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A rally towards 6,038 is anticipated after bouncing at 5,904, with key zones identified.
The updated S&P 500 Futures trading plan for May 20 highlights important resistance and support levels. Resistance appears at 5,960, with a target range of 5,977–5,994 based on Fibonacci levels. Key support points are at 5,904 and 5,926.75, which connect with the retracement and base level around 5,870.
The market shows a confirmed bounce, with prices respecting the 5,904 Point of Control (POC) line. The VWAP band now serves as support, indicating strong buying interest. If prices rise above 5,960, momentum could shift upwards towards the Fibonacci range of 5,977–5,994.
Kashkari says investor sentiment is being hurt by ongoing uncertainty over trade policies.
The US economy started strong this year, but trade policies from the Trump administration have caused uncertainty. This situation has led to market ups and downs, making it harder for businesses to invest and hire.
Currently, there’s no clear timeline for fixing trade problems, and as a result, companies are delaying investments.
Positive Job Growth Outlook
There is a hopeful outlook for job growth in the US, thanks to advancements in AI. However, the risk posed by high debt levels will depend on overall confidence. Questions remain about the US’s long-term global role. It’s recommended that individuals do their own research before making investment choices. At the year’s start, the American economy was thriving, but trade conflicts raised concerns. With no resolution in sight, businesses are adopting a cautious approach. They are not investing or hiring as much as they planned. This caution is understandable, as policy changes have made it tougher to forecast, especially regarding imports and long-term investments. From a market perspective, trade tensions have brought about some instability. The trend indicates that many are unsure when or how trade policies will change, influencing how capital is valued. This uncertainty impacts pricing models and how different assets relate to each other, especially in equity derivatives and interest rate hedging. On the structural side, automation and machine learning developments are boosting job expectations, which could lead to greater corporate confidence if productivity improvements are seen in the third quarter and beyond. However, worries about corporate and public debt still weigh on the market, affecting risk appetite.Revising International Standing
The US is also reassessing its international role. This involves more than just tariffs and trade relationships; it’s about how global capital manages risks when the currency policies are unpredictable. This hesitation has shown up in the options market, where the demand for protection against downturns hasn’t decreased since the first quarter. We’re closely monitoring volatility trends in both US and Asia-Pacific markets, where gamma risk has slightly increased. As these themes evolve, directional biases may need adjustments. Calendar spreads, especially in sectors linked to international supply chains, offer chances for relative value strategies due to frequent market changes. Volatility traders might look at skew positions in these areas, where implied volatility remains high compared to historical levels, suggesting further moves ahead. We’ve seen increased activity in protective puts across cyclical sectors and a rise in steepening strategies—indicating that risk managers aren’t viewing the current calm as permanent. While there’s no panic, there is a clear sense of caution. We see stability in credit spreads but are implementing strict stop-loss rules on core equity holdings to stay protected while maximizing our positions. Managing exposure is crucial. When one-month implied volatility diverges from realized levels, it often presents short-term mean reversion opportunities. We’re focusing on using dispersion in sector ETFs to diversify trades, especially when positioning turns one-sided after central bank speeches or economic data. For those reevaluating volatility assumptions, keeping an eye on the Fed’s upcoming minutes is important. If interest rate sentiments shift, the effects will be felt beyond Treasuries, potentially altering forward curves in S&P 500 options and affecting which strikes remain active. We continue to analyze flows in major derivatives markets and have increased focus on demand for VIX-linked ETPs as indicators of institutional hedging. Together with our proprietary indicators, this provides a clearer view of how effectively downside risks are being managed. As always, we suggest evaluating strategies with independent metrics, while also considering real-world positioning for better alignment with current market exposures. This approach focuses on practical risk management rather than theoretical risks. Create your live VT Markets account and start trading now.EUR/USD shows resilience around 1.13 after sharp recovery, but mixed signals remain
The EUR/USD pair is currently trading around 1.13 after a strong rise during the day. This increase suggests a recovery after the European session, but different timeframes show mixed signals.
