Canada’s Prime Minister Carney believes that US tariffs on international trade might stick around for a while. Right now, no country seems able to avoid these tariffs. Starting August 1, the US will impose tariffs of 35% on Canadian goods. However, these tariffs might settle between 10% and 20%.

Outlook On Tariffs

Donald Trump expects that companies will handle most of the cost increases from these tariffs. He sees tariffs as a tax for doing business in the US and as compensation for unfair trade practices. Trump says tariff cuts will depend on removing tariffs on US exports. Based on Carney’s comments, we think the market is underestimating the risks of a renewed trade conflict. Trump’s perspective is that tariffs are a permanent negotiating tool, marking a significant change in approach. The next few weeks won’t be about guessing the outcome but about preparing for the turbulence the negotiations will create. Volatility is the most noticeable trade. We see a big opportunity in the currency markets right now. The Canadian dollar is very vulnerable. With over $2.5 billion in goods and services crossing the border every day, even a 10% tariff will hurt the Canadian economy. The USD/CAD exchange rate is around 1.37 and doesn’t reflect the panic a 35% tariff would cause. In 2018, during tariffs that were less severe, the Loonie dropped over 8% in just a few months. We should consider buying long-term call options on the USD/CAD, betting it will rise to 1.40 or higher as negotiations heat up.

Investment Strategy

The impact of tariffs won’t be the same across the board, and we can take advantage of this using options on specific sectors. US tariffs will hit Canada’s S&P/TSX Composite Index hard. We should start by buying puts on Canadian index ETFs. According to Statistics Canada, motor vehicles and parts are Canada’s biggest exports to the US, worth over $80 billion a year. This makes Canadian auto parts manufacturers like Magna International and Linamar Corporation very exposed. We can take bearish positions here by buying puts or shorting their stocks. The Canadian lumber and aluminum sectors will also be directly affected. In past trade disputes, we see a clear pattern: the overall market may dip, but targeted sectors take the biggest hits. It’s crucial to take action before the situation escalates. With a U.S. election approaching, volatility driven by headlines is highly likely. Trump’s strategy is well-documented, so we should use past data to inform our trades now, while the costs of protection and speculation are still relatively low. We are buying volatility and anticipating a weaker Loonie. Create your live VT Markets account and start trading now.

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Commerce Secretary Howard Lutnick discussed various trade and economic issues on CNBC. He pointed out that a deal involving rare earth magnets also covers China’s chip sales, with the goal of keeping the US ahead in technology and ensuring that sales to China continue. Lutnick stressed that the US is working to promote its artificial intelligence (AI) standards worldwide. He also clarified that the US only imposes tariffs on finished steel products, not on raw steel imports, as part of its ongoing tariff policies.

Reversing The Tariff Impact

Tariffs have historically impacted the US by pushing industries to move abroad. However, Lutnick noted that the Trump administration is trying to reverse this trend. He mentioned that under Trump’s leadership, efforts are underway to secure better deals for Americans. Lutnick’s remarks offer a clear strategy, and our role is to account for potential friction. The plan is to keep China technically reliant on us and making them pay for it. This isn’t a “free trade” situation; it’s a managed conflict, and every investment position should reflect this understanding. The strategy is to provide them with our advanced technology to maintain leverage in areas like rare earth minerals. The statistics show that China’s semiconductor imports increased by 2.8% in value in the first quarter of 2024, even though the volume decreased. They are being pushed to buy high-value chips from companies like Nvidia, which are under US control. The clear move is to invest in long-term options for key US chip designers that benefit from this dependency, while also using short-term options to hedge against political risks. Lutnick’s comments on steel signal a strategy to protect domestic makers of finished goods. Recently, the White House suggested raising tariffs on certain Chinese steel and aluminum to over 25%. This is not just theoretical; the last round of Section 232 tariffs in 2018 helped US Steel and Nucor increase their pricing power. With the ISM Manufacturing PMI dropping to 48.7, indicating contraction, there is strong political motivation to support these industries. We could consider trading strategies that target the Materials Select Sector SPDR (XLB). Buying straddles on domestic manufacturers ahead of further trade announcements could be wise since their stock prices will likely fluctuate significantly with policy news.

