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As the USD strengthens, USD/CHF reaches new highs while EUR/USD nears important support levels
The USDCHF is on the rise as the US dollar gains strength against other major currencies. This currency pair is approaching important resistance levels, with possible targets between 0.8057 and 0.80597.
On the hourly chart, USDCHF has crossed the 50% midpoint of July’s low-to-high swing at 0.80405. It is heading towards a key swing zone between 0.80438 and 0.80467. If it successfully breaks above this area, it could lead to even more gains. Analysts are keeping an eye on the 100- and 200-hour moving averages, which are close together in the 0.8057 to 0.80597 range, as the next targets.
USDJPY rises past the 200-hour moving average as European traders finish, approaching the 100-hour moving average
The USDJPY rose as European trading ended for the day. It surpassed the 200-hour moving average at 147.49, reaching the 100-hour moving average at 147.646. The price paused at this level as traders considered the next move.
If the price breaks above the 100-hour moving average, the next target will be the 38.2% retracement and swing area around 148.000. Traders who sold after Powell’s speech may feel let down as buyers regain control.
Support And Resistance Levels
If the price drops below the 200-hour moving average with momentum, the next target area would be 147.075. If it breaks this level, watch for the next zone between 146.61 and 146.75. As of today, August 25, 2025, the USDJPY is stalling at the 100-hour moving average around 147.65. This level is crucial, and traders should consider positions based on whether it breaks decisively. The immediate range is closely defined between the 100-hour and 200-hour moving averages. For those expecting a move higher, recent data supports a stronger dollar. Last week’s US Core PCE data for July showed a rise to 2.9%, slightly above the 2.8% forecast, putting pressure on the Federal Reserve to keep its hawkish stance. A solid break above 147.65 could signal a buy for short-dated call options targeting the 148.00 strike price for September expiration. On the flip side, if it fails at this resistance, the price may drop back toward the 200-hour MA at 147.49. Given Japan’s Core CPI holds steady at 2.1% year-over-year, the Bank of Japan is unlikely to become more aggressive. A break below the 200-hour MA with momentum could make buying September put options at a 147.00 strike an attractive choice.Volatility And Market Considerations
We should recall Japan’s sharp intervention by the Ministry of Finance in late 2022, which happened when the pair rose above 150. This historical caution suggests that selling call spreads above 148.50 may be a smart strategy to take advantage of limited upside potential. Implied volatility for USDJPY options is likely to rise as we approach the US Non-Farm Payrolls report in early September. It’s a tactical move to establish positions now, before that volatility is fully factored in. The outcomes of that jobs report could provide the needed catalyst to break the current range. Create your live VT Markets account and start trading now.EURUSD hits session low, testing buyers’ support and giving sellers new targets
The EURUSD currency pair has hit a new low for the day while staying in a tight trading range. This range is currently 47 pips, much lower than the usual average of 88 pips.
Technically, the pair is moving away from a swing area between 1.1692 and 1.17028. This move takes away nearby support for buyers and strengthens sellers’ positions. Now, the focus is on several targets at lower levels: the 200-hour moving average at 1.16674, the 61.8% retracement level at 1.16615, and the 100-hour moving average at 1.16522.
Important Support Zone
These levels create a key support zone. If the price drops below this area, it could reverse the upward momentum seen on Friday, impacting buyers who entered above these levels previously. The EURUSD is dropping to new lows, but the market remains calm, with a daily range well below the recent average. Sellers are growing more confident as the price moves away from the 1.1700 swing area. Right now, the focus is on the crucial support zone between the 200-hour moving average at 1.1667 and the 100-hour moving average at 1.1652. This technical pressure is backed by recent data showing that Eurozone CPI for July 2025 was below target at 1.9%. This has raised expectations that the European Central Bank will adopt a dovish stance, especially with officials scheduled to speak at the upcoming Jackson Hole symposium. Any indication of future easing could push the pair below that support cluster.Policy Divergence
On the other hand, the dollar is buoyed by a strong labor market, with the July 2025 Non-Farm Payrolls report adding over 250,000 jobs, surpassing expectations. Recent Federal Reserve minutes indicate a continued hawkish outlook, keeping the option for another rate hike in 2025 open. This difference in policy is putting pressure on the euro. The tight trading range suggests low volatility, making options strategies appealing. Given the downside risks, traders might consider buying puts or setting up bear put spreads to aim for a drop below 1.1650. This approach offers a defined-risk opportunity to profit from a potential breakdown if both the fundamental and technical conditions align. We have seen similar setups before, where the policy divergence between a hawkish Fed and a cautious ECB led to significant dollar strength in 2022. A clear break below the 100-hour moving average would indicate that Friday’s rally was a false start and confirm a lower path for the pair. Create your live VT Markets account and start trading now.USDCAD stays in a narrow range after declines, focusing on key support at 1.38016
The USDCAD is trading between 1.3812 and 1.38315 today. This range is a narrow 27 pips, and the pair is holding steady near last week’s lows.