Short-term indicators suggest possible pullbacks, while the long-term outlook is positive. The Relative Strength Index (RSI) indicates neutral momentum, while the MACD shows some selling pressure. However, the Average Directional Index (ADI) suggests buying pressure continues.
Moving Averages Analysis
Moving averages give a brighter long-term view, with the 10-day exponential and simple moving averages showing bullish trends. Yet, the 20-day simple moving average is indicating selling pressure, which may hinder further recovery. On the 4-hour chart, the outlook remains bullish. The MACD shows buying momentum, and short-term moving averages suggest continued buying interest. Support is around 1.1230, while resistance could emerge near 1.1280. Wider Fibonacci levels suggest support between 1.0400 and 1.0900 and resistance may extend beyond 1.1500. These details help in understanding potential breakout scenarios in the market.Market Positioning Strategy
The EUR/USD pair is consolidating its gains around the 1.13 mark after rising intraday, likely due to renewed demand at key technical areas. However, short-term indicators show some hesitation, as intraday tools indicate a slowdown. The RSI, which measures momentum, did not confirm the latest rise and remains neutral, implying that market confidence may not be strong enough. Meanwhile, the MACD is showing sell signals, which contrasts with the bullish trend seen in longer timeframes. The ADI still supports upward movement, though. Looking at moving averages, the 10-day exponential and simple lines suggest prices may continue to rise. However, the 20-day simple moving average is acting as resistance, indicating that maintaining recent gains may be challenging without stronger demand. In the 4-hour timeframe, intentions are clearer. The MACD shows bullish momentum again, and both EMAs and SMAs are trending upwards, indicating buying pressure above recent support at 1.1230. If this support holds, resistance is likely forming near 1.1280. Breaking through this level could allow for more upward movement in the short term. Additionally, the broader Fibonacci levels from 1.0400 to 1.0900 highlight historical areas of market activity. These levels are often pivotal for gauging market structure. On the upper side, resistance above 1.1500 remains a possibility, especially if the current rally progresses smoothly. We believe monitoring both medium-to-long-term technical signals and short-term hesitations is key for managing market positioning. We prefer setups where momentum aligns with these larger trends, especially through dip-buying strategies around support areas, as long as the structure of the move stays intact. Being patient and waiting for confirmation at critical levels will be more beneficial than reacting to every small price change. With signals varying across timeframes, how the market reacts to specific levels will guide our strategy in the coming sessions. Create your live VT Markets account and start trading now.Mexican Peso strengthens against US Dollar amid market reactions
The Mexican Peso is holding steady against the US Dollar, despite Moody’s downgrade of the US credit rating to AA1. While the Peso benefits from the weakened USD, it is facing challenges against the Euro, Pound Sterling, and Australian Dollar due to risk-averse investor sentiment.
Fears over trade tensions and the US fiscal outlook are putting pressure on the Dollar, undermining its typical status as a safe haven. Issues like rising US debt and slow growth projections are limiting prospects for interest rate hikes.