Volatility In Trade Deals

When Lutnick says Trump secures “the best deals,” we know to expect volatility. We all experienced this during the 2018-2019 period. Markets shifted not based on earnings but on policy statements. A single comment could move the S&P 500 by 2%. In this kind of market, we should use the CBOE Volatility Index (VIX) as our main hedge. It would be wise to buy VIX futures or call options as a safeguard for our portfolios. The cost of this protection is low compared to the risks of a trade negotiation that could quickly turn negative. Focusing on US standards for AI represents a long-term objective. Whichever country sets the rules controls the ecosystem. The National Institute of Standards and Technology’s efforts to establish a global AI framework will help support this. The opportunity here is not just about immediate price changes but about investing in companies that will drive this new ecosystem. This means looking at LEAPS (Long-Term Equity Anticipation Securities) for major tech firms and cybersecurity companies that will develop, implement, and enforce these new American-driven standards. Create your live VT Markets account and start trading now.

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Major European stock indices ended the day lower. The Spanish Ibex was the biggest loser, dropping 1.15%. Other indices also fell, including Germany’s DAX, which lost 0.35%, and France’s CAC, down 0.54%. The UK’s FTSE 100 and Italy’s FTSE MIB both declined by 0.66%. As European markets closed, US markets had mixed results. The Dow Jones Industrial Average fell by 254 points, a drop of 0.57%.

US Market Mixed Performance

The S&P index stayed the same at 6268.00, while the NASDAQ index rose by 143.91 points, or 0.70%, reaching 20786.86. In contrast, the small-cap Russell 2000 dropped by 21.69 points, or 0.96%, finishing at 2228.02. The gap in the market is growing, presenting clear opportunities. The difference between the tech-focused index and broader industrial and small-cap benchmarks shows a two-speed economy that traders can use. The Dow’s decline reflects worries about the latest ISM Manufacturing PMI, which dropped to 48.7, signaling two months of contraction. Meanwhile, the NASDAQ’s gain highlights investors’ flight to large tech companies and the growing focus on AI. Our strategy is to take advantage of this widening gap. We prefer long positions on the Nasdaq 100, likely through call options on the QQQ, while also taking short positions on the Russell 2000 using puts on the IWM. The Russell’s underperformance indicates tightening financial conditions and ongoing economic fears, which we expect to continue. While not a perfect comparison, the movement of capital into a few tech giants while the broader market struggles resembles the late 1990s, a time marked by extreme relative performance.

European Market Sentiment

In Europe, the overall weakness tells a clearer story that suggests a bearish outlook. The sell-off, especially the significant drop in the Spanish market, is a response to the latest inflation data. Eurozone CPI recently increased to 2.6%, above the 2.5% forecast, making the European Central Bank’s plans for rate cuts more uncertain. This uncertainty is damaging to market sentiment. We think buying put options on broad European ETFs like the FEZ is a smart way to hedge against or profit from further market jitters, as the ECB deals with ongoing price pressures. Finally, the S&P’s stability during this chaos should be seen as a coiled spring rather than true stability. The market is experiencing significant tension. With the CBOE Volatility Index, or VIX, recently in the low 13s—a historically low level—we see great potential in long volatility positions. Buying straddles or strangles on the SPX is an appealing approach. It’s a non-directional bet that this stalemate will break. Whether the outcome is a sharp rally or a steep decline, we expect increased market movement in the coming weeks. Create your live VT Markets account and start trading now.

