The week of August 25th to 29th is important because of key economic data from Australia, Japan, and the U.S. **Monday:** New home sales data will be released in the U.S. **Tuesday:** Australia will share the RBA monetary policy meeting minutes, and Japan will report its yearly core CPI. Meanwhile, the U.S. will focus on durable goods orders, consumer confidence, and the Richmond manufacturing index. **Wednesday:** Australia will release its inflation data. **Thursday:** The U.S. will report on preliminary GDP, unemployment claims, and pending home sales. **Friday:** Japan will publish its Tokyo core CPI, Canada will announce its monthly GDP, and the U.S. will share several important economic indicators. This includes the core PCE price index, personal income and spending, and the updated University of Michigan consumer sentiment and inflation expectations. Throughout the week, FOMC members’ comments about possible interest rate changes in September will draw attention.

Economic Indicators and Predictions

In the U.S., the forecast for new home sales is 635K, up from 627K the previous month. However, sales are still about 7% lower than last year due to high mortgage rates. Core durable goods orders are expected to rise by 0.3% month-over-month, while overall durable goods orders may drop by 3.8%. High borrowing costs and uncertain trade policies remain hurdles for large investments, causing further declines in business equipment spending. In Australia, July’s CPI is projected to rise to 2.3% year-over-year from June’s 1.9%. This increase reflects higher electricity prices expected after earlier discounts. Japan’s Tokyo core CPI is anticipated to decrease to 2.6% from 2.9%, mainly due to lower energy prices, although food prices remain high. In the U.S., the core PCE price index is expected to be 0.3% month-over-month, while personal income and spending are both predicted to rise by 0.4% and 0.5%, respectively. Signs of stability in U.S. consumer spending are evident, with retail consumption increasing by 0.5%. Personal income is also expected to rise by 0.5%, driven by wage growth and longer working hours. Nevertheless, inflation pressures are likely to increase, especially as core PCE rises, which will challenge the Fed as it navigates slow growth and ongoing inflation. This week, our main attention is on Friday’s U.S. Core PCE inflation report, which will significantly shape expectations for a Fed rate cut in September. Currently, markets estimate about a 60% chance of a 25-basis-point cut, a notable change from the more conservative outlook earlier in 2025. If inflation remains high, this could quickly shift market sentiment, leading to volatility.

Market Strategies and Considerations

Ahead of Friday, we will monitor preliminary data like durable goods orders and consumer confidence for clues about economic momentum. Ongoing weakness in business investment, a trend developing since late 2024, highlights the case for potential rate cuts. However, traders should remain cautious, as the Federal Reserve continues to focus on persistent inflation. This uncertainty before the PCE release makes options strategies appealing. The VIX has been steadily rising from the low teens seen earlier this summer to about 17, indicating that traders are seeking protection against sharp market movements. This environment favors long volatility positions, such as straddles on the S&P 500, to capitalize on significant market movements following Friday’s data. Outside the U.S., Australian inflation data on Wednesday provides a key chance in forex markets. After a surprisingly low reading in June, a rebound to 2.3% is expected, which would place inflation solidly within the RBA’s target range and could boost the Australian dollar. We are considering AUD/USD call options to benefit from a stronger-than-expected inflation result. In Japan, the inflation data is unlikely to trigger any policy changes from the Bank of Japan, which has kept its policy rate near zero during the global tightening phase of 2023 and 2024. The crucial “super-core” inflation is expected to stay steady but not high enough to compel a change from the BoJ this year. This policy divergence should keep supporting carry trades, like shorting the yen against the dollar. Ultimately, Friday’s U.S. PCE data will steer the market in the upcoming weeks. A core reading of 0.3% or above could challenge the rate cut narrative, likely strengthening the U.S. dollar and pressuring equities. On the other hand, a reading of 0.2% or lower would reinforce expectations for a rate cut in September, potentially stirring a rally in risk assets. Create your live VT Markets account and start trading now.

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The USD has weakened overall as Fed Chair Powell hinted at a more relaxed monetary policy, leading traders to expect a possible rate cut in September. Currently, there’s about an 85% chance of this cut, and a total of 54 basis points of easing is anticipated by the end of the year. Now, all eyes are on the US Non-Farm Payroll (NFP) report. Strong results could lower the chance of a September cut to 50% and create a more aggressive outlook. On the other hand, weak results might increase the chances of more rate cuts, including a potential third cut by year-end.