Exchange Rates And Fiscal Influence
The USD/MXN exchange rate is around 19.373, down 0.48%. The previous support level of 19.40 is now acting as resistance. This highlights how fiscal matters impact the USD’s performance against emerging currencies like the Peso. The downgrade from Moody’s has led to higher Treasury yields and a decline in the DXY US Dollar Index. Although these higher yields could boost the USD, the ongoing fiscal uncertainties present challenges. Federal Reserve officials are exercising caution due to these fiscal concerns, which are affecting the USD’s performance. Continuous trade tensions with the US also pose risks for the Peso, as Mexico relies heavily on exports to the US market. The USD/MXN pair has broken through its support zone, now trading below the 20-day Simple Moving Average and key Fibonacci levels. The RSI shows decreasing momentum, indicating further declines could happen if resistance holds at 19.46. The Mexican Peso has remained resilient against the US Dollar after Moody’s reduction of the US credit rating to AA1. Normally, this would increase demand for safer assets like Treasuries and the Dollar, but the current fiscal uncertainties are hindering that trend. The downgrade raises questions about the US’s long-term fiscal path, especially amid rising debt and slow growth projections, which weigh down the Dollar even with higher Treasury yields. The Peso is staying strong against the Dollar largely because market participants are hesitant to chase the Greenback after the downgrade. However, the Peso has shown weakness against other major currencies like the Euro, Pound, and Australian Dollar, reflecting a shift to safer, established currencies during uncertain times. From a technical perspective, the USD/MXN pair has fallen below the previous support level of 19.40, which now serves as a resistance point. With trading below the 20-day Simple Moving Average and an RSI indicating slowing momentum, further declines may occur unless the market sees a significant shift. The current resistance level at 19.46 may hold unless fiscal concerns ease or risk appetite increases.Fiscal Concerns and Market Reactions
Yields have risen after the downgrade, but the growth is tempered by the underlying fiscal message. Higher yields usually attract capital, but in this case, they come with increased credit worries, dividing investor opinions. If fiscal concerns persist, demand for the Dollar could remain low, regardless of interest rate movements. Policymakers like Jefferson and Barkin have expressed caution in their recent statements. They acknowledge fiscal challenges and how they might impact monetary policy. Their comments suggest that the Fed isn’t in a hurry to tighten monetary policy, keeping the Dollar somewhat restrained. The uncertainty around how inflation and fiscal issues might interact in the medium term adds to the complexity. On the Mexican side, risks remain. While the Peso has performed well, its dependence on US exports makes it vulnerable to trade disputes and geopolitical tensions. Even minor tensions can lead to significant shifts given the volume of trade between the two countries. In the coming sessions, we’ll be watching if the Dollar can recover based on solid data or changes in Fed strategies. We must also keep an eye on external risks that could cause sudden shifts. If the Peso stays strong and avoids significant trade news, the current technical break might deepen. For now, with resistance at 19.46 and significant weakness in the RSI, expectations lean towards further downside, depending on how the market perceives US fiscal developments and interest rate expectations. There is clear hesitation to invest in the Dollar, even with rising yields, creating divergences across Dollar pairs. By analyzing both macro and technical signals, we believe the fiscal pressures are increasingly reflected in USD/MXN, which we view as a recalibration rather than a short-term correction. Create your live VT Markets account and start trading now.GBP/JPY rebounds to 193.60 after three days of decline, helped by improved UK-EU sentiment
GBP/JPY is on the rise, currently trading around 193.60 after briefly dipping to 192.78, bouncing back from a three-day decline. A new agreement between the UK and EU has improved political sentiment, influencing currency movements alongside the different monetary policies of the BoE and BoJ.
The UK and EU have agreed to cooperate in defense and economic areas, marking a reset since Brexit. This deal could give UK companies access to the EU’s €150 billion SAFE defense fund, strengthening economic ties and boosting the British Pound.