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Major European markets ended the day lower. Spain’s Ibex fell by -1.15%. Other indices also dropped, with Germany’s DAX down -0.35%, France’s CAC falling -0.54%, and both the UK’s FTSE 100 and Italy’s FTSE MIB dropping -0.66%. As European markets closed, US indices showed mixed results. The Dow industrial average lost 254 points, or -0.57%, while the S&P index stayed flat at 6268.00. In contrast, the NASDAQ index rose by 143.91 points, or 0.70%, closing at 20786.86.

Small Cap Pressure

The small-cap Russell 2000 faced challenges, dropping by -21.69 points, or -0.96%, to 2228.02. These numbers show varied performances in major US and European markets at the end of trading. The closing numbers reveal not just simple risk sentiment but deeper fragmentation. The all-red European markets, especially Spain, signal caution. This isn’t a quick reaction—it’s linked to fundamental issues. Eurozone inflation rose to 2.6% in May, raising doubts about the European Central Bank’s ability to keep easing policies. This could limit stock market growth. We suggest considering short positions on broad European indices, such as puts on the Euro Stoxx 50 ETF, as a protective strategy. The real signal comes from the stark differences across the Atlantic. The Dow’s decline and the Russell’s sharper drop indicate stress in the US economy, while the NASDAQ’s rise shows that money is not leaving the market but is concentrating in a small number of big tech companies. This isn’t a healthy trend; it suggests a rush to safety. The data backs this up: the Nasdaq 100 has surged over 17% this year, while the Russell 2000 has barely moved. This gap is among the widest we’ve seen in years, similar to the market conditions before significant corrections.

Trading Opportunities

We should directly trade this divergence. The time for passive index exposure has passed. There is a big opportunity in relative value trades, specifically going long on the Nasdaq 100 and short on the Russell 2000. This strategy highlights the market trend we’re seeing. In addition, the underlying weakness is obscured by the S&P’s stable performance, which has lulled the CBOE Volatility Index (VIX) into complacency, staying low around 13. While the index looks calm, recent data shows that fewer than half of its stocks are above their 50-day moving average. This internal tension suggests a potential market shift. We see this as a great chance to buy inexpensive protection. Long-dated puts on the SPY or calls on the VIX are now cheap hedges against the likely moment this fragile situation changes. Create your live VT Markets account and start trading now.

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The USD keeps rising as yields go up, impacting various currency pairs like AUDUSD, EURUSD, and GBPUSD, which are testing important technical levels. For AUDUSD, the 200-bar moving average on the 4-hour chart is at 0.6514. If it drops below this, the next targets are the 38.2% retracement level at 0.65096 and the 50% level at 0.64833.

Euro Testing Key Support Levels

In the EURUSD case, it has fallen past the 1.1663 level, quickly hitting targets between 1.1614 and 1.1629. If this support fails, focus will shift to another range from 1.15680 to 1.1578, with a 38.2% retracement at 1.15357. For GBPUSD, the pair is testing the 61.8% retracement from May’s low at 1.33873. If it drops below this level, we’ll look at the 1.3360 to 1.3378 swing area, with June’s low at 1.3371. To regain control, GBPUSD would need to rise above 1.3414. With the US 10-year Treasury yield surpassing 4.3%, a level not consistently seen for over a decade, these technical levels represent key points in a larger economic divergence. The recent US CPI showed a sticky 3.7%, and the job market keeps adding over 200,000 jobs monthly. This gives the Federal Reserve every reason to keep its “higher for longer” approach. This signals continued dollar strength against currencies with central banks facing slowing economies.

