The USDCHF pair saw some price swings after Fed Chair Powell indicated a softer stance on interest rates, sparking conversations about possible cuts. Traders are now looking forward to the US Non-Farm Payroll report, which will help shape expectations for interest rates, especially for September. Strong labor market data could decrease the chance of rate cuts, while weaker data might boost those expectations. In Switzerland, the Swiss National Bank (SNB) is holding steady with no rate changes expected soon, even with a slight improvement in the Consumer Price Index (CPI). The market expects a resolution regarding US tariffs on Switzerland, which could cut rates from 39% to between 10-20%.

Technical Analysis Insights

On the 4-hour chart, USDCHF dropped below 0.8020, but corrections happened as traders paid attention to upcoming US data. Sellers might aim for a rebound to the trendline for support, while buyers could be waiting for a breakout toward 0.82. The 1-hour chart shows a slight upward trend, supporting a positive outlook. Buyers may strengthen their positions during trendline pullbacks, while sellers might look for new lows if the price breaks lower. Key upcoming data includes the US Consumer Confidence report, Jobless Claims, and the US PCE price index, which could further influence the currency pair’s direction. After last week’s dovish remarks from the Fed, the likelihood of a rate cut in September has jumped significantly. The CME FedWatch Tool currently shows this chance at over 80%, a notable rise from a month ago. As a result, many traders are unwinding long-dollar positions that hedged against high rates. All attention is on this Friday’s Non-Farm Payrolls report, with a consensus predicting about 175,000 jobs added. A strong reading above 200,000 could challenge the narrative of a September rate cut and drive the dollar higher. On the other hand, missing expectations with under 150,000 jobs would likely reinforce easing expectations and could push USDCHF down to the 0.8000 mark.

Market Reactions and Comparisons

With the upcoming data being so critical, there is a growing interest in short-dated options for USDCHF. Traders are positioning for increased volatility, with strategies like straddles and strangles gaining popularity to take advantage of bigger price moves in either direction. This approach minimizes the need to predict the NFP outcome while betting on strong market reactions. We’ve seen similar patterns before, particularly during last year’s policy shift when the market began to anticipate Fed cuts for the following year. In that case, initial dovish signals resulted in significant dollar weakness, although moves were often volatile and reversed when strong data emerged. This history suggests that any unexpected strength in the upcoming reports could lead to a rapid short squeeze. Currently, the Swiss franc is taking a backseat in the market, making this a more straightforward focus on U.S. economic data and Fed policy. With the SNB on hold and last month’s inflation showing a mild 1.5% year-over-year rate, there aren’t many domestic factors moving the franc. Ongoing tariff discussions with the U.S. are a background concern but aren’t the main influence this week. Create your live VT Markets account and start trading now.

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Nasdaq is trading at $23,437, down 0.25% from yesterday. After peaking at $24,068.50 on August 13, it fell 4.32% to $23,035, then bounced back to $23,650. The current price is below an important pivot area from July. For today’s Nasdaq 100 futures, the Decision Range is set between $23,445 and $23,480. A bearish trend may happen below $23,463, while a bullish trend could take hold above $23,513. Traders can utilize micro contracts for smaller trades since one MNQ point is 1/10th of the E-mini dollar value.

Bearish and Bullish Targets

If prices stay below the Decision Range, the market is likely to decline. Initial bearish targets are $23,417, $23,400, and $23,374. Further targets to watch are $23,312, $23,276, $23,226, and $23,123. It’s wise for short positions to not extend beyond $23,482; failing to stay below $23,513 could signal a shift to bullish trading. If prices hold above $23,513, potential bullish targets include $23,531, $23,543, $23,575, $23,665, and $23,695. A drop below $23,445 would cancel the bullish trend. Traders should manage risk carefully and take partial profits at key levels. TradeCompass can support decision-making but traders must act independently. Since hitting an all-time high of over 24,000 on August 13, 2025, the Nasdaq has pulled back, and we now focus on the key pivot zone around $23,450. The current trend feels bearish as long as we stay below this mark, indicating the market is searching for its next major driver. The upcoming Federal Reserve’s Jackson Hole symposium later this week should provide guidance on interest rates, which will be crucial as recent economic data has created uncertainty. The Fed’s messages will shape market direction in the weeks ahead, explaining the range-bound trading since the pullback.