Japanese Yen and US Dollar Dynamics

The Japanese yen has gained strength due to these Fed expectations. More appreciation of the yen may depend on weak US data or high inflation in Japan. Increased government support could also raise inflation expectations. On the daily chart, USDJPY faced rejection at the 148.50 resistance level. Sellers are now focusing on the upward trendline around 145.50 for potential buying chances. The four-hour chart shows USDJPY has been moving sideways, while the one-hour chart indicates a slight upward trend, with buyers pushing towards resistance. Key upcoming events include US Consumer Confidence, US Jobless Claims, Tokyo CPI, and the US PCE price index. With the Fed’s dovish shift last Friday, we anticipate increased volatility in the USD/JPY pair. This uncertainty, especially ahead of the crucial Non-Farm Payroll (NFP) report next week, creates opportunities for options traders. Strategies such as straddles or strangles could be effective for capitalizing on significant price movements in either direction, without needing to predict the direction.

Market Analysis and Historical Context

The market currently expects an 85% chance of a rate cut in September; however, recent data tells a different story. In July 2025, we observed a solid jobs report with +260,000 jobs added, while Core PCE inflation has stubbornly stayed above the target at 2.8%. This data contradicts the Fed’s softer tone, suggesting that a strong NFP print next week could lead to a sharp increase in USD/JPY. Historically, we recall major market shifts in late 2023 when traders misjudged the timing of the Fed’s policy changes. A similar situation may be developing now, where dovish statements clash with strong economic data. Therefore, buying out-of-the-money USD/JPY call options with a short-term expiry may offer a cost-effective hedge against a hawkish surprise from the upcoming jobs report. Conversely, a weak NFP report would support the Fed’s dovish stance, likely pushing USD/JPY down toward the 145.50 trendline. In that case, purchasing put options or setting up bearish put spreads would help us benefit from the downward trend. The goal is to be in a position that profits from the initial market reaction to the data release. For Japan, Tokyo’s Core CPI remains steady at around 2.0%, which isn’t high enough to drive the Bank of Japan into aggressive action. This situation echoes the gradual policy normalization process we saw in 2024. For now, the main factor influencing this currency pair is the outlook for US interest rates. This week, we will closely monitor figures for US Consumer Confidence and the PCE price index. Any signs of weakening consumer confidence or slowing inflation could reinforce the case for a September rate cut, likely adding downward pressure on USD/JPY even before the important NFP data is released. Create your live VT Markets account and start trading now.

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Jefferies has raised its year-end target for the S&P 500 to 6,600, up from 5,600, which they set at the end of July. This increase is the second major update in a short time. It comes after Fed Chair Powell’s recent comments, suggesting the central bank might take supportive actions that could impact the market.

Market Pricing and Federal Reserve Policy

With the new target of 6,600 for the S&P 500, we think the market is expecting a more favorable policy from the Federal Reserve. This outlook is a direct response to last week’s dovish remarks indicating the Fed is ready to ease conditions. The latest CPI data from July shows inflation has slowed to 2.8%, reinforcing our belief that stocks are likely to rise. In the next few weeks, we recommend buying call options to take advantage of this expected upward trend. We’re focusing on out-of-the-money calls on the SPX with October and November 2025 expirations, especially around the 6,500 strike price. This strategy allows for leveraged gains in case of a year-end rally while keeping risks manageable. For traders who prefer to take on less risk, selling cash-secured puts or bull put spreads can be a good choice to earn premium. This approach benefits from both a rising market and the passage of time, based on the belief that the index won’t drop significantly from current levels. This method worked well during a similar Fed pivot in late 2023, leading to a strong market rally into the next year.

Impact on Market Volatility

We also need to think about market volatility. The CBOE Volatility Index (VIX) is currently near 14, and we expect it to decrease further as the Fed’s dovish position reduces uncertainty. This makes short-volatility trades, like selling straddles, more appealing for those betting on a steady rise rather than sudden jumps. However, the main risk to this outlook is a surprisingly strong economic report, such as the upcoming August jobs data, which could prompt the Fed to change its dovish tone. Because of this, we suggest structuring any bullish positions with defined risk, like using spreads. This can help protect against a quick change in market sentiment. Create your live VT Markets account and start trading now.