Bank Of England’s Cautious Approach
The Bank of England (BoE) has initiated a cautious rate cut, beginning a slow easing while staying strict on policies to control inflation. In contrast, the Bank of Japan (BoJ) maintains higher rates after moving away from negative rates, focusing on global trade uncertainties and potential tariff impacts. Upcoming CPI data from both the UK and Japan may affect GBP/JPY, as inflation and central bank strategies remain important. Currently, the currency pair is benefiting from reduced UK political tensions and the BoJ’s careful approach. The British Pound is performing variably against major currencies today, showing the strongest gains against the US Dollar. GBP’s fluctuations against other currencies reflect recent geopolitical and economic events. The rebound of GBP/JPY towards 193.60, after a quick pullback to 192.78, shows relief following political uncertainty. This recovery is driven not just by sentiment but also by improved UK-EU relations. Traders are now more focused on the fundamentals as diplomatic tensions ease. The updated cooperation between the UK and EU—particularly in economic integration and shared defense—could lead to significant capital flows. UK firms’ potential access to the SAFE defense fund may change long-term expectations for cross-border capital movement. As this capital starts flowing, the Pound could gain more consistent support, especially when compared to currencies with less aggressive monetary policies. The Yen, hindered by a slow Japanese recovery, may not react strongly to geopolitical positivity.Central Bank Strategies And Market Opportunities
Bailey and his team have started to lower borrowing costs, but their language suggests they aren’t aggressively trying to boost growth. For traders, the key is not just the rate cut, but the messaging. By indicating that conditions remain tight, the BoE provides support for the Pound even as nominal rates decrease. This helps minimize risks for GBP, especially against currencies with passive guidance. Meanwhile, the BoJ is still adjusting after ending negative rates, focusing on managing internal demands and estimating trade risks. Ueda’s team faces challenges with a delicate labor market and fluctuating import costs, which means any significant tightening is unlikely. Japan’s cautious policy often leads to limited currency movement unless there are external influences. In the short term, consumer price data from both countries will create volatility. A weaker UK CPI could slightly dampen expectations for the BoE’s path of easing, but the overall message about inflation control remains strong. A miss may temporarily challenge GBP’s strength without completely unraveling it. Japan’s inflation data, however, could impact the market more directly. If it comes in lower than expected, it may reinforce existing bets on persistent BoJ caution. On the other hand, a surprise increase could spark speculation about potential policy changes that aren’t currently reflected in retail sentiment. Most derivative flows in JPY-linked assets seem unconvinced about a near-term shift from the BoJ at this point. From a flow perspective, GBP is showing unusual strength against the Dollar, usually a strong safe-haven competitor. This suggests that traders are reevaluating GBP positioning more broadly, not just against the Yen. For cross-asset strategies, it could be an opportunity to increase GBP long exposure or reduce downside hedging, especially where implied volatility is reasonably priced compared to historical trends. We may find opportunities in structured positions that take advantage of the policy differences between Threadneedle Street and the BoJ. Short-term spreads that react to CPI surprises could offer good payoffs in either direction with manageable risk. Timing entries around data releases should be a key focus in the coming sessions. Ultimately, this situation isn’t only about one currency pair’s strength. It ties into how differing policy actions, better diplomatic relations, and the timing of macro data create advantages in derivatives—especially in weeks where sentiment and spreads diverge. Create your live VT Markets account and start trading now.The EUR/CHF pair remains around 0.94, showing slight gains despite fluctuating momentum indicators.
EUR/CHF is currently trading around 0.94, showing slight gains but keeping a neutral tone with mixed signals. Key support is found below 0.9370, while resistance is around 0.9400. The market remains within its recent trading range.
On the daily chart, technical indicators offer a mixed view. The RSI is in the 50s, indicating neutrality. The MACD suggests some buying momentum, but the Awesome Oscillator and Ultimate Oscillator are close to zero, supporting a neutral stance. The moving averages present a mixed picture: the 20-day SMA indicates a buy bias, while the 100-day and 200-day SMAs signal bearishness.
In the 4-hour timeframe, the outlook is slightly more positive. The 4-hour MACD is positive, and both the 10-period EMA and SMA favor an upward trend. However, the 20-period 4-hour SMA signals a sell, and the Bull Bear Power and Ultimate Oscillator are neutral.
Immediate support levels are at 0.9368, 0.9366, and 0.9364. Resistance levels are at 0.9373, 0.9390, and 0.9407. Broader Fibonacci ranges indicate support from 0.9000 to 0.9200 and resistance from 0.9600 to 0.9800.
Although EUR/CHF is slightly above 0.94, its movement is limited, echoing recent trading patterns without strong conviction. It feels like a tug-of-war, with buyers unable to push past resistance and sellers unable to firmly drive prices lower.
