Fed’s Goolsbee and other economists emphasize the need for the Federal Reserve to remain independent to prevent inflation from returning. Goolsbee’s remarks come as discussions on tariffs and their economic impact continue. Most economists agree that the Fed should stay free from political pressure. However, some believe the current administration may not fully support this independence, despite what they say publicly. Goolsbee argues that tariffs are not just temporary causes of inflation but contribute to a “stagflation area shock.”

Federal Reserve Meetings and Economic Policy

Goolsbee suggests that the upcoming Federal Reserve meetings will be crucial to tackling challenges from economic policies and tariffs. We are noticing rising tension between the government and the Federal Reserve. The central bank’s independence is vital to ensuring that the high inflation of 2022 does not return. The Consumer Price Index reading of 3.1% in July indicates that this fight is ongoing, creating more pressure. The new tariffs on electronic components announced in late July are seen by some as a minor issue, but we view them as a significant shock that could hinder growth while increasing prices. The “stagflation” risk is real, especially since second-quarter GDP growth was a low 0.8%.

Market Volatility and Interest Rates

This mix of political and economic uncertainty is likely to lead to higher market volatility in the coming weeks. The VIX index has jumped from the low teens to nearly 19 over the past month, showing growing anxiety. The upcoming Fed meetings are critical, as they could cause major price swings in the markets. In this situation, traders might want to buy protection against a potential market downturn. Index put options on the S&P 500 can help safeguard against broad market declines. Traders can also consider volatility through VIX call options or futures ahead of key policy announcements. The future of interest rates is now very unclear, a situation we have not faced since the aggressive rate hikes of 2023. If tariffs push the Fed to act, they may need to keep rates elevated for an extended period, even with the economy slowing down. This prompts consideration of put options on long-duration bond ETFs like the TLT to guard against rising yields. Create your live VT Markets account and start trading now.

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The Canadian Dollar is experiencing some benefits because the US Dollar is weakening after moderate US inflation reports. This has raised hopes that the Federal Reserve might ease monetary policy. However, the Canadian Dollar hasn’t made significant gains and remains in its previous trading range. In July, the US Consumer Price Index (CPI) showed a 2.7% increase compared to last year, which was lower than the expected 2.8%. Meanwhile, the core CPI rose to 3.1%, slightly above the forecast of 3.0%. This news eased worries about the inflation impacts of tariffs and boosted expectations for a rate cut after summer to 95%.

Current Market Sentiment

This change in market sentiment has put more pressure on US Treasury yields and the US Dollar. Despite this, the Canadian Dollar is struggling to recover, mainly because oil prices have fallen to about $62.00, losing almost $8 in August. The Canadian Dollar is influenced by various factors, including the Bank of Canada’s interest rates, oil prices, and Canada’s overall economic health, which includes inflation and trade balance. Higher interest rates from the Bank of Canada generally support the value of the Canadian Dollar. Other economic indicators such as GDP, employment statistics, and consumer sentiment also play a role in the value of the CAD. A strong Canadian economy typically boosts the CAD, while weak data might cause it to decline. As of August 13, 2025, the Canadian Dollar finds itself in a challenging position. While the US Dollar is weakening, the Canadian Dollar isn’t gaining momentum. This suggests the currency pair will likely trade sideways within its current range for the next few weeks.

Market Forces and Influences

The strongest support for the Canadian Dollar comes from the market now predicting a 95% chance of a US rate cut after summer due to the recent US inflation rate of 2.7%. This contrasts with the Federal Reserve’s earlier aggressive approach in 2025. We are looking forward to the Federal Reserve’s Jackson Hole symposium later this month, which might lead to significant market movements. However, the sharp decline in oil prices is hindering the Canadian Dollar’s progress. WTI crude has dropped nearly $8 this month, resting around $62 a barrel. This is a significant obstacle, as oil is Canada’s most important export. Until oil prices stabilize, the Canadian Dollar will struggle to make a strong recovery. For derivative traders, this situation suggests aiming for strategies that can benefit from low volatility in the short term, such as selling options outside of the recent trading range. The USD/CAD pair is likely to continue bouncing between established support and resistance levels. However, we should stay adaptable, as key data releases in September could sharply increase market volatility. We are closely monitoring the Bank of Canada’s interest rate decision in early September, especially since Canada’s inflation is slightly higher at 2.9%. Any indication that the Bank of Canada might not follow the Fed’s easing could strongly influence the currency. Canada’s upcoming employment report and the OPEC+ meeting will also be important events that could change the current situation. Create your live VT Markets account and start trading now.