Bearish Outlook for Pound Sterling

We believe it’s time to prepare for a break of these supports rather than a bounce. The Euro is seeing a breakdown as the Eurozone’s inflation estimate cools to 2.4%, with Germany reporting a big drop in factory orders. This policy divergence creates a strong tailwind for the USD. Therefore, we are actively buying put options on the EURUSD with strikes below 1.1500, aiming for expirations in 30 to 45 days. The Sterling situation is similar. Although inflation remains high, the Bank of England is now discussing the potential harm of further rate hikes on an already weak economy, which historically is bearish. We are positioning for a break of the key retracement level by setting up put debit spreads on GBPUSD. This allows us to define our risk while aiming for a move towards 1.3200, indicating a significant change. For the Australian dollar, its future depends not only on the Fed but also on China’s faltering recovery. With Chinese youth unemployment data being withheld and property developers defaulting, Australia’s main commodity buyer is struggling. The break of the 200-period moving average should be viewed as the start of a downward trend rather than as support. We see this as a chance to sell call spreads with a target ceiling around 0.6550, betting on a quick sell-off after any temporary rally. Historical data from the 2014-2016 commodity slump shows that breaks of key long-term averages during a strong dollar cycle can lead to rapid declines. Create your live VT Markets account and start trading now.

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The Dow Jones Industrial Average (DJIA) remains steady around 44,400. This stability comes as investors wait to see if President Donald Trump’s tariff threats will be delayed or lessened. The next tariff deadline is set for August 1, following delays on reciprocal tariffs. Trump has hinted at potential tariff increases on countries like South Korea, Japan, Canada, and Mexico. Although negotiations are ongoing, little progress has been made on new trade deals, with only the UK and Vietnam having reached agreements so far.

Trade Agreements Overview

Details on the trade agreements are limited. There’s a proposed 20% tariff on Vietnamese exports to the U.S. and a 40% tariff on goods that pass through Vietnam. U.S. inflation data, which is expected to show the effects of early tariffs, will be released alongside important earnings reports from major banks this week. The Dow Jones is fluctuating within a range of 45,000 to 44,000. While daily movements show a slight decline, bullish signals suggest that downturns could be good buying opportunities. The index, founded by Charles Dow, tracks 30 leading U.S. stocks by adding their prices and dividing by a set factor. Key factors affecting the DJIA include company earnings, global economic indicators, and interest rates set by the Federal Reserve, which influence corporate credit costs. Dow Theory helps analyze trends by looking at movements in both the DJIA and the Dow Jones Transportation Average, which follow three phases: accumulation, public participation, and distribution. Investors can engage with the DJIA through ETFs, futures, options, and mutual funds. These options provide diverse ways to invest in the index without directly buying all 30 stocks. Trading carries risks, and thorough research is vital before making any investment decisions. This information is for informational purposes only and not a recommendation to buy or sell assets.

Market Strategies and Opportunities

We view the tight range between 45,000 and 44,000 not as calmness, but as a spring ready to release. For derivative traders, this consolidation in light of the impending August 1 tariff deadline presents an opportunity. Market indecision may be keeping implied volatility low, which makes options pricing more affordable ahead of a potential breakout. This suggests it’s a good time to consider building long volatility positions. Historically, intense trade negotiations can lead to sharp and unpredictable swings. During the tariff escalations of 2018-2019, the CBOE Volatility Index (VIX) frequently spiked above 20 and even over 35 when there were developments in negotiations. The current quiet market resembles those pre-surge periods. We are therefore exploring strategies like long straddles or strangles on ETFs that track the index, allowing for profit from any significant movement. A tariff delay could push the index toward the 45,000 resistance, whereas implementation could drive it down toward the 43,500 support level. Our focus on Vietnam is intentional. Recent data shows the U.S. goods trade deficit with Vietnam hit $105 billion in 2023, making it a prime target for new tariffs. The proposed 20% tariff is substantial and would quickly impact consumer prices and corporate supply chains, a reality the upcoming inflation data will reflect. We are also monitoring the transportation sector for confirmation, in line with Dow’s theory. Any weakness in this sector would be a bearish sign, suggesting that the economy is already slowing in expectation of these new trade barriers. Instead of trying to predict the outcome of the President’s negotiations, we are using this consolidation period to set up positions that will benefit when the range eventually breaks. Selling short-dated puts against long-dated puts, creating a calendar spread, is another sophisticated way to play this situation, funding the position while betting that uncertainty will lead to a downturn. The key is to prepare for the breakout, not to guess its direction. Create your live VT Markets account and start trading now.