Looking at the daily indicators, the market appears indecisive. The Relative Strength Index stays in the mid-50s, showing balance between demand and supply, but it hasn’t diverged enough to suggest a clear direction. The MACD suggests a slight increase in risk appetite, but support is weakened by the flat Awesome Oscillator and Ultimate Oscillator, which indicate a lack of strong directional energy.
The mixed signals among the moving averages add to the uncertainty. While the 20-day SMA rises, pointing to bullish pressure, both the 100-day and 200-day SMAs pull in the opposite direction, suggesting hesitance about long-term strength. This divergence is significant and may impact sentiment for medium- to long-term traders.
In the 4-hour view, the tone shifts subtly. Short-term momentum appears to improve. The positive MACD indicates potential for continued buying, and the alignment of the 10-period EMA and SMA supports a short-term upward trend. Still, the 20-period SMA appears below the current price, indicating that a clean trend isn’t evident. Neutral signals from the Bull Bear Power and Ultimate Oscillator suggest that traders are still undecided.
From a levels perspective, immediate support is tightly grouped between 0.9368 and 0.9364, unlikely to hold strong if pressure increases. Resistance levels near 0.9390 and 0.9407 are close by as well, and recent low trading volume suggests these levels may be contested rather than easily broken.
The broader Fibonacci ranges, extending from 0.9000 to 0.9800, serve as long-term markers. Although we’re currently trading well above the lower end, these wider ranges may attract market activity during significant shifts.
For those watching implied volatility or making directional bets, it’s wise to avoid overcommitting too soon. The mixed signals across timeframes suggest that nimble strategies may be more effective than strongly directional ones. In the coming days, the focus will be on whether buyers can hold above the narrow support while testing resistance near 0.9400 enthusiastically. Until then, momentum may face interruptions from false starts and shallow pullbacks.
The US Dollar Index is currently around 100.30, down by more than 0.5%
The US Dollar Index (DXY) is currently at about 100.30, facing pressure due to uncertainty from Federal Reserve officials. The recent downgrade of the US credit rating from ‘AAA’ to ‘AA1’ emphasizes concerns over fiscal health, even though the economy has some strengths.
Several Federal Reserve comments are being analyzed. Raphael Bostic noted that the credit downgrade could affect the economy and suggested waiting 3 to 6 months for more clarity. Philip Jefferson mentioned that the Fed has to balance risks between price stability and employment.
Market Reaction and Yield Movements
The market’s response to the downgrade shows reduced risk appetite. Bond yields are rising, making US debt less appealing. According to the CME FedWatch tool, there is an 8.3% chance of a rate cut in June, which increases to 36.8% for July. Technical analysis reveals that the DXY is having trouble maintaining its safe-haven status, with support at 100.22 and resistance near 101.90. In a “risk-off” climate, investors prefer currencies like the USD, JPY, and CHF. The challenges facing the US Dollar indicate economic uncertainty, as investors look for clearer signals from economic data and the Federal Reserve. The DXY’s recent measure around 100.30 represents more than just a number. It shows investor hesitation and wider anxiety after the US credit rating downgrade. Although the economy remains strong—featuring steady consumption, strong job growth, and technological leadership—the downgrade raises worries about rising debt and future fiscal strategies. Markets are beginning to incorporate deeper concerns beyond just short-term events. Bostic’s comments suggest that policymakers are not eager to change rates despite the worsening credit metrics. A pause of three to six months is recommended to see how labor and inflation trends develop. Jefferson notes that the Fed is juggling growth and inflation risks, making it unlikely that policy will become more accommodating anytime soon, which adds uncertainty to interest rate forecasts.Yield Movements and Currency Implications