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The Euro (EUR) has risen by 0.5% against the US Dollar (USD), keeping pace with many other G10 currencies due to a general weakness in the USD. The EUR/USD has hit a two-week high above 1.1700 as traders expect a rate cut from the Federal Reserve. Attention is on Germany’s early inflation data and comments from Fed officials. Technical signals indicate a bullish trend, with support at 1.1650 and resistance at 1.1750.

Currency Movements

The GBP/USD pair is climbing as well, breaking through 1.3550. This increase is fueled by a weaker USD and a positive market sentiment linked to expectations of a dovish Federal Reserve. Gold remains in a good position but faces challenges gaining momentum, as safe-haven demand decreases despite rumors of rate cuts by the Federal Reserve. The US Dollar keeps falling as traders weigh the chances of a September rate cut. Artificial Intelligence tokens are gaining traction, especially with Perplexity’s $34.5 billion bid for Google Chrome. Bittensor (TAO), Near Protocol (NEAR), and Render (RNDR) are among the top performers. The Bank of England has recently lowered rates to 4%. While this move is significant, officials remain cautious about ongoing inflation issues. Meanwhile, trading foreign exchange carries high risks, and newcomers should be aware of these dangers. With the US Dollar continuing to weaken, we predict this trend will persist. The market is anticipating a Federal Reserve rate cut in September, which is boosting other currencies against the dollar. We should consider options strategies that take advantage of a declining dollar and increased currency volatility in the upcoming weeks.

Trading Strategies

Since the EUR/USD has moved above 1.1700, we see more upward potential towards the 1.1750 resistance level. It may be wise to buy call options on the euro to capitalize on this momentum while closely monitoring the upcoming German inflation data. A recent report indicates that Germany’s preliminary inflation for July 2025 is at 2.6%, which could make the European Central Bank cautious, adding complexity to our trades. The British Pound is also on the rise, and the recent rate cut by the Bank of England to 4% should be viewed as a sign of its future policy direction. Although this may weaken the pound over time, the current USD weakness is a stronger influence lifting GBP/USD. We recall a similar increase in late 2023 when markets first expected a Fed policy change, suggesting this momentum might continue. Gold is in a complicated position, currently trading around $2,350 per ounce. Typically, a weaker dollar boosts gold, but a strong risk appetite is limiting its appeal as a safe haven. We could use straddles, an options strategy that profits from significant price movements in either direction, to trade any potential breakout. The US Dollar Index (DXY) has dropped to 101.50, its lowest level in three months, supporting the weak dollar trend. This follows last week’s Non-Farm Payroll report, which indicated that only 150,000 jobs were added in July 2025, significantly below expectations. This weak employment data increases the likelihood of a September rate cut by the Federal Reserve. In the more speculative market segment, excitement around AI tokens like TAO and NEAR showcases a strong risk-on mentality. Given their high volatility, it’s wise to use derivatives to manage risk, such as buying protective puts against current holdings. This approach allows us to benefit from potential gains while minimizing losses. Create your live VT Markets account and start trading now.

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The Euro has risen by 0.5% against the US Dollar, aligning with other G10 currencies as the US Dollar weakens. Technical indicators point to a positive trend, with aggressive easing from the Federal Reserve likely boosting the Euro. Interest rate differences between central banks are shrinking, supporting the Euro’s rise. Germany’s final Consumer Price Index (CPI) for July holds steady at 2.0% year-on-year, matching initial estimates.