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It’s a quiet Sunday in the UK due to the bank holiday, with no major market news. The German IFO report is the highlight, but it is not expected to affect interest rates or the markets much.

Powell’s Ongoing Impact

Fed Chair Powell’s gentle approach is likely to keep influencing the markets this week, as effects from Friday carry on. There isn’t much significant economic data coming out this week, with only the US Jobless Claims on Thursday being noteworthy. Next week will be more eventful with the US Non-Farm Payroll (NFP) report scheduled for September 5th. The Federal Reserve is closely watching the labor market, as its strength or weakness can greatly impact interest rate expectations. Today’s market feels sluggish because of the UK holiday, and the German IFO is the only significant data point. This morning, the IFO Business Climate index came in at 87.5, slightly below expectations. This confirms the weak manufacturing PMI trend we observed last week. Overall, this doesn’t change the outlook for European interest rates, and the focus remains on the US. The dovish remarks from Fed Chair Powell at the Jackson Hole symposium last Friday continue to steer market sentiment. His comments about a cooling labor market have led to increased bets on a weaker dollar and stronger stock prices. With only the US Jobless Claims on Thursday as the major data for this week, this trend seems likely to continue.

Anticipating the US NFP Report

The upcoming US Non-Farm Payrolls report on September 5th is the key event to watch. July’s report showed job growth slowing to 185,000 with the unemployment rate steady at 4.0%. The Fed has emphasized that it’s focusing on the labor market. A weak NFP report could strengthen expectations for a rate cut, while a surprisingly strong report could cause significant market shifts. In the coming days, traders may lean towards short-dated call options on equity indices like the S&P 500 to capitalize on the current positive sentiment. As we approach the NFP report, we expect the implied volatility (VIX) to rise from its current low of around 14. This increase could make buying options after the NFP release, such as straddles on currency pairs like EUR/USD, an effective strategy for profiting from expected price fluctuations. Create your live VT Markets account and start trading now.

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Eurostoxx futures fell by 0.2% in early European trading, with German DAX futures also dropping by 0.2%. In contrast, UK FTSE futures remained unchanged at new record highs. US futures stayed steady after Wall Street experienced strong gains late last week. European stocks continue to perform well, with Spain and Italy’s benchmark indices reaching their highest points in almost 20 years.

Market Consolidation After Rally

European futures paused on August 25, 2025, indicating a consolidation after last week’s strong rally. This rally was fueled by hints from the US Federal Reserve about a more relaxed interest rate policy, which lifted markets worldwide. The current stability suggests that traders are evaluating whether these new highs can be maintained. Market volatility is at multi-year lows, with the VSTOXX index for Euro Stoxx 50 options around 14. This low level means option premiums are relatively cheap—a situation not seen since before the significant rate hikes began in 2022. This low cost offers traders a chance to buy protection or position for future moves without significant upfront costs. The strength in European stocks is backed by easing inflation, with the latest inflation figure for the Eurozone in July 2025 at 2.1%, close to the ECB’s target. This environment supports the record highs in the UK and the near two-decade peaks in Spain and Italy. However, German futures show slight weakness, reflecting recent manufacturing PMI data for August, which indicates the sector is barely expanding at a reading of 50.5.

Strategies For Record Levels

With indices at or near record levels, it’s a smart time to think about protective strategies. Purchasing put options on the Euro Stoxx 50 or DAX can provide inexpensive insurance against a possible 5-10% correction in the coming weeks. This approach allows traders to keep their profitable stock positions while managing downside risk. On the other hand, the dovish stance from central banks continues to support stocks. For those who believe the market is just experiencing a short pause, starting bullish positions like bull call spreads could be beneficial. This strategy enables traders to profit from a gentle rise while keeping their costs defined and limited. We observed similar market behavior during the recoveries in 2023 and 2024, where brief pauses typically led to further gains. The focus will be on the upcoming economic data in early September. Any signs that economic growth is weakening more than anticipated could quickly introduce volatility back into the market. Create your live VT Markets account and start trading now.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