Interestingly, US bond yields are reflecting this caution. Higher yields usually mean bonds are less appealing for holding from a price standpoint, even if the income looks better. This situation seems to weaken the US dollar when its safe-haven qualities should be solid. That the dollar is hesitating under these conditions signals a loss of confidence. Expectations for future interest rates are quietly shifting. While June might be too early for changes, the rising likelihood of a July cut—now close to 37% according to the CME FedWatch tool—implies that markets anticipate weaker economic data soon. If this occurs, yield curves could steepen more, leading rate-sensitive assets to adjust. This transition is unlikely to be smooth. Chart patterns tell a similar story. Support is hovering around 100.22; a breach could lead to significant downward movement, while resistance just below 102 could limit any recovery unless strong economic data or affirmative comments from the Fed emerge. In risk-averse situations, investors tend to favor currencies like the yen or Swiss franc. However, the dollar isn’t displaying its usual strength in such times, and its lack of reaction is telling. With market volatility shifting and the dollar struggling for stability, it’s wise to monitor changes in positioning and implied volatility across forex pairs, rate futures, and yield spreads. If the DXY continues to test its support level while sentiment remains cautious, we might see unique opportunities in short- to medium-term interest rate derivatives. Small changes in real yields and Fed comments in the coming days could lead to significant impacts, especially if any data surprises alter the outlook. The market and central bankers are responding more reactively than proactively now. Until a clear signal emerges, price discovery may be sensitive and erratic. This creates opportunities, but precise timing and careful exposure management are crucial. Create your live VT Markets account and start trading now.EUR/USD rises 0.85% to near 1.1290 during North American trading amid US credit downgrade
Hope for a US-China Trade Deal
During European trading hours, there might be more announcements about trade deals, though we don’t know which partners will be involved yet. The Federal Reserve is focused on controlling inflation rather than employment, and they don’t plan to cut interest rates anytime soon. The EUR/USD seemed strong at the start of the week, partly due to possible trade announcements between the EU and the UK. The European Central Bank (ECB) may lower interest rates because of concerns about growth and inflation. US-EU trade discussions are upcoming, with the EU suggesting they buy more US goods to balance the trade deficit.Trade Collaboration Across the Atlantic
From Europe’s viewpoint, the euro’s strength is linked to both the dollar’s weakness and regional news. There are talks about a new set of trade measures between the EU and the UK, which could boost investor confidence. Meanwhile, the ECB is likely to reduce rates sooner than expected due to slowing growth and worsening inflation data. This difference in policy compared to the Fed might temporarily strengthen the euro. We also need to consider that the dollar received some support from positive trade messages from Washington, especially comments from Trump about renewed discussions with China. However, these signals have not been strong enough to counterbalance broader concerns about fiscal issues and interest rates. More information is expected to emerge during the European session, but it’s unclear which countries will be involved next. On both sides of the Atlantic, there’s ongoing preparation for formal US-EU trade coordination, which is an important topic. The EU has suggested buying US exports to help balance trade without starting new tariff disputes. These developments are important to follow in real-time, as they may create quick changes in an otherwise rate-driven market. For currency traders, the situation is straightforward: the focus remains on interest rate differences and short-term political risks. With yield curves steepening in the US and discussions about easing policies in Europe, spread trades become more appealing. Traders need to reassess their positions based on central bank signals and fiscal news while keeping a close eye on economic data releases. In this environment, being flexible is crucial, as reactions to headlines can be swift and strong. Create your live VT Markets account and start trading now.Pound Sterling strengthens against major currencies ahead of UK CPI data in early trading
The Pound Sterling begins the week strong ahead of an EU-UK trade summit set to take place in London. A potential trade deal could strengthen relationships since Brexit and benefit UK sectors like defense, agriculture, and energy.
UK arms suppliers could find opportunities worth 150 billion Euros through a defense agreement. Recent reports showed the UK economy grew by 0.7% in the first quarter, supporting the Pound’s rise.