The Recent Euro Ascent

The Euro’s recent rise almost completely recovers its drop from late July, nearing multi-year highs. Momentum is strong, but the Relative Strength Index (RSI) is below the overbought level of 70. This indicates a possible trading range between support at 1.1650 and resistance at 1.1750. During European trading, the EUR/USD surpasses 1.1700 as the US Dollar weakens due to speculation about rate cuts from the Federal Reserve. Similarly, the GBP/USD also climbs past 1.3550, fueled by a positive market sentiment. Gold is facing challenges in gaining momentum as safe-haven demand decreases, even with a generally positive outlook. Anticipation of a Federal Reserve rate cut is weighing on the US Dollar, which in turn affects gold pricing. AI tokens are gaining popularity, with top performers including Bittensor, Near Protocol, and Render, following Perplexity’s interest in Google Chrome. Additionally, the Bank of England has lowered rates by 25 basis points, reflecting concerns over persistent inflation.

US Dollar Weakness and Euro Strength

With the US Dollar losing value, we expect the EUR/USD pair to maintain its strength in the coming weeks. Anticipated rate cuts by the Federal Reserve are closing the interest rate gap with the European Central Bank, which supports the Euro’s strength. We recommend buying call options on EUR/USD with strike prices above 1.1700. Our outlook is backed by recent data showing US core inflation falling to 2.1% and a cooling labor market, as unemployment in July rose to 4.2%. This trend makes it likely that the Federal Open Market Committee will cut rates in September, further pressuring the US Dollar. Meanwhile, with Eurozone inflation steady at 2.1% for July, the European Central Bank has little motivation to make cuts just yet. The technical analysis supports this upward trend, as the RSI remains below the overbought level, indicating potential to rise toward the 1.1750 resistance. We observed a similar situation in 2019, where a patient ECB and a cutting Fed provided support for the Euro. This historical context suggests that the current trend could continue for several weeks, although we will watch the 1.1650 support level closely. While the British Pound is also gaining against the US Dollar, the Bank of England’s recent 25 basis point rate cut raises some caution. Lowering rates amid July inflation at 2.8% indicates serious worries about economic growth, which might limit the Pound’s strength compared to other currencies. Thus, we suggest considering a long position in EUR/GBP, as the Euro’s stable policy is likely to outperform. For gold traders, the current situation is challenging despite the declining US Dollar. A strong risk-on feeling in the market is boosting equities and currencies, which lowers the need for safe haven assets. This means that just betting against the dollar might not guarantee profits for gold, and investors should be cautious about expecting gold to break out significantly. In a different area, the momentum in AI-related tokens like Bittensor and Near Protocol offers a high-risk opportunity. This rally is driven by news in the industry, not broader central bank trends. For those willing to take risks, this niche could lead to short-term gains, but it does not align with our main forex strategy. Create your live VT Markets account and start trading now.

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European shares ended the day on a positive note, fueled by hopes for peace talks and a reduction in tariff impacts. Presidents Trump and Putin are set to meet in Alaska this Friday. Trump talked about this meeting with European leaders and Ukraine’s Zelenskiy, giving the plan a thumbs up. Key European indices closed higher: – The German DAX went up by 0.67% – France’s CAC increased by 0.66% – The UK’s FTSE 100 rose by 0.19% – Spain’s Ibex gained 1.08% – Italy’s FTSE MIB advanced by 0.60%

US Stock Market Performance

In the United States, the stock market showed mixed results. The Dow Jones Industrial Average climbed 317 points (0.71%) to reach 44,775. The S&P 500 edged up by 4.56 points (0.07%) to hit 6,450.42. Meanwhile, the NASDAQ dipped slightly by 1 point (0.01%) to 21,680. In the US debt market, yields decreased. The 2-year yield dropped by 5.0 basis points to 3.680%. The 5-year yield fell by 5.9 basis points to 3.763%. The 10-year yield decreased by 6.2 basis points to 4.230%, and the 30-year yield slid down by 6.4 basis points to 4.821%. The upcoming Friday meeting is adding uncertainty to the market, despite the current positive sentiment. We suggest traders consider buying near-term volatility since options on the S&P 500 may be undervaluing the potential for a sharp move after the meeting. The CBOE Volatility Index (VIX), which measures market fear, has been around 16 but may spike if the summit’s outcome isn’t seen as a clear success. The difference in performance between the Dow and NASDAQ shows a shift away from high-growth tech stocks to industrial stocks. We have seen this before, especially earlier in 2022, when rate-hike fears first impacted the market. Consider selling call spreads on tech-focused ETFs while buying call spreads on industrial sector ETFs to take advantage of this trend.