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Major US indices have recently lost their earlier gains. The S&P 500 is now trading in the negative, while the NASDAQ, although still positive, has reached its session lows. The Dow Jones Industrial Average has dropped by 300 points, or 0.67%, to 44,160. Earlier, it was up by 44.62 points. The S&P 500 index is down 7.19 points, or 0.12%, sitting at 6,261.98, after being up by 33.48 points at its high. The NASDAQ has gained 95 points, or 0.46%, now at 20,736.40, but it peaked with a rise of 195.71 points earlier.

The Small Cap Russell 2000

The small-cap Russell 2000 index has declined by 20.80 points, or 0.92%, resting at 2,228.88. What we are seeing isn’t just a midday trend reversal; it reflects a deeper conflict within the market. Initial optimism, likely sparked by a cooler-than-expected May Consumer Price Index reading of 3.3%, quickly faded as the reality of the Federal Reserve’s position became clearer. Their latest projections now indicate just one rate cut for 2024, down from three earlier this year. This push and pull between inflation data and the Fed’s stance is creating a prime scenario for trading strategies focused on volatility and market divergence. The most obvious sign of this is the unusual calm in the volatility markets. With the VIX around a historically low level of 13, the market’s “fear gauge” seems unaware of potential risks. To provide context, its long-term average is closer to 20, and it soared above 80 during the 2020 downturn. We see this current complacency as a significant misjudgment of risk. It means protective options for indices like SPY and QQQ are very affordable. For traders holding substantial long positions, now is the time to buy insurance—when the premiums are low, not when the market is in crisis. We are using put debit spreads to minimize our risk and reduce the cost of this protection. The differences between the indices tell an important story. The weakness in the Russell 2000 is a direct result of the “higher for longer” interest rate environment, which hurts smaller companies that depend on debt for growth. In contrast, the NASDAQ’s strength indicates a shift toward stable investments, as funds flow into large tech companies with strong financial positions. This creates an opportunity for pair trades. We are positioning ourselves to go long in the tech sector using call spreads on QQQ while simultaneously taking a bearish stance on small caps through put spreads on IWM. This strategy is not a bet on the overall market trend, but rather a play on continued divergence.

Market Tension and Strategy

The upcoming weeks will be marked by this tension. Every new piece of economic data will be examined not just for its own sake, but for how it may influence the Fed’s decisions. We believe a cautious approach is best—not to make bold predictions about direction, but to create trades that succeed in a climate of rising uncertainty. Our playbook focuses on leveraging the market’s unpredictable behavior, using the current low-volatility phase to build an options portfolio that will profit when this calm eventually ends. Create your live VT Markets account and start trading now.

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The Mexican president, Sheinbaum, is reacting to new tariffs imposed by the US. Mexico plans to take further action if a deal with the US is not reached by August 1. Sheinbaum is against the US duties on tomatoes, showing her disapproval of the policy. She mentioned that Mexico is working hard to fight drug cartels and suggested that the US should also do its part.

Future Implications on Trade

Her comments are the first clear sign of a strategy, indicating that the time for quiet observation has ended. In the coming weeks, we should expect increased market volatility, rather than a specific direction. While her opposition to tomato duties may seem small, it represents the larger $800 billion trade relationship between the US and Mexico. We view this as the starting point for negotiations that will affect currency and stock markets long before the August 1 deadline. The Mexican peso is where the action is. We witnessed how political uncertainty led to the USD/MXN exchange rate jumping from under 17.00 to over 18.50 shortly after the election. This was the market reacting to the risk of a supermajority. Now, we are seeing active conflict, making buying volatility on the peso a direct strategy. We are exploring long-term options straddles on the USD/MXN pair. This strategy lets us profit from significant price changes, regardless of whether the peso strengthens or weakens. The focus is on the *size* of the move, not which direction it takes. Besides currency, we are also considering the iShares MSCI Mexico ETF (EWW), which has dropped over 10% following the election. Sheinbaum’s strong comments, particularly linking cartel actions to US cooperation, create potential risks that could affect investor confidence. Any suggestion of retaliatory measures from Mexico will negatively impact this ETF’s components. We are using put options on EWW as a hedge or a bearish position regarding the Mexican market’s resilience against a trade conflict.

