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In July, the services PMI rose to 55.7, indicating growth in five sectors, especially technology.
In July 2025, the S&P Global Services PMI showed an increase, with the services index rising to 55.7 from 52.9 in June. The preliminary estimate had been 55.2. The composite index also increased, going up to 55.1 from 52.9 last month, which is close to the preliminary figure of 54.6.
The upcoming ISM non-manufacturing index is expected to reach 51.5, up from 50.8 in June. In the US service sector, five out of seven sectors saw more business activity in July, compared to four the previous month. Technology experienced its fastest growth since June 2021, while the financial sector grew at its quickest pace since December 2024.
USDCHF struggles to maintain upward momentum after failing to break resistance
The USDCHF recently tried to break above a resistance level but struggled. The pair moved above the 100-hour moving average and the 38.2% retracement from May 2025, reaching a high of 0.8117. However, it couldn’t maintain that level, leading sellers to challenge the 0.8102 resistance again. Attention may now turn to possible downward targets.
Buyers are watching the swing zone between 0.8062 and 0.8054, supported by the rising 200-hour moving average at 0.8049. If the price drops below this, it could fall toward the range of 0.8017 to 0.8023 and possibly even lower, to 0.7985 to 0.7994. Staying above the 200-hour moving average could indicate a period of consolidation, but the recent rejection suggests weak momentum.
Market Influences And Resistance Levels
Important resistance levels are at 0.8102 and 0.8173. Support is found between 0.8054–0.8062 and 0.8017–0.8023. With the price below 0.8102, sellers seem to be in control, but breaking above it could shift market sentiment. Trade concerns are also affecting the market, as Switzerland is facing a 39% tariff and has a significant trade surplus with the US. Potential US tariff hikes on chips and pharmaceuticals are adding to the uncertainty. The recent attempt by USD/CHF to rise has faltered badly. The inability to maintain the 0.8102 resistance level indicates that sellers are regaining control. This breakdown signals a bearish trend, so we should be careful with long positions for now. With the price now trading below 0.8102, the easiest path seems to be downward. We are closely monitoring the support zone between 0.8062 and 0.8054. Traders may consider buying put options with strike prices near 0.8050 to take advantage of a possible breakdown of this level in the upcoming weeks.Economic Indicators And Potential Impacts
We are seeing mixed signals from the US economy. The July jobs report, released last week, reported a stronger-than-expected gain of 250,000 jobs, which supports the US dollar. This underlying strength might prevent a steep drop in the pair and could lead to some volatile trading. In Switzerland, recent data showed inflation for July at 1.8%, slightly below predictions. This gives the Swiss National Bank (SNB) room to avoid raising interest rates, especially since they are concerned about the franc getting too strong. The SNB has historically intervened when the franc appreciates, which could limit its gains. The looming threat of a 39% US tariff on Swiss goods is the primary source of uncertainty, impacting key sectors like pharmaceuticals and watchmaking. We’ve seen similar erratic movements in safe-haven currencies during past US-China trade disputes in 2018 and 2019. This history suggests that both USD and CHF may experience unpredictable demand for safety, making directional bets risky. This uncertainty is reflected in the options market, where one-month implied volatility for USD/CHF has risen to 9.5%, up from an average of 6% in the second quarter. Traders anticipate larger price fluctuations ahead. For those already in positions, purchasing protective puts could be a smart way to guard against sudden news related to tariffs. Create your live VT Markets account and start trading now.USDCAD faces a market stalemate due to strong support and resistance, causing trader indecision.
**USDCAD Key Technical Zones**
USDCAD is currently between strong support at 1.3762 and resistance at 1.3810. If it breaks above 1.3810, the price could rise to 1.3860. However, if it drops below support, it may fall to 1.3726.
Buyers are actively defending the 1.3762/1.3759–1.3749 area, which is connected to the 38.2% retracement level and the rising 200-hour moving average (MA). Meanwhile, sellers are firmly positioned at 1.3810, where the 100-day and 100-hour MAs intersect.
Staying below 1.3810 indicates a possible downward trend toward 1.3726 or even 1.36908. On the other hand, breaking above 1.3810 could change the direction toward 1.3860 and 1.3890.