Market Sentiment and Strategy

While European markets are rising on hopes for peace, we should remember that the 2018 Helsinki summit led to unexpected volatility afterward. The current optimism seems fragile and might change quickly if the Alaska meeting doesn’t yield a clear plan for de-escalating tensions in Ukraine. Buying out-of-the-money puts on the SPDR S&P 500 ETF (SPY) with a late August expiry can be a cost-effective hedge against a negative outcome. The drop in Treasury yields, particularly with the 10-year now at 4.23%, contrasts with the equity market’s optimism. This move toward the safety of government bonds indicates that a significant portion of the market is preparing for slower economic growth or a risk-off event. We see a chance to buy call options on bond ETFs like the TLT, which would benefit if yields continue falling due to geopolitical tensions or disappointing economic data. Create your live VT Markets account and start trading now.

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Economic Indicators Analysis

Before the July decision, the Bank of Canada considered factors like persistent inflation and strong job growth. The USD/CAD pair must clearly drop below 1.3760 to maintain gains and test support at 1.3720/30, with resistance at 1.3810/15. The article offers forward-looking statements. It advises individuals to do thorough research before making investment choices, highlighting that risks can lead to a total loss of capital. The views expressed belong to the authors and may not reflect any official policy. The author currently holds no positions in the mentioned stocks and has not received compensation from the related companies. The Canadian Dollar is facing challenges, even as the US Dollar weakens. Other currencies have made significant gains, but the loonie’s progress is limited. This indicates a particular challenge for Canada that we should note. Historically, major Canadian pension funds, like OTPP and La Caisse, reduced their US Dollar exposure during 2024. This shift shows a long-term move away from US assets by key players, and it’s essential to consider this context as we assess the current market.

Market Position and Strategies

This weakness is evident in the latest data from July 2025. Canada’s inflation dropped to 2.8%, but the economy lost 15,000 jobs, raising unemployment to 6.4%. Compared to the stronger job market and persistent inflation of mid-2024, the current figures suggest the Bank of Canada might need to lower rates sooner than the US Federal Reserve. Given this difference, we anticipate more volatility in USD/CAD in the coming weeks. Traders should consider strategies that benefit from price fluctuations, such as buying straddles or strangles. This approach can lead to profits whether the pair moves sharply up or down as autumn approaches. For those with a specific outlook, the likely trend is a higher USD/CAD. The previous resistance level near 1.3815 seems like a reasonable short-term target. Buying call options on USD/CAD or utilizing call spreads could be a good way to position for further Canadian Dollar weakness with a defined risk. It’s essential to recognize the underlying risk, as unexpected economic data can quickly change the trend. Using stop-losses on any futures positions is important for managing downside risk. Hedging existing short USD/CAD positions with out-of-the-money call options is also a wise strategy right now. Create your live VT Markets account and start trading now.

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The US Dollar is currently losing value, influenced by a few different factors. A recent report on the US Consumer Price Index showed mixed results, causing the dollar’s value to drop initially. President Trump has criticized Fed Chair Powell and discussed possible lawsuits, further impacting the dollar’s situation. Additionally, Trump’s nominees for key economic positions have commented on inflation and how data is reported.

