EUR/JPY is trading positively around 172.60 early in the European session. The strong upward movement is supported by a bullish trend above the 100-day EMA and a solid RSI. Resistance is at 173.11, while initial support is found between 172.00 and 171.90. Political uncertainty in Japan is affecting the Yen, especially after the Liberal Democratic Party lost control in the upper house. This situation allows the EUR/JPY cross to rise to about 172.60, supported by fiscal worries in Japan. The pair looks strong on daily charts, remaining above key moving averages.

Potential Gains And Risks

If momentum continues, further gains may challenge the 173.11 level, pushing towards targets at 173.75 and 174.52. On the downside, falling below the support could lead to a drop to 170.81 and possibly 170.00. The Japanese Yen’s value reflects Japan’s economic performance and the Bank of Japan (BoJ) policies. Although currency interventions are rare, the Yen has weakened due to differences in policies with major banks. Recently, a narrowing of this gap has helped support the Yen. Market sentiment plays a significant role as well. The Yen acts as a safe-haven currency, often gaining strength during global market stress. These factors all affect the Yen’s value against other currencies in different market conditions. Given the current bullish momentum, traders might consider strategies that take advantage of a potential move toward the 173.11 resistance level. Buying near-term call options could be an easy way to benefit from this positive trend. The strong RSI and the trading position above important moving averages reinforce this optimistic view.

Diverging Central Bank Policies

It’s important to consider diverging central bank policies. The European Central Bank lowered interest rates in early June 2024, indicating a possible easing cycle. This is in stark contrast to the growing belief that the Bank of Japan may soon need to tighten its policy. Japan’s core inflation rate, which excludes fresh food, was 2.5% in May 2024, staying at or above the BoJ’s 2% target for the 26th consecutive month. This ongoing inflation puts pressure on Governor Ueda to think about raising rates, possibly in the third quarter. Such a decision would strengthen the Yen and challenge the current trend in the currency pair. We must also consider the government’s readiness to intervene, as seen with the 9.79 trillion yen intervention in April and May 2024 to support the Yen. This history suggests that as the pair rises, the risk of abrupt government action increases. Holding unhedged long positions becomes riskier with each upward movement. The political situation adds more uncertainty. Prime Minister Kishida’s approval ratings have dropped below 20% in some polls. This low popularity could cause fiscal delays that weaken the Yen further. Alternatively, it might lead to major policy changes aimed at winning back public support. Thus, we see value in using option spreads to manage this uncertainty. A bull call spread, for example, could allow traders to gain from a moderate rise toward 173.75 while limiting potential losses. This strategy offers a balance between the bullish technical signals and the substantial fundamental and political risks of a sudden market reversal. Create your live VT Markets account and start trading now.

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Crude oil has stabilized after the turbulent June caused by the Israel-Iran conflict. With geopolitical issues no longer affecting prices, traders are now focusing on global growth trends. There is a general upward momentum thanks to ongoing government spending and easy money policies. The August 1 tariff deadline might make traders cautious, but any changes in political messages could shift market expectations.

Risks To The Bullish Outlook

Factors that could challenge a positive outlook include concerns about tariffs affecting growth or shifts in interest rate expectations. The market may fluctuate between 60 and 90, but current patterns indicate a possible upward trend. On the daily chart, prices dropped after the Israel-Iran conflict but found support around 64.00. Buyers are looking to push prices higher, while sellers need to break this support to drive prices down to around 55.00. The 4-hour chart shows a peak at 69.00 before the price returned to support. Trading may continue within support and resistance levels, awaiting a possible breakout. On the 1-hour chart, a slight downward trend marks the decline to support. If buyers can break above this trendline, they might push for new highs, while sellers will aim to drive prices lower and break support.

Opportunity For Positioning

The current calm market presents a great chance for positioning. A recent report from the U.S. Energy Information Administration (EIA) indicated a bigger-than-expected drop in crude inventories by 4.1 million barrels. This suggests that buying interest is strong beneath current prices and reinforces the technical support at this level. The emphasis on global growth is warranted, especially with new data showing China’s Caixin Manufacturing PMI exceeded expectations at 51.7, reflecting growth in the world’s largest oil importer. Additionally, futures markets, as per the CME FedWatch Tool, show over a 90% chance that the Federal Reserve will keep interest rates unchanged, easing a significant concern for the markets. This supports the notion that policies are favorable for demand. Looking at the tariff deadline from the previous administration, we can reference the 2018-2019 trade war. During that time, while tariffs caused short-term market fluctuations, the overall driver remained the broader global growth outlook rather than political news. Therefore, we should see any declines due to tariffs as potential buying chances, unless they coincide with genuine economic setbacks. From a derivatives perspective, this outlook suggests selling cash-secured puts with a strike price at or slightly below 64.00. This strategy allows us to earn premium while establishing a buy point at a crucial support level. For those who are more directly bullish, buying a call spread, such as the 65/70 spread, offers a defined way to profit from upward movement toward the upper end of the short-term range. To capitalize on the anticipated stable price movement between support and resistance, traders might consider an iron condor. This options strategy can benefit from low volatility and time decay as long as prices stay between the specified strikes. With the CBOE Crude Oil Volatility Index (OVX) near its recent lows, selling premium becomes an appealing strategy. As we near the slight downward trendline, breaking above it could signal a chance to enter new long positions. A straightforward approach would be to buy near-term call options to benefit from a quick rise toward the 69.00 resistance. On the other hand, a definitive drop below the 64.00 support would signal an opportunity to buy puts, aiming for a deeper correction. Create your live VT Markets account and start trading now.