Long Term Strategy and Historical Context

We have seen similar situations before. During the NAFTA renegotiations in 2017 and 2018, implied volatility on the peso remained high for months, benefiting those who invested in volatility as the spot price fluctuated. The current scenario is made more complex by the upcoming 2026 USMCA review. Each tariff threat and counter-threat is an early move in this larger game. Sheinbaum’s comments go beyond tomatoes, which represent over $2.5 billion in annual US imports; they set the tone for the next two years. Create your live VT Markets account and start trading now.

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The Australian Dollar is falling against the Japanese Yen, with AUD/JPY currently around 96.70. A Harami candlestick pattern has appeared, indicating market uncertainty as the pair approaches a key resistance point. AUD/JPY recently passed the 61.8% Fibonacci retracement level of 96.15 from an earlier drop. The pair is slightly above the 200-day Simple Moving Average (SMA) at 95.80, suggesting there is potential support.

Long Term Trend

The long-term trend remains positive, with the 50-day and 100-day SMAs showing upward movement. The Relative Strength Index (RSI) is below 70, which hints at a possible pullback since it nears overbought conditions. If the price breaks above 97.00, it could rise towards the 78.6% Fibonacci retracement at 98.90. However, if selling pressure increases, support levels are at 96.15 and 94.10, and further declines could happen if these levels are broken. The Australian Dollar is affected by several factors: the Reserve Bank of Australia’s interest rates, iron ore prices, and the economic health of China. These elements, along with Australia’s Trade Balance, influence the currency’s value. The strength of China’s economy directly impacts demand for the Australian Dollar.

Australian Dollar Strength

Considering the uncertainty shown by the Harami pattern as the pair tests key resistance, we suggest a careful approach. While the long-term upward trend guides us, the short-term outlook is muddled by mixed signals, which derivatives can help navigate. The case for Australian Dollar strength is strengthening. Australia’s latest quarterly CPI increased unexpectedly to 3.6%, leading to speculation that the Reserve Bank of Australia might be the last major central bank to consider rate cuts. Recent minutes from their meeting showed that a rate hike was discussed actively. This hawkish stance strengthens the upward momentum indicated by the 50-day and 100-day SMAs. Historically, during periods of RBA tightening and robust global growth, like the significant rallies in 2021 and 2022, pullbacks in this pair have often provided good buying opportunities. However, we need to balance this positivity with the challenges faced by its largest trading partner. China’s recent Caixin Manufacturing PMI reading of 51.7 marks a seventh consecutive month of growth, which is a positive sign for Australian exports. Yet, this is countered by ongoing weakness in China’s property sector and sluggish consumer spending. This contrast is reflected in iron ore prices, which, after a significant rebound, are currently around $117 per tonne, well below previous highs. This economic tug-of-war in China directly contributes to the indecision shown in the candlestick pattern and explains the RSI’s failure to move firmly into overbought territory. As a result, we see an opportunity for a bull call spread. By buying a call option with a strike just above the market, say at 97.25, and selling a higher strike call close to the 78.6% Fibonacci level around 98.75, traders can position for a gradual rise. This strategy lowers upfront costs and defines risk, a smart move given the potential for a quick rebound from resistance. For those who think the conflicting data from China will lead to consolidation, selling an out-of-the-money strangle—by placing a put option below the 94.10 support and a call option above the 97.00 resistance—could be a good way to capitalize on the expected market fluctuations. Create your live VT Markets account and start trading now.