Key levels to watch:
– **Resistance:** 1.3810, 1.3860
– **Support:** 1.3762, 1.3726
The United States has increased tariffs on Canadian goods outside of the USMCA to 35%, with additional penalties of up to 40% for those evading the tariffs. These tariffs primarily target steel, aluminum, autos, lumber, and industrial goods. Next year, tariffs on semiconductors and pharmaceuticals could reach as high as 250%.
In response, Canada has imposed 25% tariffs on C$30 billion worth of U.S. goods. While some tariffs have been relaxed, most remain in effect due to ongoing negotiations without resolution. Up to 95% of Canadian exports are protected by the USMCA, but both countries face pressures amid looming tariff threats.
**Currency Market Dynamics**
As of August 5, 2025, the USDCAD pair is tightly bound between 1.3762 support and 1.3810 resistance. This limited range suggests the market is waiting for a significant trigger before making a decisive move. Traders should focus on preparing for a breakout rather than assuming the range will hold.
The main factor driving this tension is the ongoing trade friction between the U.S. and Canada. Despite 95% of Canadian trade being safeguarded under the USMCA, new tariffs on essential goods like steel and lumber are injecting uncertainty into the market. Any developments during negotiations could disrupt current technical levels.
Recent data has increased upward pressure on the pair, making a break above 1.3810 seem more likely. Last week’s Canadian Labor Force Survey revealed an unexpected drop in employment, while recent U.S. inflation data remains high, supporting the Federal Reserve’s hawkish position. This economic divergence boosts the U.S. dollar against the Canadian dollar.
Reflecting on the trade tensions of 2018 and 2019, we observed how quickly currency pairs reacted to tariff announcements and negotiation updates. A similar situation is emerging, indicating that headline risk is extremely high. This history suggests any resolution or setback could trigger a sharp trend lasting several days.
Given the potential for sudden moves, traders in derivatives should consider strategies that profit from increased volatility. Buying out-of-the-money call options with strike prices above 1.3860 or put options below 1.3726 may provide a cost-effective way to position for a breakout, allowing for large movement participation while limiting initial risk.
The main risk to this strategy would be an unforeseen progress in trade discussions, which could quickly reverse momentum and strengthen the Canadian dollar. This could lead USDCAD to break below the 1.3750 support area and target lower levels. Therefore, it’s crucial to time any long volatility strategy carefully, perhaps using options with several weeks before expiration to wait for the right catalyst.
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In June, Canada’s trade balance was -C$5.86 billion, which was better than expected due to changes in exports and imports.
In June, Canada had a trade deficit of C$5.86 billion, a bit better than the expected C$6.3 billion. Exports went up slightly to C$61.74 billion, while imports climbed to C$67.6 billion.
Exports to the U.S. grew by 3.1% from May but were still 12.5% lower than last year. Imports from the U.S. increased by 2.6%, breaking a three-month streak of decline, thanks to purchases for an offshore oil project. This widened Canada’s trade surplus with the U.S. from C$3.6 billion in May to C$3.9 billion.
