels are between 1.3545 and 1.3550, while resistance is seen at 1.3595/00, moving up to 1.3740/50. We are witnessing a consistent rise in Sterling’s value, especially since there hasn’t been major economic or political news recently. Traders appear unconcerned about a potential interest rate cut by the Bank of England, focusing instead on improving inflation and economic strength, which enhance the appeal of Sterling. Sterling’s quiet rise to just below 1.36 marks its highest level since early 2022. This recovery, particularly in calm trading conditions, reflects market confidence in its upward direction. However, we are reaching short-term resistance around 1.3595, where price movement has started to pause. It’s common to see slight hesitations near previous highs, especially when indicators show a lack of strong momentum for a downturn. Currently, we are experiencing a minor pullback rather than a significant decline. Support levels have been tested and have held around the 1.3545–1.3550 range, allowing us to track how far selling might push prices. If this support remains intact in subsequent tests, it’s unlikely we will see a reversal soon.Market Structure
The ongoing upward trend is backed by solid momentum indicators. Oscillators are not yet showing overextension but suggest limited room for significant pullbacks in the near term. Any softness in prices is likely to be short-lived without major impacts—at least for now. If prices break through the 1.3600 resistance level, it could open the way to the next range, estimated around 1.3740–1.3750. From a market structure perspective, the clear support and resistance levels indicate a trend being adhered to by traders. This means we should maintain our directional bias until new evidence suggests otherwise. Neutral events, such as upcoming survey data, might not derail this pattern on their own. What stands out currently is the balance between anticipated volatility and actual price movement. The absence of large price swings indicates that traders are acting in expectation rather than response. The market has largely factored out the rate cut, and unless forecasts change significantly, we might see narrow trading conditions—this could also create opportunities for price breakouts as we approach the June decision. For now, we should focus on the sustainability of momentum. Movements below 1.3545 should be approached with caution, as that could disrupt the stability that has supported the pound since late May. Until then, a focus on continued stability with a tendency for upside movement appears to be a sound approach. Create your live VT Markets account and start trading now.EU eases tariffs after positive conversation with von der Leyen, impacting EUR
The recent EU tariff delay came after important talks among key leaders, likely due to worries about how tariffs affect US economic growth. European stocks have responded well, rising 10% this year, while the S&P has dropped 2%.
The EUR/USD currency pair is showing a strong upward trend, with current gains in the low 1.14 range. Support levels are at 1.1325/50, and resistance levels are at 1.1460 and 1.1580/00.
Strong Start For EUR/USD
The EUR/USD pair had a solid start to the week, breaking past the 1.1400 mark. At the same time, the US Dollar weakened as the US-EU trade deadline was extended. Bitcoin also rose above $109,000 due to improved market sentiment following the tariff delay. Gold, however, has seen its gains capped at $3,350 per troy ounce, even after last week’s increase. With the tariff deadline pushed back, markets are experiencing less tension between the US and Europe. European stocks are benefiting from this calming atmosphere, reflected in a 10% gain this year, while US stocks have taken a step back due to concerns about domestic demand. Both technical and fundamental indicators show that the euro is gaining strength. The EUR/USD pair has climbed above 1.1400, a key level many traders were watching. It is now close to 1.1450 and testing higher resistance around 1.1580. The support area between 1.1325 and 1.1350 should hold, assuming the overall economic conditions remain stable. The dollar’s decline, due in part to softer forecasts and geopolitical issues, is helping this rise. Yields in Europe haven’t greatly increased despite the stock market rally, suggesting that stock performance isn’t currently linked to expectations for interest rates. This disconnect could lead traders to rethink volatility levels in euro-related assets. In particular, holding short gamma in euro options might feel risky right now, leaving little room for mistakes if volatility increases—especially with upcoming inflation data or remarks from policymakers.Market Sentiment And Volatility
The spike in Bitcoin to over $109,000 shows how quickly market sentiment can change. Various factors, including better liquidity and the delay in tariffs, contributed to this rapid move. It reflects a renewed appetite for risk across multiple asset classes, which may put pressure on traditional safe havens. Gold seems to be stuck despite last week’s upward trend. It has encountered strong resistance around $3,350 per ounce and hasn’t moved higher, even with the dollar’s pullback. This may indicate hesitation among major buyers or simply a pause after previous significant gains. For hedging purposes, its positioning appears lighter than many expected. As we move into the next couple of weeks, options pricing in currencies and metals must catch up with current price movements. Traders holding short positions on EUR or long positions on XAU may want to reconsider their strategies. It may not be necessary to exit entirely, but adjusting stops or developing protective measures is wise. Changes in strike skew and implied volatility should be analyzed carefully, as they show where risk is being priced. As the trade deadline extension impacts asset prices, currency volatility may remain elevated while equity volatility decreases. This divergence presents a trade opportunity. Focusing on relative volatility between FX and equity indices may yield selective chances, especially when using calendar spreads or vanna-based trades. Timing remains critical. If the euro continues its positive trend and breaks through resistance at 1.1460, the pace of interest rate adjustments between Europe and the US could speed up. Yield spreads haven’t fully reacted to this strength, suggesting there’s still room for short-term fluctuations. Such gaps can often result in sharp reversals during the week. The upcoming sessions provide great opportunities: being long on the euro with tight downside options, selectively holding risk in metals near resistance, and positioning short on the dollar with clear exit plans. Current price movements offer clearer signals—it’s time to act carefully and decisively. Create your live VT Markets account and start trading now.The Canadian dollar stays stable in the low 1.37 range, outperforming major currencies.