Economic Indicators and Market Strategies

The July 2025 Consumer Price Index (CPI) was 3.4%, offering a slight relief but still showing inflation is stubbornly above the Fed’s 2% target. When combined with a slowing Q2 2025 GDP growth of 1.8%, the information gives the Federal Reserve reasons to consider various actions. For derivative traders, it’s essential to prepare for substantial movements as the market chooses its path. If the news pushes the market down and we break below $23,400 decisively, traders might position for a deeper correction, targeting a retest of the recent lows around $23,000. Buying put options with September expirations or starting short futures positions would be direct strategies in this case. On the other hand, if encouraging remarks help the market reclaim the $23,513 level strongly, the uptrend might restart. A sustained move above this point would make call options or long futures positions more appealing, aiming first for the $23,700 resistance before attempting the 24,000 all-time high. As we approach September, we can expect increased volatility regardless of whether the market rises or falls. Historically, September has been a weak month for stocks, with the S&P 500 averaging declines since 1950. Strategies that profit from price swings, like straddles, may work well. Currently, with the VIX at a relatively low 15.2, buying options is not very costly, making it a favorable time to define risk through derivatives. Consider purchasing puts to protect long stock portfolios or using debit spreads to speculate on upcoming moves with limited downside risk. Create your live VT Markets account and start trading now.

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Market Expectations

Credit Agricole expects the Federal Reserve to lower interest rates twice before the year ends—once in September and again in December. They predict the target rate will drop to 4.00% after a period of steady policy. This forecast comes from ongoing inflation, which limits the Fed’s ability to make big changes to monetary policy. The US economy is slowing down but not heading into a recession. Credit Agricole finds the job market to be fairly stable. This stability allows the Fed to avoid major reductions in rates. While inflation might temporarily rise due to tariffs, any impact is likely to be brief. As the US awaits the next jobs report, which will help guide the Fed’s decisions, the outlook aligns with expectations for rate cuts beginning in September. We anticipate two rate cuts of 25 basis points each by the year’s end. However, because inflation remained stubborn at 3.4% in July 2025, the Fed won’t be able to make dramatic cuts. This situation indicates a slow, careful approach to reducing rates.

Investment Strategies

We are closely monitoring interest rate futures linked to SOFR, which show a strong chance of the first cut happening next month. The upcoming jobs report, due in early September, could change these expectations. If the report is unexpectedly strong, it might challenge the idea of a rate cut in September and increase short-term market volatility. In this context, we expect a modest rise in stock prices, unlike the sharper market movements we observed in late 2023 when rate cuts were first anticipated. Given the unpredictability, options strategies that thrive on increased volatility, like purchasing straddles on the S&P 500 before major data releases, could be beneficial. The CBOE Volatility Index (VIX) is currently around 15, which is low historically and offers a cost-effective opportunity for volatility trades. The job market remains robust, evidenced by the last Non-Farm Payrolls report, which added 190,000 jobs. This gives policymakers a reason to be patient. Consequently, we see trading strategies heavily reliant on fast rate cuts as risky. Data indicating continued economic strength may pose short-term challenges for both bonds and stocks. Additionally, we must note that tariffs could lead to a temporary increase in inflation later in the year. This complicates straightforward predictions that interest rates will only fall. It may be wise to protect long-term positions against possible short-term spikes in inflation expectations. Create your live VT Markets account and start trading now.

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Barclays suggests that at the end of the month, there won’t be much selling of the dollar against most major currencies. The model remains neutral regarding the euro and yen. US bonds and stocks are having a bigger impact on market flows than the recent changes discussed at Jackson Hole. Both have seen slight gains this month, which signals weak selling of the dollar against most currencies.