Exports And Imports Overview
Exports to countries other than the U.S. dropped by 4.1% from May, marking the first decline since February, but were still 14.7% higher compared to last year. Significant decreases in shipments to the UK and Japan were somewhat offset by increased exports to China. Imports from other countries fell by 0.3%, leading to a larger trade deficit of C$9.8 billion in June. Canada’s total exports in the second quarter decreased by 12.8%, with notable drops in energy products, motor vehicles, and consumer goods. Imports fell by 3.9%, even with a rise in metal and mineral products. The trade balance changed dramatically, swinging to a C$19.0 billion deficit from a small C$388 million deficit in the previous quarter. Looking at June’s trade data, the headline figure was a minor positive surprise, but it was overshadowed by the record C$19.0 billion trade deficit for the entire second quarter. The sharp 12.8% decline in Q2 exports, particularly the 12.5% year-over-year drop in exports to the U.S., points to significant weakness.Implications For Bank Of Canada And Currency Market
This weak performance in Q2 leaves the Bank of Canada with little room to tighten monetary policy. With July’s inflation at a cooler 2.5%, the central bank is more likely to keep its current approach for now. This economic softness suggests that a cautious path is the most likely for policymakers. We expect the Canadian dollar to face tough challenges in the coming weeks. The currency has already had a rough time, with USD/CAD rising from 1.3500 to around 1.3750 after the extent of Q2 weakness became clear in July 2025. This trend mirrors patterns seen during late 2023, when global slowdown fears were high. Given this outlook, traders should prepare for increased volatility, especially with upcoming data releases like the final Q2 GDP figures. Strategies that benefit from price swings, rather than steady trends, could be advantageous. The significant drops in key sectors like autos and consumer goods indicate a fragile economy. Ongoing trade talks with the U.S. add more uncertainty. Although Canada’s surplus with the U.S. grew slightly in June, the decrease in non-energy exports shows a vulnerability beyond just commodity prices. Any negative news from these negotiations could lead to sharp reactions in currency markets. Create your live VT Markets account and start trading now.The trade balance for June was -60.2 billion, which is better than the expected -61.3 billion.
The US trade balance for June 2025 was -60.2 billion, slightly better than the expected -61.3 billion. The previous month’s figure was revised from -71.5 billion to -71.7 billion.
In June, exports were 277.3 billion, down from 279.9 billion the month before. Imports also dropped to 337.5 billion from 350.5 billion.
Market Response
The market didn’t react much to this data. The trade balance has stabilized after a rise in imports due to tariffs before “Liberation Day.” Although the smaller trade deficit for June 2025 looks positive, it mainly comes from a sharp decline in imports. We are buying less from other countries at a faster rate than we are selling. This suggests that demand in the US economy may be slowing down. Other recent data supports this view. Retail sales in July grew by only 0.1%, which was below expectations. Additionally, the ISM Manufacturing index, a key measure of factory performance, fell to 49.8 in July, indicating a slight contraction for the first time in six months.Economic Implications
We are seeing a return to normal after the surge in imports during the spring. Companies stockpiled goods to prepare for the new “Liberation Day” tariffs, causing a temporary increase in the trade gap. This pattern has occurred before, during the trade disputes of 2018 and 2019. For derivative traders, this cooler economic outlook makes a rate hike by the Federal Reserve in September less likely. Recent comments from Fed officials about being “patient” are now more relevant. We’re preparing for higher market volatility, as the VIX index has already risen from its July lows to over 17. In the coming weeks, strategies that benefit from a stable or slightly weaker US dollar may be more effective. With less pressure on the Fed to raise rates, traders might consider buying protective puts on stock indices that are near their highs, as they are sensitive to any signs of an economic slowdown. Interest rate option markets may also see increased activity as the chances of future rate cuts are re-evaluated. Create your live VT Markets account and start trading now.Trump raised concerns about outdated survey data, talked about tariffs, and discussed trade relations with China.
President Trump shared his views on recent survey data, arguing it is outdated and biased. He highlighted changes since he took office, noting that stock prices have risen and energy costs have fallen. Gasoline prices are at $2.40, and OPEC+ is increasing drilling activities. He also mentioned positive developments internationally, with countries like Japan, Indonesia, Vietnam, and Korea opening up to investment. U.S. stocks had a slight uptick, with the NASDAQ up 94 points and the S&P up 17.5 points.
Trump talked about tariffs, stating that the EU would face tariffs if investments are not made. A 15% reduction would apply if investments are made. He mentioned a $600 billion agreement with the EU. Stock prices dipped slightly during his discussion about tariffs. He plans tariffs on chips and pharmaceuticals, with pharma tariffs possibly increasing to 150-250% within a year. Trump downplayed worries about oil prices but pointed out that inflation has peaked under the Biden administration. Tariffs on Russian oil for India were set to increase, as current tariffs are seen as excessive.