Upcoming UK Economic Indicators
The Consumer Price Index (CPI) data, due Wednesday, may impact the Bank of England’s policy. Core CPI is expected to increase from 3.4% to 3.6%, based on the latest figures. The Pound is trading near 1.3400 against the US Dollar, which has slipped after Moody’s downgraded the US sovereign credit rating. Despite this, confidence in US financial systems remains steady. The US Dollar Index has fallen to 100.40. President Trump’s planned visit to China for direct talks with President Xi Jinping could pave the way for a possible trade deal. The Federal Reserve’s monetary policy influences the Dollar’s value, and rising inflation expectations due to tariffs are a concern. Consumer inflation expectations have increased from 6.5% to 7.3%, which may prevent rate cuts.Pound Sterling Market Dynamics
The Pound is showing a positive, short-term trend, supported by technical indicators. If it breaks above 1.3445, it might encounter resistance, while 1.3000 serves as key support. Though the Pound’s current upward trend suggests short-term strength, it’s essential to understand the factors driving this change, especially for those with leveraged exposure. The upcoming EU-UK trade summit adds speculative excitement, fueled by hopes of closer ties post-Brexit. If even partial agreements in defense or agriculture are reached, it could shift risk models in related UK industries. For instance, the potential for British defense companies to access €150 billion in opportunities is significant. This could lead to real policy changes that would positively affect large contractors who have faced diplomatic issues. Such a shift would impact related stocks and attract investments in aerospace and security sectors. Timing entries in these areas before official announcements may be beneficial. Moreover, the UK’s GDP growth of 0.7% in the first quarter supports a long-term bullish outlook on the Pound, at least for now. This figure surpassed expectations and countered recent doubts about the UK’s economic growth. However, it’s uncertain how this will influence the Bank of England when combined with this week’s CPI release. If core consumer inflation hits or exceeds 3.6%, it could limit the chances of near-term easing. If this happens, the market may expect a longer hold on interest rates, boosting the Pound further. We anticipate increased volatility surrounding Wednesday’s CPI release, especially in short-term interest rate products. Surprises could widen market reactions if they prompt new forward guidance. In the US, the Dollar has weakened—not due to economic strength changes, but because of reputational risks following the Moody’s downgrade. This has created a different narrative: while institutional confidence remains strong, concerns about the Dollar outlook are growing, lowering the Dollar Index to 100.40. This shift influences USD dynamics, particularly against sensitive pairs like USD/GBP and USD/JPY. Additionally, new political risks from US-China trade talks could affect expectations. With discussions between Washington and Beijing returning, tariff-sensitive instruments might react strongly. If tensions ease, long USD positions may tighten, especially as commodity-linked currencies adjust. Inflation expectations have jumped to 7.3% from 6.5%. This change affects the Fed’s ability to justify rate cuts and advocates for more conservative policy. Lowering rates will become more difficult, an important factor for those trading Treasuries or looking for yield compression in the markets. Technically, the Pound shows bullish signs supported by momentum signals. However, without further catalysts, the resistance level at 1.3445 is likely to hold. The 1.3000 mark is seen as a crucial support area. Momentum traders might look for breakout opportunities above 1.3450 but should be cautious of false breaks, especially with Wednesday’s CPI on the horizon. We are closely monitoring gamma exposure levels, as they could trigger delta hedging flows if the options market becomes uneven. Overall, the strategy involves recognizing when policy, macro data, and sentiment shift from being parallel to converging. When this alignment happens, strategic positioning can lead to substantial rewards, provided that risk parameters are carefully adjusted. Create your live VT Markets account and start trading now.USD/CHF falls to around 0.8330 as the US dollar weakens, down 0.5%
The USD/CHF pair is down 0.5%, nearing 0.8330, as the US Dollar weakens across the board. This decline follows Moody’s downgrade of the United States Sovereign Credit Rating from Aaa to Aa1, partly due to a $36 trillion increase in national debt.
The US Dollar Index (DXY) is around 100.30, indicating ongoing pressure on the dollar. In reaction to the downgrade, 10-year US Treasury yields have risen to about 4.52%, marking a 1.8% increase since the previous close.