Last Friday, prices dropped after a speech at Jackson Hole, moving closer to the lower end of the swing area. In early Asian trading today, the high reached 1.3843 before falling to about 1.38161.
London Holiday Impact
The London holiday has led to lower trading volumes, affecting market activity. Traders are paying attention to the rising 100-bar moving average on the 4-hour chart, currently at 1.38016. This level has been strong support in recent weeks. If the price falls below 1.38016, it could change short-term trends and target the 100-day moving average at 1.37676, along with the 200-bar moving average on the 4-hour chart at 1.37539. Buyers want to keep the current consolidation, while sellers are trying to break this key support. Overall, the USDCAD is stuck in a tight range since last Friday’s Jackson Hole speech. For derivative traders, the key level to watch is the rising 100-bar moving average around 1.3801. This level has held steady for weeks, becoming the pivot point for our next moves.Options Strategy Considerations
With lower trading volumes, selling weekly options could be a good strategy in the near term. An iron condor with strikes outside the 1.3750 to 1.3850 range could help capture premium as the pair consolidates. This strategy benefits from the market’s current indecision and time decay. If there’s a clear drop below 1.3800, buying put options that expire in the next two to three weeks would be wise. This bearish outlook is backed by last week’s Canadian CPI data, which showed core inflation rising to 2.4%. This suggests the Bank of Canada could stay hawkish. A break could set the 100-day moving average near 1.3767 as the first target. Conversely, we should remember a pattern from late 2024 when a similar test of a key moving average led to a strong rally. For traders expecting a bounce, buying call spreads could be a cost-effective way to prepare for a move back toward the 1.3900 highs. This bullish scenario relies on upcoming U.S. ISM manufacturing data, which could strengthen the dollar if it exceeds expectations. Create your live VT Markets account and start trading now.15% tariff on furniture expected to increase housing costs in national security assessments
Tariffs on furniture will start soon due to national security reviews of lumber. The Trump administration plans to apply a 15% tariff under Section 232.
This action could raise costs for building homes in the United States, where the housing market is already facing supply and cost issues.
Impact On Homebuilder Equities
With a 15% Section 232 tariff coming on furniture, homebuilder stocks will likely face immediate challenges. These companies are already struggling with high costs, and this new tariff will further reduce their profit margins. We are considering buying put options on homebuilder ETFs like the SPDR S&P Homebuilders ETF (XHB) to take advantage of a possible decline in their value. This tariff is a result of a lumber investigation, causing uncertainty in the lumber futures market (LBS). Recall the extreme price swings in lumber from 2021 to 2022; this tariff may cause similar fluctuations. Traders should be ready for increased volatility and might consider straddles or strangles to benefit from large price movements, regardless of direction. The effects will also reach home improvement and furniture retailers such as Home Depot, Lowe’s, and Restoration Hardware. These companies will need to either absorb the higher costs or pass them on to customers, which may be hard given that recent reports from the Conference Board show consumer confidence is already low. This situation makes bearish strategies, like buying puts or creating bear call spreads on these retail stocks, appealing in the coming weeks.Broader Market Implications
This move indicates rising trade protectionism, which will likely increase volatility across affected sectors. The broad “national security” reasoning suggests that other industries could be targeted next, introducing additional risks. We can watch the CBOE Volatility Index (VIX) for overall market reactions, but the real chance lies in the rising implied volatility of individual company options. Since Canada is a major lumber supplier for the U.S., this tariff may strain trade relations and weaken the Canadian dollar. We saw the CAD drop during past lumber disputes in the late 2010s, setting a historical precedent. Derivative traders might see this as a secondary opportunity, considering put options on currency ETFs like the Invesco CurrencyShares Canadian Dollar Trust (FXC) as both a hedge and a speculative play. Create your live VT Markets account and start trading now.New home sales hit 0.652 million, exceeding estimates but down 8.2% from the previous year.
In July 2025, new home sales totaled 0.652 million, exceeding the estimate of 0.630 million. This represents a slight decrease of 0.6% from June, when sales were revised up to 0.656 million from an initial report of 0.627 million.
Compared to last year, new home sales have dropped by 8.2%. During this time, mortgage rates went above 6.75%, but this rise is not reflected in the current sales figures. The median home price decreased to $403,800, which is a 0.8% drop from the previous month and a 5.9% decline from last year’s price of $429,000.