Upcoming Sino-American Trade Talks
Trump mentioned that Xi Jinping wants to meet. He described a positive relationship with China and acknowledged their dependence on the U.S. A potential trade deal with China is close to completion, with a meeting scheduled by the end of the year. Traders should closely watch Federal Reserve policy as a new chair announcement is expected soon. The uncertainty surrounding a new leader is causing short-term market volatility, a trend we’ve seen during past Fed changes. Options traders should be cautious about sudden shifts in bond futures and interest-rate-sensitive stocks until more clarity emerges. The energy sector shows potential, but there are risks. The national average for gasoline has dropped to around $2.45 a gallon, down from $3.20 earlier this year. This decrease follows a recent OPEC+ report indicating a modest production increase of 500,000 barrels per day, which may help keep prices low. Ongoing uncertainty in European trade calls for a careful approach. Conflicting messages about a major investment deal and new tariffs suggest volatility in European stocks and the EUR/USD currency pair. Recent German factory orders showed a surprising 1.2% decline last month, indicating frailty in the region’s largest economy.Disruptions in the Semiconductor Industry
Traders should prepare for instability in the semiconductor industry. The announcement of new tariffs on chips is likely to disrupt supply chains and impact valuations for major tech companies in the NASDAQ 100. With the U.S. importing over $60 billion in semiconductors last year, mostly from Asia, these tariffs could lead to significant price changes in the SOXX semiconductor ETF. The pharmaceutical sector now faces a serious threat. A plan to impose a small tariff that rises sharply within a year could harm companies in the Health Care Select Sector SPDR Fund (XLV). The U.S. imported over $190 billion in pharmaceutical products in 2024, making these proposed tariffs a considerable challenge for the sector. While the talk of an imminent trade deal with China is encouraging, we should expect market fluctuations. We recall the market volatility during the 2018-2019 trade discussions, where rumors and tweets could cause major index shifts in a single day. With bilateral trade exceeding $550 billion last year, traders should consider using options to guard against unexpected breakdowns in talks or sharp rallies from a successful deal. Create your live VT Markets account and start trading now.The North American session starts with a stronger USD, rising stocks, and increasing bond yields
The USD is slightly up as North America starts its trading day, along with rising stocks and yields after a mixed day yesterday. President Trump is expected to speak on CNBC at the start. US stocks are climbing, and bond yields are increasing slightly after a brief drop.
This morning, the US and Canada will release trade data, and the final S&P PMI indices will show manufacturing at 54.6 and services at 55.2. Later, we expect the ISM PMI for July, forecasted at 51.5, up from 50.8 last month. The minutes from the Bank of Japan’s June meeting were released overnight, indicating a willingness to raise rates if growth and inflation meet forecasts, although there’s some disagreement on timing.
Company Earnings Reports
Key earnings reports reveal that Pfizer exceeded expectations with a Q2 EPS of $0.78 and revenue of $14.65 billion. Caterpillar’s EPS slightly missed the mark, but its revenue was above expectations. BP reported better-than-expected revenue and announced a $750 million share buyback. Infineon and Palantir also outperformed profit expectations. European PMI data was mixed. While the UK, Germany, Spain, and China beat expectations, the EU, France, Italy, and China’s composite index fell short. In premarket trading, the Dow, S&P, and NASDAQ are all up, while yields on 2-year, 5-year, 10-year, and 30-year US debts have risen. Commodity prices have gone down a bit, with crude oil, gold, and bitcoin falling in value. With the US dollar and bond yields climbing, we’re keenly awaiting today’s ISM Manufacturing data at 10 AM ET. If it comes in strong, above the expected 51.5, it could confirm economic strength and push yields and the dollar even higher. This makes short-term options on indices like the SPX likely to react strongly around the data release. Inflation has remained sticky, as seen in July’s CPI report at about 3.4%. This puts the Federal Reserve in a challenging position. A strong ISM number would raise the chance of a more hawkish Fed, which traders can take advantage of using options on interest rate futures. The 10-year yield rising back above 4.20% this morning shows that market nerves are increasing.Market Strategies and Analysis
The CBOE Volatility Index, or VIX, has been in the mid-teens, indicating that option premiums are not excessively high. This offers a chance for traders to buy straddles or strangles on major indices ahead of the ISM data release, allowing profits from notable market movements, no matter the direction. Globally, the economic landscape is diverging, creating opportunities in currency markets. Weakness in the recent Eurozone and France PMI data contrasts with expected strength in the US. This trend supports a long position on the US dollar against the euro, which can be expressed through options on the FXE ETF or directly in currency futures. The latest earnings reports show a mixed market, ideal for pair trading with derivatives. Technology and healthcare are strong, with Palantir and Pfizer beating expectations, indicating bullish call spreads on the XLK and XLV ETFs. In contrast, Caterpillar’s earnings miss hints at margin pressure in the industrial sector, supporting bearish put spreads on an ETF like XLI, especially given the mixed results from China. Commodities are reacting to the stronger dollar and rising yields, evidenced by the notable drop in gold prices this morning. If today’s data reinforces this trend, we expect further declines for gold, making puts on the GLD ETF an appealing hedge or speculative option. Despite some positive economic signals, crude oil’s weakness points to ongoing global demand concerns, justifying a cautious outlook for the industrial sector. Create your live VT Markets account and start trading now.Markets stay stable as focus shifts to economic indicators and trade tariffs
The European FX session was quiet, with little news and only minor economic updates. The EU confirmed a 15% tariff on cars and parts, and the EU trade chief mentioned possible “turbulence” in future negotiations.