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The currency market is cautious ahead of upcoming US inflation reports. However, the US Dollar is performing well against other currencies due to ongoing trade tensions. The US Dollar Index went over 98.00 but quickly lost some strength. EUR/USD dropped to its lowest point in three weeks at around 1.1650. Germany and the eurozone are waiting for the ZEW Economic Sentiment data and Industrial Production figures, while the ECB’s Buch is set to speak.

Performance Of Gbp/Usd

GBP/USD is currently low in its trading range and may test the 1.3400 level. The only data release from the UK is the BRC Retail Sales Monitor, along with a speech from the BoE’s Bailey. USD/JPY is still moving up towards 148.00, with the Reuters Tankan Index set to be released in Japan. Meanwhile, AUD/USD lost its early gains and fell into the mid-0.6500s. President Trump’s recent threats have impacted American WTI prices, driving them below $67.00. Gold prices fell to around $3,350 per ounce after reaching three-week highs, while Silver rose above $39.00 per ounce for the first time since 2011. Bitcoin hit a new high, surpassing $122,000 on Monday. The technical outlook suggests it may rise further, potentially exceeding $130,000. Markets are on edge, watching for tariffs and upcoming US inflation figures.

Market Volatility And Strategic Positioning

Given the current market situation, we are preparing for a significant increase in volatility. There’s a clear cautiousness, with the US inflation data being crucial to our strategy. The latest core Personal Consumption Expenditures (PCE) index, the Fed’s favorite measure of inflation, is around 2.8% year-over-year. Any unexpected increase could boost the US Dollar significantly. Currently, the market is anticipating fewer than two rate cuts this year, a change from the six or seven that were expected a few months ago. This scenario of “higher for longer” is driving our strategy. Therefore, we are not simply betting against the Euro with spot shorts; instead, we are buying puts on the EUR/USD, targeting strikes below 1.1600. Weak German industrial data will support this trade, and while we will pay attention to Buch’s comments, we see any euro strength as an opportunity to expand our positions. For sterling, the outlook is similar but has some differences. Bailey has been consistently cautious, and new BRC data shows UK retail sales growth slowing to just 0.4%, indicating a tough economic landscape. We believe GBP/USD may break below the 1.3400 level soon. Our approach is to buy put spreads, which reduces entry costs while still providing significant leverage if the pound drops after the inflation report. The rise of USD/JPY towards 148.00 is due to the growing interest rate gap, which the Bank of Japan is reluctant to close swiftly. Historically, when this pair moves so quickly, Japanese officials tend to intervene verbally, leading to sharp but temporary pullbacks. While the trend benefits us, we are hedging our long dollar exposure by purchasing affordable, out-of-the-money USD/JPY puts. This acts as a protective measure against any unexpected moves from Tokyo after the Tankan report. In commodities, the decline in WTI is directly related to trade tensions. Even the hint of new tariffs from someone like Trump can negatively impact demand forecasts. We expect a range-bound environment for now. We are structuring iron condors on oil futures, betting that fears of a global slowdown will restrict the upside, while OPEC+ will support the downside. The real action is in metals. Silver’s sharp rise past a ten-year high indicates significant speculative interest. We are avoiding naked shorts and instead using call spreads to benefit from the momentum, managing our risk in a market detached from fundamentals. For gold, its dip from recent highs shows signs of caution. We are buying short-dated puts to hedge against a stronger dollar and higher-than-expected inflation numbers, which could temporarily diminish gold’s appeal. Lastly, Bitcoin’s rise above $122,000 has pushed implied volatility to extreme heights. Buying options outright here is expensive. To target the potential $130,000 mark, we are using bull call spreads. This strategy allows us to engage in the potential upside while capping our maximum losses—a vital practice in an asset class where sentiment can change rapidly. The market is poised for a shift, and we are ready to capture the energy when it happens. Create your live VT Markets account and start trading now.

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