Average Sale Price Update
The average sale price for homes was $487,300, down 3.6% from June’s price of $505,305 and from July 2024’s price of $513,200. The housing supply decreased to 9.2 months from 9.8 months. Builders have lowered prices to attract buyers in this challenging market. Recent data comes before the latest drop in mortgage rates, which have now approached 6.5%, the year’s lowest level. The July new home sales figures showed better results than expected, but there’s still concern with an 8.2% annual decrease in sales. This mix of signals indicates that the housing market remains fragile despite some strength. For traders, this uncertainty may be an opportunity in homebuilder ETFs such as ITB or XHB.Implications of Recent Mortgage Data
This data collection occurred before mortgage rates fell back to around 6.5% in early August 2025. It suggests that August sales could see a rebound as lower borrowing costs attract buyers back to the market. Considering this, it may be wise to take short-term bullish positions, like buying call options that expire this fall, to possibly benefit from this upward movement. A similar trend was observed in late 2023 when falling rates temporarily increased sales activity, making this a familiar setup for a tactical trade. The Mortgage Bankers Association reported a small rise in mortgage applications in the first half of August 2025, supporting the idea of a potential rebound. This highlights the importance of the Federal Reserve’s next meeting in September; any indication of maintaining rates could further boost the housing market. While we may see a short-term increase, the significant 5.9% year-over-year drop in median prices is a key concern. This decline suggests that builders are losing pricing power and that consumer affordability remains a critical challenge for the economy. Therefore, it is wise to hedge any bullish positions in homebuilders by considering put options on financial sector ETFs, which are affected by economic slowdowns. Create your live VT Markets account and start trading now.Palantir’s stock decline is due to high valuations and cautious investor sentiment in the tech sector.
Palantir Technologies’ stock is currently declining, mainly due to weakness in the AI and tech sectors. This downturn is influenced by profit-taking after a recent surge and worries about the stock’s high valuation compared to its earnings and sales.
Palantir’s valuation metrics are quite high. The price-to-earnings (P/E) ratio stands at 527.55, meaning investors pay more than $500 for every dollar of earnings. The forward P/E ratio is also high at 189.26, indicating nearly $200 for expected profits. Furthermore, the price-to-sales ratio is 109.45, suggesting that investors spend over $109 for every dollar of sales.
The upcoming earnings report from NVIDIA, a major player in AI, could affect Palantir’s stock. If NVIDIA performs well, it may boost momentum for AI stocks, including Palantir. However, a weak report could hurt the sector’s sentiment.
Investors can take lessons from this situation. It’s essential to focus on valuation, pay attention to sector sentiment, and manage risk carefully because of possible volatility. Realizing partial profits after a significant increase can be a wise move. The current decline is primarily due to valuation concerns and profit-taking, rather than any specific news about Palantir.
We see a familiar trend with Palantir. Its high valuation makes it sensitive to broader market changes. The stock’s forward P/E ratio is now around 75, much lower than the extreme levels in 2023, but it still indicates high expectations. This premium valuation means that any changes in sentiment can lead to sharp price drops, even without specific news.
The overall economic climate is adding more pressure, which we should consider in our strategies. Recently, the Federal Reserve emphasized a “higher for longer” approach to interest rates, with the federal funds rate at 4.5% and little chance of cuts this year. Historically, such conditions dampen high-growth tech stocks, as future earnings become less valuable.
In the AI sector, last month’s cautious guidance from Databricks caused ripples throughout the market, impacting Palantir as well. This shows that Palantir often moves with the market, making it sensitive to sector news. While excitement for AI remains, the market is becoming choosier about prices, marking a significant shift from the enthusiasm seen in the 2023-2024 rally.
For derivative traders, Palantir’s options are particularly intriguing now due to high implied volatility, currently around 65%. This volatility makes buying puts or calls expensive and raises the risk of losing premium value. Thus, strategies that leverage this high premium may be wise in the upcoming weeks.
One effective strategy is to sell premium, like writing covered calls against an existing stock position. This generates income and provides some protection against slight downturns. Alternatively, those optimistic long-term but expecting short-term weakness might consider selling cash-secured puts at a lower strike price. This can yield premium while allowing the potential to buy the stock at a discount. Both strategies benefit from time decay and possibly lower volatility.
Using spreads can also help manage risk and reduce expenses. A call debit spread could serve to bet on modest upward price movement while defining risk. A put credit spread can generate premium with the belief that the stock will not fall below a certain price. These defined-risk strategies are ideal for Palantir, where swift and unpredictable moves are common.
US stock indices are experiencing a slight decline, with the NASDAQ at a critical point near its 100-hour moving average.
**US Stocks Decline at Open**
Friday’s rally after Chair Powell’s speech at Jackson Hole helped the index move above key averages. Right now, staying above the 100-hour moving average at 21,390 keeps a positive short-term outlook. However, if the price falls below this level, sellers could take control, risking a drop to the 200-hour moving average at 21,187.33.
**Testing Key Support Levels**
As the week begins, the markets are slightly pulling back, especially the NASDAQ, which is testing an important short-term support level. The 100-hour moving average at 21,390 is crucial for derivative traders. A significant break below this could lead to a deeper correction and prompt more aggressive short positions.