Traders are now looking ahead to the US ISM Services PMI, which is due at 10 am ET. They are particularly focused on the prices component. Comments from Fed’s Daly previously boosted the stock market, as investors expect rate cuts unless there are significant changes in the economy.
Discussion On Tariffs And Trade
Coming up soon is an appearance by Trump on CNBC’s “Squawk Box,” where he will likely discuss tariff revenue and criticize Fed Chair Powell. The market has already absorbed the EU’s 15% tariff on cars, which developed during the spring months. For derivative traders, this suggests the major price swings linked to trade news are likely over. Going forward, the focus should be on economic data and central bank actions for the rest of 2025. All eyes are on the upcoming US ISM Services PMI, with expectations for a reading of 53.5. If there is a significant difference from this prediction, especially regarding the prices paid component, it could lead to increased market volatility. We can recall how the market reacted strongly to unexpected inflation data in the first quarter of 2025 as a reference for what might occur. Recent dovish signals from the Federal Reserve have boosted stock prices, with a 70% chance of a rate cut in September priced in, based on Fed funds futures. This provides a chance for options traders to prepare for potential swings around essential data releases that could affect these odds. For instance, buying straddles on major indices before the ISM report could be a strategy to take advantage of an unexpected outcome.Market Volatility And Trading Strategies
The VIX is currently trading at a calm 14, suggesting some complacency ahead of the upcoming data. However, implied volatility for short-term options is increasing, indicating that traders expect a short burst of activity soon. This trend resembles what we saw leading up to major central bank meetings earlier this year. Create your live VT Markets account and start trading now.The greenback weakens amid dovish expectations, while EURUSD encounters resistance and possible bullish trends
The EURUSD currency pair saw a pullback after a weaker than expected Non-Farm Payroll (NFP) report. The USD was widely sold off because traders anticipated a more positive report. This change has led the market to now expect 59 basis points of easing by the end of the year, up from 35 basis points before. Fed officials like Williams and Daly have suggested a possible rate cut in September. This makes it likely that Fed Chair Powell will hint at a similar decision during the Jackson Hole Symposium.
On the EUR side, there haven’t been significant updates since the US-EU trade deal, which set tariffs at 15%. The European Central Bank (ECB) is neutral about rate cuts but would consider them if it sees notably negative data. Currently, the market is expecting a 14 basis point easing by year-end, indicating a 50% chance of another rate cut.