Treasury Secretary Comments

Treasury Secretary Bessent hinted at a possible 50 basis point interest rate cut in September, based on the latest inflation data. This raises questions about the Federal Reserve’s independence and its future rate decisions, especially with inflation still hovering around 3%. The DXY index saw some sell-offs, confirming its resistance levels. If it falls below the support level of 97.70, it could indicate ongoing losses for the USD, leading attention to Fed rate policy and rate differentials. The US Dollar is weakening as discussions about lowering interest rates increase. The latest inflation report reveals that consumer prices are still up 3.1% from a year ago, which puts the Federal Reserve in a tough spot. This situation reminds us of the pressures the Fed faced in 2019 when its rate policies were openly questioned.

Strategies in the Current Economic Climate

Given the current environment, we should think about buying put options on dollar-tracking funds, betting on further declines. If the Fed hints at a rate cut during its September meeting, despite inflation staying above their 2% target, the dollar could drop sharply. Historically, periods of high political influence over the Fed have led to significant volatility in the dollar. We are paying close attention to the DXY index, which is now testing the 103.50 support level. A strong drop below this level could indicate that the dollar is entering a new downward trend, shifting focus to the interest rate differences between the US and other central banks. This makes strategies like purchasing call options on the Euro against the Dollar (EUR/USD) particularly appealing in the coming weeks. A weaker dollar and the possibility of lower interest rates also benefit commodities priced in dollars. We can expect assets like gold to perform well in this environment, as they become cheaper for foreign buyers and compete less with yielding investments. After the 2008 financial crisis, a similar mix of policies sparked a multi-year bull run in gold prices. Create your live VT Markets account and start trading now.

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The USDJPY currency pair hit a new low during the US session, falling below the 38.2% retracement level of the 2025 trading range from January’s high of 147.13. It stopped just short of the rising 200-bar moving average at 147.04, creating a point of downward pressure. The day’s lowest price was 147.08, lying between these technical indicators. When the USDJPY chart shows these technical levels coming together, traders often use this area to plan their trades and manage risks.

Strategizing From Technical Levels

For buyers, the strategy is to set a stop loss just below the break point to limit risks while aiming for a price increase. On the flip side, sellers might look to take profits at these technical points. If the price breaks downward, it could lead to more significant selling pressure. Right now, the USD/JPY pair is testing a key support area between 147.04 and 147.13. This zone is important because a trend line, moving average, and a crucial retracement level all converge here. The bounce from 147.08 shows that buyers are trying to defend this level. For traders who expect the dollar to recover against the yen, now is a good time to consider buying call options. This approach allows you to bet on a price rise while limiting your risk to the cost of the option. If the 147.00 support holds, we could see the price move back toward the 150.00 level we observed earlier this year. The downward pressure on the dollar is backed by recent economic data from the United States. The July 2025 inflation report showed a decrease in price pressures to 2.8%, and the jobs report from early August pointed to slower hiring. This makes it less likely that the Federal Reserve will raise interest rates again this year.

Potential Market Movements

Conversely, if the price breaks below 147.00, it could indicate a much larger drop, and traders should stay alert. In that case, buying put options could allow for direct profits from further declines. A sustained move below this support zone could quickly send the price down to the 145.00 level. The potential strength of the yen is also significant, fueled by new signals from the Bank of Japan. Recent discussions about a possible policy review at the upcoming September meeting have traders speculating about an end to negative interest rates. This speculation is pushing the yen higher against the dollar. Looking back, we saw a similar technical setup in spring 2024 before the pair rallied significantly. However, we also remember sharp declines in late 2022 when fears of intervention were high. This history suggests that whatever direction the price breaks from this 147.00 area, the move could be swift. Create your live VT Markets account and start trading now.

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In June, South Africa’s retail sales growth dropped to 1.6%, down from 4.2% the previous year. This shows a clear decline in retail performance. The Euro remained strong, trading above 1.1700 against the US Dollar, supported by a weak USD and better risk sentiment. The British Pound also rose to multi-week highs, exceeding 1.3550 due to positive market sentiment.