The Canadian Dollar (CAD) had a strong week as the US Dollar (USD) fell by 1.6% by Friday. This made the CAD one of the stronger major currencies of the week.
Interestingly, there is a rare negative correlation between the CAD and US stocks, currently at -36% over the past month. Normally, the CAD would move in sync with the stock market, providing some stability against US market fluctuations.
Bank Of Canada Commentary
Bank of Canada Governor Macklem mentioned that core inflation is becoming more volatile. He indicated that several factors will influence the next interest rate decision, hinting at possible changes in the market. The USD’s drop below the 1.3745/50 level could lead to further gains for the CAD. The USD lacks strong support until it reaches the 1.34/1.35 range, which may lead to a full retracement to 1.3420. This recent shift indicates a break from usual trends. The CAD is rising while US stocks decline, reversing the typical relationship. Usually, when stocks rise, the Loonie also appreciates. Instead, we are witnessing the opposite, as shown by the -36% correlation. This suggests the CAD is now driven by different factors, possibly related to monetary expectations or demand for Canadian assets. When the usual indicators are quiet, we look to other signs. Macklem’s comments earlier in the week provided more context. While he did not give clear guidance, his mention of “increased volatility” in core inflation sounded more like a warning. When a central bank recognizes conflicting inflation pressures and states that “multiple factors” will affect its next decision, it suggests a preference for flexibility rather than strict rules. Fluctuations in inflation data might lead to unexpected changes, emphasizing the importance of upcoming data such as retail sales and labor market developments.Volatility Pricing And Risk Appetite
Looking at price action, the USD’s decline below the 1.3745/50 level changes short-term expectations significantly. Without that support, we may now enter a wide, less competitive range in the low- to mid-1.34s. The last time prices lingered in that area was in January, where they quickly moved through. This indicates that liquidity may become uneven, potentially driving momentum in either direction. If momentum traders increase short positions on USD/CAD, reaching 1.3420 is possible, though not certain. Closing older USD positions might enhance this movement. For trading with derivatives, all of this highlights the need to focus on volatility pricing. Premiums for CAD calls may still not accurately reflect the scale and speed of currency changes, given the unusual correlations and potential shifts in local rate expectations. It’s worth considering spreads that lean towards a moderate but directional decline in USD/CAD. However, protective measures should be taken, especially with macroeconomic events like US jobs data and Canadian CPI approaching. Additionally, if risk appetite continues to wane and the CAD keeps strengthening, carry trades based on interest rate differences may not offer their usual protection. The quiet from Canadian policymakers this week could shift to more direct communication if the market anticipates rate cuts or overlooks inflation figures. This isn’t the current expectation, but we shouldn’t assume that past correlations will always hold. Finally, it’s important to recognize that positioning behavior may override technical indicators. Large investors could react more quickly to changes and not wait for traditional confirmations, leading to increased short-term volatility. The market may not fully adapt to these changes, which is something to keep an eye on. Create your live VT Markets account and start trading now.USD weakens as Trump’s 50% EU tariffs are postponed to July 9 amid tariff delay
President Trump has delayed a decision on 50% tariffs on EU imports until July 9th. This has slightly boosted market confidence, leading to stronger European stocks and US equity futures, though Chinese markets faced losses as local electric vehicle stocks dropped.
The USD has weakened but remains above earlier lows, while the New Zealand Dollar is performing strongly. The Japanese Yen and South Korean Won lagged overnight. The Bloomberg dollar index is at its lowest since December 2023.
Treasury Secretary Bessent said that the decline is due to stronger other currencies rather than a weaker USD. With a public holiday in the US, trading volume is expected to be low today. The DXY index may stabilize intraday, but a weak close on Friday suggests further losses may be coming.