## For Bearish Traders Bullish traders can aim for targets of 3416.3 and 3417.9 if they break through 3414.1. Further gains might reach 3422.9 or extend to 3435.9 for swing traders. The predicted range is narrow, indicating possible sharp movements. Value Area and VWAP define support and resistance, highlighting fair value based on volume. VWAP deviations act like volatility bands, reflecting market changes. ### Gold Trading Principles Successful gold trading requires discipline: one trade per direction, smart stop placement, and adaptable confirmation styles. Sticking to these principles safeguards capital and aligns with market trends. Today’s technical analysis shows a bearish trend below 3409.7. However, gold still looks attractive for traders and long-term investors. As of August 25, 2025, gold futures are under slight downward pressure, trading just below the 3409.7 mark. This suggests sellers have a slight advantage now, potentially leading to a drop towards 3403.2. Even so, this short-term weakness occurs in the context of a strong bull market, with gold rising over 35% in the past year. Gold’s impressive performance in 2025 is fueled by ongoing inflation and signs of economic slowdown. The July 2025 CPI report indicated core inflation stuck at 3.8%, while recent data showed Q2 GDP growth slowed to just 1.5%. This economic environment keeps gold attractive, as it boosts demand for safe-haven assets. In the upcoming weeks, derivative traders should consider any dips as chances to buy, especially if prices near the swing support level around 3377.5. We need to observe price action at these lower points to check if buyers come in, confirming that the overall uptrend is still on track. If this level doesn’t hold, we could see a more significant correction. On the other hand, if bearish pressure eases and bulls push prices back above 3414.1, it would indicate the primary trend continues. In this case, we would aim for the upper swing extension target of 3456.1 over the next few weeks. This movement aligns with the current economic uncertainties pushing investors towards gold. Historically, this scenario is reminiscent of the late 1970s when high inflation and slow growth generated significant policy uncertainty. During that time, gold thrived as it transitioned from merely an inflation hedge to a refuge from unpredictable central bank actions. We’re witnessing a similar trend today, suggesting gold’s path remains upward in the coming weeks. Create your live VT Markets account and start trading now.

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The US dollar dropped on Friday after Fed Chair Powell made dovish comments. This caused stock prices to rise and gold to gain value. Treasury yields also fell, marking a change in market trends as the week ended. Right now, the dollar is stabilizing but having trouble reaching new lows. The EUR/USD is close to 1.1700, impacted by large options expirations. Meanwhile, USD/JPY has slightly recovered to 147.30, after reaching a peak of 147.52 but facing resistance at the 200-hour moving average.

Market Activity Levels

US futures have settled down after Friday’s gains. S&P 500 futures are down by 0.1%. Trading has been quieter due to the summer bank holiday in the UK, as markets take a pause before Wall Street kicks back into gear. Fed funds futures show an 87% chance of a 25 basis points rate cut. Even with this high probability, markets are cautious and aren’t fully committing to a September cut until the US jobs report on September 5 provides more information. After last week’s dovish signals from the Fed, the market is in a pause, which is common on a slow Monday. With the 87% probability of a rate cut for September already priced in, it seems like the best approach is to short the dollar and invest in equities. However, this high probability also leaves the market open to surprises. The upcoming US jobs report on September 5 is crucial. Initial jobless claims have edged up slightly over the past month, averaging around 230,000, indicating a cooling labor market and supporting the case for a Fed rate cut. If the jobs report shows significantly stronger numbers, it could lead to sharp changes in the market and elevate the dollar.

Investment Strategies

Given the current situation, implied volatility seems low, with the VIX index around 13.5. This suggests that the market is not very sensitive ahead of the major data release that could influence Fed policy. For derivative traders, this represents an opportunity to buy volatility at a low price. One simple strategy is to consider options on major stock indices that expire shortly after the jobs report. A long straddle or strangle on the S&P 500 could profit from significant movement in either direction, regardless of whether the data is unexpectedly strong or weak. This approach isn’t about predicting direction but betting that the current market calm will change. The dollar also remains a key focus, showing signs of weakness. This is supported by recent Core CPI data, which at a 3.1% annual rate is the lowest since early 2024. A contrarian strategy could involve buying inexpensive out-of-the-money call options on the US dollar. This could yield benefits if the jobs report surprises and leads the market to reconsider the likelihood of a rate cut. We remember how volatile markets were in late 2023 when payroll data frequently challenged the belief in a Fed pivot. At that time, one jobs report could shift rate expectations by 20-30 basis points in just one day. The current scenario feels similar, with a strong consensus based on data that is still inconclusive. Create your live VT Markets account and start trading now.