Neutral Outlook for the Euro and Yen

The euro and yen are stable due to the strong performance of European and Japanese bond markets. This helps offset the selling pressure on the dollar. In the upcoming month, we expect selling pressure on the U.S. dollar against most currencies. The S&P 500 has gained 1.5% this August, causing large funds to sell dollar-denominated stocks to balance their portfolios. This selling is likely to influence dollar prices as the month ends. For traders, this indicates a strategy of betting on a weaker dollar, especially against commodity currencies like the Australian and Canadian dollars. Buying short-term call options on AUD/USD or NZD/USD could be a smart way to take advantage of this expected dollar decline. These rebalancing flows are usually predictable and can overshadow other market trends.

Euro and Yen as Exceptions

However, the euro and yen are expected to behave differently, likely staying stable against the dollar. The strong performance of European and Japanese government bonds this month is countering the weaker dollar trend. For example, German 10-year bund yields fell 20 basis points in August, balancing out pressures from US equity markets. This suggests selling short-term volatility in EUR/USD could be a good strategy. Last week’s comments from the Jackson Hole symposium should be seen as a minor factor for now. While the Fed hinted at a possible pause, the market is mainly focused on large month-end liquidity events. The lack of strong policy commitments means that these technical flows will dominate. This pattern is similar to what we observed in parts of 2023, where market flows often influenced currency movements when there were no major economic surprises. We predict this trend will continue over the next week or two. Therefore, opting for strategies that benefit from a gradual decline in the dollar or stable trading ranges is the wisest approach. Create your live VT Markets account and start trading now.

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European Flight to Safety Today, French stocks dropped sharply, signaling a clear move away from risk. The CAC 40 fell by 1.7%, reflecting local fears linked to the ongoing political situation. This decline wipes out the gains made this month, indicating that traders who were once hopeful are now quickly leaving the market. The rising uncertainty has pushed the VSTOXX, Europe’s key fear gauge, up over 25% this week. It’s now trading above 28 for the first time this year. A similar situation occurred in the summer of 2024 when an unexpected election announcement caused the CAC 40 to plummet nearly 7% in just one week. Buying put options on the CAC 40 seems like a simple way to profit from potential further declines in the upcoming weeks. Political Crisis Impact on Trading France is significantly underperforming compared to Germany, creating a chance for a pairs trade. Shorting CAC 40 futures while buying German DAX futures could be beneficial if the political crisis stays confined to France. This strategy relies on the French-German bond spread, which has already widened by 15 basis points, continuing to grow as investors seek higher rewards for holding French assets. If you own French blue-chip stocks like LVMH or TotalEnergies, now is a crucial time to think about protective puts. With options volatility increasing, these hedges are becoming pricier, so it might be wise to act quickly. The pressure building towards the end of the month could lead to more volatile swings as major funds adjust their positions. Create your live VT Markets account and start trading now.

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Gold prices jumped on Friday after comments from Fed Chair Powell suggested potential changes in interest rates. This sparked increased expectations of interest rate cuts in September, with two cuts predicted by the year’s end. Market participants are now closely watching the upcoming US Non-Farm Payroll (NFP) report, as it could greatly impact interest rate predictions.

Impact of NFP Data

If the NFP data is positive, it might reduce the chances of a September rate cut, which could negatively affect gold prices. On the other hand, weak data could raise expectations for more rate cuts, helping gold prices rise. Although we expect real yields to fall due to Fed easing, any adjustments to short-term interest rates may cause fluctuations in gold’s current upward trend. In the daily gold chart, prices are moving between 3,438 resistance and 3,245 support. The market remains in a range until a clear breakout happens. In the 4-hour chart, gold saw a rise but then fell back to 3,350. Buyers are likely targeting the resistance level. If prices drop further, sellers might look to reach the 3,245 support. Today’s key focus is on the US Consumer Confidence report, followed by US Jobless Claims on Thursday and the US PCE price index on Friday.