Gold And The Market

Gold slightly increased but stayed above $3,350, bolstered by expectations of a dovish outlook from the Fed. However, the positive risk atmosphere limited its potential for further gains. Artificial Intelligence tokens caught the spotlight after Perplexity’s $34.5 billion bid for Google Chrome, with Bittensor, Near Protocol, and Render leading the way. The Bank of England also reduced rates by 25 basis points, bringing them down to 4%, amid concerns about ongoing inflation. For Forex traders, there are suggestions for the best brokers to trade popular currency pairs and commodities. It is important to find brokers offering competitive spreads and reliable platforms, suitable for both beginners and experienced traders. Looking back, South Africa’s retail sales slowing to 1.6% growth in June served as an early warning. Recent data from Statistics South Africa shows a year-on-year contraction of 0.5% for July 2025, confirming this negative trend. This makes put options on South African retail ETFs or shorting the ZAR against the dollar intriguing opportunities for the coming weeks.

Currency And Economic Trends

We recall when the Euro was robust above 1.1700 and the Pound over 1.3550, supported by a weak dollar. As of today, August 13, 2025, the Euro is around 1.1250, and the Pound is near 1.3100, showing a strong return of the dollar. Traders might consider buying call options on the USD index (DXY) or setting up bearish option spreads on these pairs if they expect this trend to persist. The Bank of England’s rate cut to 4% last year feels like a distant past. With UK rates now at 4.5% to combat stubborn service-sector inflation that reached 5.8% last month, there is high policy uncertainty. This scenario is ripe for volatility trades on the Pound, such as long straddles, to profit from significant price movements in either direction. Gold was steady above $3,350, supported by a dovish Fed outlook. Today, it is closer to $3,280, as higher global interest rates create challenges for this non-yielding asset. We are likely dealing with a range-bound market, making strategies like selling covered calls on physical holdings appealing for generating income. The massive Perplexity offer for Google Chrome sparked interest in AI tokens like Bittensor and Render. Since that peak, many of these tokens have corrected by 40%, reflecting the volatile boom-and-bust cycles seen in the crypto markets during 2023 and 2024. Given this high implied volatility, buying long-dated protective put options could be a sensible way to hedge existing positions. Create your live VT Markets account and start trading now.

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**Mortgage Applications Surge** The EUR/USD pair stayed above 1.1700, while the GBP/USD rose past 1.3550 for the first time since late July. This boost in market confidence made it harder for the US Dollar to gain traction midweek. Gold prices remained steady above $3,350, showing only slight gains despite expectations of a more relaxed Federal Reserve policy. In the cryptocurrency world, AI tokens saw growth, with Bittensor, Near Protocol, and Render leading the way. The Bank of England cut interest rates by 25 basis points, bringing them down to 4%. This decision comes amid ongoing inflation concerns, despite signals suggesting that the easing of policies may have ended. For those trading EUR/USD, we compiled a list of top brokers offering competitive spreads, quick execution, and strong platforms. These brokers support traders of all experience levels, guiding them through the ever-changing Forex market. We see the remarkable 10.9% increase in mortgage applications as a strong sign of recovery in the US housing market, a shift not observed since the turbulence of 2024. Coupled with the July consumer price index, which was slightly lower than expected at 2.8%, we believe the Federal Reserve will keep its dovish approach. This hints at ongoing US dollar weakness in the weeks ahead. **Currency and Commodity Outlook** Given the dollar’s weakness, we expect further gains in the EUR/USD and GBP/USD pairs. The Bank of England’s rate cut to 4% was widely anticipated, which is why the sterling actually gained strength. This move, combined with unexpectedly strong UK services data from July, supports our bullish outlook on these currencies through call options or futures. Gold’s position above $3,350 is notable; this represents a significant increase from last year’s $2,300, primarily driven by continuous central bank purchases. However, its current price stagnation, despite a favorable Fed outlook, suggests the rally may be losing momentum. We believe it’s wise to consider hedging long positions using put options or selling some out-of-the-money calls. The impressive gains in AI-focused cryptocurrencies such as Bittensor, Near Protocol, and Render indicate that specific trends are driving the digital asset market. This momentum continues the upward trend seen in late 2024. Due to the high volatility, we’re adopting defined-risk strategies like buying call spreads to manage our initial costs. Create your live VT Markets account and start trading now.

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