Technical Analysis
Looking at the EURUSD daily chart, resistance is found at the 1.1575 level, with the possibility of a drop to 1.1065 if sellers take control. On the 4-hour chart, sellers are relying on this resistance to push for lower prices. The 1-hour chart shows minor support at the 1.15 level, where buyers might aim to break above 1.1575, while sellers watch for further declines. Upcoming events include the US ISM Services PMI today and US Jobless Claims reports on Thursday. There is a noticeable change in sentiment towards the US dollar following last week’s jobs report. The Non-Farm Payrolls for July 2025 reported only 150,000, far less than the expected 220,000. This has prompted traders to quickly factor in Federal Reserve rate cuts before the year ends. Now, the market anticipates almost 60 basis points in cuts by December—a significant move from just 35 basis points prior to the report. This rapid adjustment is reminiscent of late 2023 when traders pre-emptively expected early rate cuts in 2024. It suggests that any strong economic data could lead to a swift reversal.European Central Bank Policy
On the other hand, the European Central Bank is taking a wait-and-see approach, remaining neutral on its policy. With Eurozone inflation stubbornly at 3.1% last month, they need to see a substantial drop in inflation before considering further cuts. This divergence in central bank policies is the main factor driving the EURUSD higher. A crucial technical level to watch is 1.1575, which has halted rallies twice in the past quarter. For traders believing this resistance will hold, buying inexpensive, short-term put options below the 1.1500 support provides a way to bet on a reversal with limited risk. This strategy guards against a sudden spike fueled by more weak US data. However, if the price breaks above 1.1575, it would signal a new bullish trend, possibly reaching the 1.1700 level, a point not seen since early 2022. Traders might consider call options to prepare for this breakout while keeping risk minimized. All eyes will be on today’s ISM Services PMI and Thursday’s Jobless Claims to determine if the weak jobs data was an isolated incident. Create your live VT Markets account and start trading now.Traders closely monitor Bitcoin futures for key price levels that indicate potential bullish or bearish moves.
Bitcoin Futures (MBT) are currently above 109,725 USD, drawing traders’ attention to an important technical area. This area highlights a previously broken resistance line, which is now acting as support.
The Bitcoin futures chart shows a regression channel. This channel helps traders identify trends and provides dynamic boundaries for trading signals.
The channel also looks like a possible bull flag pattern, which is a continuation setup in technical analysis. If it plays out, it could lead to a significant price movement.
If Bitcoin futures break above the channel’s upper boundary, it might indicate a rally toward a new all-time high above 123,615 USD. On the other hand, if the price drops below the lower boundary, it could correct toward 100,000 USD.
Binance has now opened Bitcoin options writing to all eligible users. This change allows traders to write call and put options, providing new ways to generate income.
Contracts are settled in USDT, and users have various expiry options. Binance is offering a 20% fee discount, although users must meet certain risk requirements.
This move increases liquidity and offers advanced trading strategies, but also involves risks if not handled carefully. The impact largely depends on how responsibly traders use these tools. Overall, this development represents further progress for Bitcoin amid current technical challenges.
As of today, August 5th, 2025, Bitcoin futures are at a crucial point. The price is testing a support level around 113,000 USD within a bull flag pattern. This setup indicates a potential major price movement in the coming weeks.
If futures break and stay above the 117,000 USD level, it suggests strong bullish momentum. This perspective is backed by recent data from early August 2025, showing three consecutive weeks of institutional inflows into digital asset products, totaling over $500 million. Traders may want to consider buying call options or going long on futures to capture potential upward movement toward a new all-time high.
However, if the price falls below the 113,000 USD support level, this bullish outlook would become invalid. The Futures Estimated Leverage Ratio has been increasing since late July 2025, signaling that the market might be at risk of a sharp correction. A confirmed decline could prompt traders to buy put options or initiate short positions, with 100,000 USD as a reasonable initial target.
Binance’s recent expansion of options writing gives us additional tools for this situation. Seasoned traders might sell cash-secured puts around the 113,000 USD support level to earn premium income, betting that the price will hold. Alternatively, writing covered calls against existing holdings could be a good strategy if a gradual upward trend is expected.
We have encountered similar technical setups before; the consolidation in late 2020 came before a significant rally in 2021, highlighting the possible upside. However, failures of such patterns, like the one in mid-2022, resulted in steep corrections, reminding us to stay cautious. Implied volatility in the options market has increased over the past week, indicating that traders are expecting a large move.
Given the uncertainty at these price levels, effective risk management is essential for derivative traders. Using clear stop-loss orders on futures contracts is vital to safeguard against unexpected changes. Options traders have defined risks but should be cautious of premium decay if the price consolidates longer than expected.