FED’S Impact On Gold

The Federal Reserve’s recent dovish shift has changed the outlook, leading us to believe rate cuts are on the way this year. The market is currently forecasting a high chance of a September cut, especially after July’s Core PCE data showed a manageable 2.7%. Attention will be on the upcoming labor market data for direction. Next week, the US Non-Farm Payrolls (NFP) report will be crucial for derivative traders. It could determine the Fed’s next move and influence gold’s short-term direction. Traders should be ready for two different outcomes. If the jobs data is strong, say over 200,000, expectations for a September rate cut will likely fall, putting pressure on gold prices. In this case, traders might consider buying puts on gold futures or ETFs to hedge against or profit from a potential drop to the 3,245 support level. A solid report would challenge the current dovish stance. Conversely, if the jobs report shows less than 150,000 jobs, it would boost expectations for more rate cuts, possibly three by year’s end. This could drive gold prices higher, making call options appealing to capture the upward momentum toward the 3,438 resistance. Such low job numbers would indicate that the economy is slowing sufficiently for the Fed to take action. We saw a similar situation during the aggressive rate hikes of 2022-2023, where consistently strong labor data kept real yields high, putting pressure on gold prices. Now, with the Fed easing, lower real yields should support gold over the long term, though short-term fluctuations will be driven by data surprises. Technically, gold is trading in a defined range between 3,438 resistance and 3,245 support. Before the NFP release, traders might consider volatility plays, like buying straddles, to profit from a breakout in either direction. Until that happens, price movements are likely to stay contained. In the short term, the 3,350 level is a key pivot point. If prices dip toward this level in the coming days, it could be a buying opportunity for tactical traders looking to purchase short-dated call options, expecting a bounce. However, if prices break below this level, it would signal weakness and open the door for a move down to the main 3,245 support. Create your live VT Markets account and start trading now.

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French household confidence fell in August, hitting its lowest level since October 2023, according to INSEE on August 26, 2025. The consumer confidence index dropped to 87, falling short of the expected 89. Concerns about unemployment are high, adding to this decline in confidence. People also feel less optimistic about their standard of living, with the sub-index for future living standards dropping two points to -64, the lowest since March 2023.

Key Market Indicators

The decline in French consumer confidence is a major warning sign for the upcoming weeks. This indicates a decrease in domestic demand, which could negatively impact the CAC 40 index, especially retail and luxury goods stocks. To prepare for a potential market downturn, we are considering buying put options on the CAC 40 index. We could also look into individual puts for consumer stocks that are most affected. This strategy will perform well if the market declines, as we expect. This worry isn’t just in France; we noted a disappointing German IFO Business Climate index just last week. The combined weakness from the two largest economies in the Eurozone suggests a larger regional slowdown. This reinforces the need for a cautious or bearish approach to European assets.

Potential ECB Policy Response

We think that these disappointing data will push the European Central Bank to adopt a more cautious approach at its September meeting. With Eurozone inflation easing to 2.1%, these growth worries could stall discussions about tightening policies. This situation might be beneficial for French government bonds (OATs). A cautious ECB, particularly while the US Federal Reserve focuses on its own priorities, could also impact the Euro. Therefore, we are considering strategies that would benefit from a drop in the EUR/USD exchange rate. This includes put options on the Euro and bearish futures positions. This consumer pessimism reminds us of the sentiment from late 2023, which occurred before a notable economic slowdown in early 2024. History tells us that a sharp drop in future expectations usually isn’t isolated; it often leads to a prolonged period of reduced household spending that can extend for several months. Create your live VT Markets account and start trading now.

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French CAC 40 futures are down 0.7%, continuing the downward trend from the previous day, when the index closed 1.5% lower. This decline jeopardizes the monthly gains that followed a dip on August 1.