This cautious trading follows last week’s Consumer Price Index report for July, which came in slightly higher than expected at 3.4%, compared to the anticipated 3.3%. While this isn’t alarming, it has dampened enthusiasm from Chair Powell’s balanced tone at the Jackson Hole symposium. It places more pressure on the upcoming jobs report to indicate a cooling economy without raising recession fears.
Implied volatility is on the rise, with the VIX increasing over 8% this morning, trading around 16.5. This suggests that buying options might be a smart choice in the coming weeks. Higher volatility boosts option premiums, benefiting long positions if a significant market move occurs.
**Historical Precedent and Strategy**
Remember when Chair Powell’s hawkish speech at Jackson Hole in August 2022 led to a sharp sell-off lasting weeks? Although his tone was more measured this time, that history reminds us to be ready for a possible delayed market reaction. Protecting long equity portfolios with index puts could be a wise strategy until the market’s direction is clearer.
With the NASDAQ resting on this key level, a volatility strategy like a straddle on the QQQ ETF could be effective. This entails buying both a call and a put option at the same strike price, benefitting from a significant move in either direction. It’s a bet that current uncertainty will end with a clear breakout or breakdown from the 21,400 level.
The Russell 2000’s underperformance today is also a red flag, as small-cap stocks tend to be more sensitive to economic changes. With the NFIB Small Business Optimism Index dropping for the third month in a row, traders might consider buying puts on the IWM ETF. This can serve as a hedge against a broader economic slowdown that could hit smaller companies harder.
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Technical analysis indicates that USDCHF is fluctuating within a narrow range while sellers remain in control.
The USDCHF is testing key resistance levels, particularly the 0.8047 point, while 0.8017 serves as support to help forecast market trends. After Powell’s speech last Friday, the currency pair dropped significantly, falling below the 100- and 200-hour moving averages and slipping through the 0.8040–0.8047 range.
Despite extending below the 0.8017 low of an important swing area, sellers couldn’t maintain their downward momentum. Currently, the price is back within the swing area but is having difficulty breaking through the 0.8040–0.8047 resistance zone, which aligns with earlier swing points and the 50% midpoint from July’s rally.
Key Support And Resistance Levels
Staying below this zone keeps a downward trend. The 0.8017 level is significant, and if the price drops below the 61.8% retracement at 0.8010, it may open up selling opportunities towards the 0.7986–0.7994 range. In summary, the market is in a tug-of-war while it remains within the “red box.” A move above 0.8040 to 0.8047 could push sellers back, whereas dropping below 0.8017 and 0.8009 might strengthen their position. The current uncertainty in USDCHF, sitting between 0.8017 support and 0.8047 resistance, suggests potential energy is building. This creates an opportunity for traders to benefit from rising volatility, such as through a long straddle, anticipating a large move once this balance is disrupted. This strategy allows traders to profit from a breakout in either direction without needing to guess the outcome of this tight consolidation.Market Strategy and Outlook
The sharp decline following the Jackson Hole speech on Friday, August 22, 2025, highlights renewed uncertainty about the Federal Reserve’s direction, especially considering that recent US CPI data indicated inflation at 3.2%. Meanwhile, Swiss inflation remains low at 1.5%, giving the Swiss National Bank more room to maneuver. We remember the surprise rate cuts in 2024 that weakened the franc significantly. This policy difference is contributing to the current price tensions. If sellers regain control and push the price below the 0.8017 level, we may consider buying put options targeting around 0.7990. The one-month implied volatility for USDCHF has increased to 7.9% from 6.5% earlier this month, indicating that the options market is anticipating a potential move. A clean break of the 0.8010 Fibonacci level would confirm our bearish positions. On the other hand, if the price sustains a move beyond the 0.8047 resistance, it would suggest that sellers are losing strength and buyers are gaining momentum. In this case, buying call options would be the right move, as this would negate the recent bearish sentiment. We will closely watch the upcoming US jobs report on September 5th as a potential catalyst for a bullish breakout. Create your live VT Markets account and start trading now.The US dollar strengthens while UK holiday restrictions limit activity and key economic reports are expected
The US dollar is gaining strength as a new trading week starts. This follows a bounce-back from a cautious stance after the Jackson Hole event. Currently, there’s about an 85% chance of an interest rate cut in September, a drop from levels seen last Friday. US yields are rising too, with the two-year yield up by 3 basis points and the 10-year yield up by 1.5 basis points.
Today, we are focusing on technical analysis of major currency pairs such as EURUSD, USDJPY, and GBPUSD, especially since UK markets are closed for a holiday. The Ifo Business Climate report came in better than expected at 89.0, and outlooks for Q3 look positive. Although current conditions are not meeting expectations, the EUR sentiment is getting mild support from the report’s stability.