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**Barclays and BNP Paribas Update Forecast** Barclays and BNP Paribas have changed their outlook on the Federal Reserve’s interest rate policy after Fed Chair Jerome Powell spoke at the Jackson Hole symposium. Both banks now expect two rate cuts this year. Barclays predicts these cuts will happen in September and December. In contrast, BNP Paribas previously thought there wouldn’t be any rate cuts this year. This shift shows that market analysts are rethinking how the Fed may act regarding monetary policy after Powell’s recent comments. Market observers are now looking forward to the U.S. jobs report on September 5, which could significantly impact the likelihood of the expected rate cuts. This moment reminds us of last year after the 2024 Jackson Hole meeting when many believed the Fed would soon shift to a more lenient stance. Major banks adjusted their predictions, expecting rate cuts before the year ended. However, we learned that those cuts did not happen in 2024, with the first one only occurring in March 2025. **Caution and Uncertainty** This history teaches us to be cautious about making decisions based solely on Fed comments. We are in a similar situation now, with the Fed funds rate between 4.75% and 5.00%. The latest Consumer Price Index (CPI) data from July 2025 shows a slight rise in inflation to 2.8%, making it harder to predict any upcoming easing. On the other hand, the job market is softening. The unemployment rate has increased to 4.1%, and job growth has slowed to 175,000 last month. This mixed data could lead to unexpected policy changes. The best approach in the coming weeks is not to bet on a specific direction but to prepare for a possible sharp move by investing in volatility. We should consider options that benefit from significant price changes, whether they go up or down. For example, strategies using options on SOFR futures can be designed to take advantage of market reactions to the upcoming September 5 jobs report. This way, we can position ourselves for the event without needing to predict the Fed’s final decision. Create your live VT Markets account and start trading now.

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Federal Reserve Chair Powell is open to changing policies in September due to risks in the labor market and economy. His comments suggest a more cautious approach, leading traders to believe there is an 84% chance of a 25 basis point rate cut next month. The non-farm payrolls data on September 5 will be key to confirming this. Powell pointed out that the Fed relies heavily on economic data, meaning weak labor market figures could support the idea of a rate cut.

Markets Dismissing Data

If the upcoming jobs data is disappointing, a September rate cut seems likely. There may still be pressure on the Fed, particularly from political leaders, even if they do cut rates. On the other hand, strong job numbers could make things more complicated and leave markets in doubt. In this situation, markets might overlook the data, seeing it as a temporary issue, but still expect a September rate cut. The Fed will have to manage market expectations in this context. Powell has not firmly agreed to a rate cut. If tariffs significantly impact inflation and the labor market remains strong, the pressure to make a change might lessen. The July inflation data had little effect, suggesting that the Fed could withstand bond market pressures before making major policy changes. Looking back at similar scenarios, like in 2019, provides guidance amidst the current uncertainty following the Jackson Hole symposium. With Powell recognizing risks, traders are leaning towards the idea of a dovish policy shift. The CME FedWatch Tool now indicates a 75% chance of a 25 basis point cut at the September 2025 FOMC meeting.

Potential Market Reactions

The upcoming non-farm payrolls report on September 5 is now a crucial event for the market. The last report for July 2025 revealed a slowdown, with only 150,000 jobs added. If the next report is also weak, it would almost guarantee a rate cut. For derivative traders, this situation makes buying near-term index call options a likely bet if they expect continued labor market weakness. However, if the jobs report is stronger than expected, it will bring uncertainty and challenge current market beliefs. In this case, traders might want to buy protective options, like short-dated puts on major indexes or use straddles to prepare for a spike in market volatility. The VIX is around 18, up from its summer lows, indicating that the market is preparing for this upcoming tension. We also need to keep an eye on the US CPI report, which will arrive during the FOMC blackout period. After the latest July 2025 reading of 2.8%, another low inflation figure would give the Fed more leeway to act. This means traders might consider longer-dated options, like call spreads in rate-sensitive sectors, to profit from a confirmed easing cycle. The bond market’s reaction is another vital signal to monitor. History shows, like in the lead-up to the 2019 cuts, that a sharp drop in the 10-year Treasury yield can pressure the Fed. If long-term yields fall sharply following the jobs data, it may indicate that the bond market is pressuring the Fed to act. Create your live VT Markets account and start trading now.

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