Political Crisis in France

The fall in the market is mainly due to a political crisis. French Prime Minister François Bayrou is under fire for his plans to address public finance issues. Last year’s budget deficit in France hit 5.8% of GDP, nearly double the EU limit of 3%. Bayrou’s proposal to cut €44 billion from the budget for 2026 is not well-received. He has scheduled a vote for September 8 to discuss this plan. If the proposal fails to pass, it could lead to a vote of no confidence in Bayrou, making the political climate in France even more unstable. This type of political turmoil is not new; Barnier’s government collapsed within three months last year. Another government shake-up now appears likely, increasing uncertainty in Europe’s second-largest economy. With the ongoing political instability, we can expect the French stock market to remain weak. The vote on September 8 is critical and will create significant uncertainty for the CAC 40 index. This hints at increased risk for investors holding long positions in French stocks. One way to protect against further declines is to buy put options on the CAC 40 index. The CAC 40 volatility index (VCAC) has risen to 19.5, a notable increase from 14 earlier this month. This rise indicates that the market is anticipating bigger swings.

Broader Economic Implications

France’s economic challenges are serious, which explains the market’s concerns. The country’s public debt has now crossed 112% of its GDP, well above the Eurozone average of around 89%. This makes the proposed budget cuts not just necessary but painful. The economic strain adds to the political tension, complicating potential solutions. We witnessed a similar situation last year when President Macron called for a snap election in June 2024, causing the CAC 40 to drop nearly 7% in just over a week. This recent decline suggests that any further political issues could lead to another sharp sell-off. Traders should prepare for potential volatility if the government fails in the upcoming vote. This instability could also impact the wider European market and the euro. To mitigate broader risks, traders might consider buying put options on the euro, as a crisis in the EU’s second-largest economy would likely weaken it against the US dollar. The EUR/USD exchange rate has already dropped by 0.5% this week, indicating early signs of concern in the currency market. Create your live VT Markets account and start trading now.

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In the European session, there are no economic events planned, which may lead to stable market conditions before next week’s labor market reports. Traders are keeping an eye on how markets respond to updates from the Jackson Hole symposium. In the American session, traders will look out for the US Durable Goods Orders and the Consumer Confidence report. The durable goods data often does not affect the market much because it can be volatile, so the focus is primarily on consumer confidence. It is expected to slightly drop to 96.2 from 97.2.

Consumer Confidence Report

The last report showed that consumer confidence had improved, especially in the expectations index. Recent trends indicate good economic progress, as shown by the latest US PMI numbers. While consumer confidence can influence the markets, significant changes in the data are necessary for lasting effects. This week, the main attention will be on US Jobless Claims on Thursday, with key labor market data, including the NFP report, coming next week. Central bank speakers like Fed’s Barkin at 12:30 GMT, BoE’s Mann at 16:00 GMT, and BoC’s Macklem at 18:45 GMT will share their insights. All will speak from a neutral standpoint, with one being an active voter. Today, the spotlight is on the US Consumer Confidence report, which might challenge the current market trend. Last week, the Federal Reserve’s hawkish stance at Jackson Hole led to a slight pullback in Treasury yields and the dollar. A surprise in consumer confidence could either renew that trend or cement the market’s current cautious approach. We anticipate a consumer confidence reading close to the expected 96.2, continuing the gradual decline from the 102.0 peak seen in May 2025. A result below 93 or above 99 could spark a sustained market response. Otherwise, focus will quickly shift to more significant data releases ahead.

Labor Market Data

For derivatives traders, the lead-up to next week’s important labor data is marked by expectations of volatility. The VIX index is around a low of 14, indicating that options markets do not expect a major surprise from today’s report. This situation may favor strategies benefiting from a stable market, though there is a risk of being caught off guard if the consumer confidence data varies greatly. The key event remains the upcoming labor market data, starting with Thursday’s Jobless Claims and leading to next week’s NFP report. Following July’s solid non-farm payroll increase of 195,000, another strong report for August could pressure the Fed to uphold its careful stance. This jobs data will significantly influence expectations surrounding the Fed’s policy decision in November. We will also tune in to comments from Fed speaker Barkin. However, since he is a non-voter, his remarks are unlikely to have a strong impact unless he indicates a major change in perspective. More critical for currency traders could be the speech from Bank of Canada Governor Macklem, which might affect CAD-related pairs. These speeches will be closely monitored for any new insights on the future direction of interest rates. Create your live VT Markets account and start trading now.

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