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The Bank of England’s governor, Andrew Bailey, noted that the UK’s yield curve is steepening in line with global trends. This steepening is due to uncertainties in trade and fiscal policies. Recent figures reveal that the UK’s public sector net borrowing rose to £20.7 billion in June, the second-highest June figure on record. Only the borrowing levels during the Covid pandemic were higher. With rising yields and ongoing inflation, Chancellor Rachel Reeves faces more pressure as she prepares for the autumn Budget.

Market Expectations

The governor’s comments reflect what the market has been anticipating for weeks. His acknowledgment of trade and fiscal policy uncertainties supports the idea that the long end of the UK yield curve is at risk. This indicates continued pressure on long-term government bonds, known as Gilts. Given this situation, we believe it makes sense to prepare for further steepening of the Gilt curve in the coming weeks. Derivative traders can act on this by buying ten-year Gilt futures while also selling two-year Gilt futures. The uncertainties Bailey mentioned should lead to a wider gap between these two points on the curve. The increase in government borrowing intensifies this trade. The UK’s Debt Management Office plans to issue a hefty £277.7 billion in Gilts for the 2024-25 fiscal year, which will likely push long-term yields higher due to the large supply. This fundamental shift from fiscal policies supports the technical case for a steeper curve.

Inflation Concerns

Persistent inflation, particularly in the services sector—which recently reported 5.7%—adds difficulty to the Bank of England’s role and increases market volatility. While overall inflation has reached the 2% target, these underlying pressures create uncertainty for short-term rates. We recommend considering options on interest rate futures to benefit from anticipated price fluctuations. This level of borrowing, outside of a crisis, is historically significant, reminiscent of the aftermath of the 2008 financial crisis, which led to long-lasting uncertainty. All attention will now be on the Chancellor ahead of the Autumn Statement for hints of fiscal responsibility. Any move away from fiscal prudence could speed up the steepening of the curve we are preparing for. Create your live VT Markets account and start trading now.

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GBP/USD fell below 1.3500 after gaining over 0.5% in a previous session, settling at around 1.3480 in Asian trading on Tuesday. This drop happened as the US Dollar remained stable, with caution surrounding the August 1 tariff deadline announced by US President Donald Trump. US Commerce Secretary Howard Lutnick confirmed that new tariff rates would be set on August 1, but trade discussions will continue. The British Pound is showing a slight recovery against the US Dollar, trading near 1.3480 during the American session.

Sterling Attempts Recovery

Sterling’s rise is partly due to a weakening US Dollar, impacted by low US Treasury yields and uncertainty over future trade talks and Federal Reserve policies. Expectations for UK interest rates are uncertain after mixed economic data, creating cautious optimism ahead of the Bank of England’s decision in August. In other market news, EUR/USD regained 1.1700 during the European session, and Solana hit $200. China’s second-quarter GDP showed a 5.2% year-on-year growth, but concerns about fixed-asset investment and retail sales continue. We see the recent drop below 1.3500 followed by a tentative recovery as a sign of potential volatility rather than a clear trend. Recent data indicates 1-month implied volatility for GBP/USD has risen to around 7.5%, reflecting market nervousness ahead of key events. This means option premiums are becoming more costly, making volatility-selling strategies riskier.

Central Bank Expectations

The upcoming Bank of England meeting is crucial, especially since the Office for National Statistics reported UK CPI inflation reaching the 2.0% target. Historically, hitting this target often leads to policy changes. We expect the market to fully factor in a rate cut for the August meeting, which may limit Sterling’s strength in the coming weeks. On the other hand, uncertainty about Federal Reserve policy is limiting dollar strength, as indicated by low Treasury yields. While Mr. Lutnick’s comments on trade add geopolitical risks, the CME FedWatch Tool shows a greater than 60% chance of a rate cut by September. This suggests the market is leaning toward a more dovish US central bank, preventing the dollar from rising significantly. This situation presents challenges for both central banks, making it hard to place strong directional bets. Given the mixed pressures, we believe that long volatility positions are the safest option for traders. A long straddle using options that expire after the August central bank meetings could benefit from the sharp moves likely to occur, regardless of the direction taken by the pair. Create your live VT Markets account and start trading now.

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GBP/USD has dropped slightly after rising over 0.5% the previous day. It’s currently trading around 1.3480 during Tuesday’s Asian session. The decline occurred as the US Dollar remained stable, while concerns about US President Donald Trump’s tariff deadline on August 1 increased. US Commerce Secretary Howard Lutnick confirmed that the tariff deadline is firm. Tariffs will start on August 1, but trade talks will continue. Market sentiment is also affected by worries over the Federal Reserve’s independence, with US Treasury Secretary Scott Bessent expressing concerns about the Fed’s growing responsibilities.

Market Reactions and Economic Data

Bessent has suggested a thorough review of the Fed, and President Trump’s criticism of Fed Chair Jerome Powell has led to speculation about a possible dismissal. In the UK, upcoming S&P PMI data is expected to show less decline in manufacturing and solid growth in services. The Bank of England may reduce long-dated bond sales due to decreased demand, and traders anticipate at least two rate cuts by 2025, even with lower easing expectations. The Pound Sterling, shaped by the Bank of England’s policies and economic indicators, is an important global currency. Its main trading pairs include GBP/USD, GBP/JPY, and EUR/GBP. With conflicting pressures on the currency pair, traders should brace for higher volatility rather than predict a clear direction. The confirmed tariff deadline raises significant event risks, while potential strong UK economic data may counterbalance this. This uncertainty suggests that using options strategies might be wiser than taking outright positions. Market concerns regarding upcoming trade restrictions and the criticism of Powell are already evident. This is shown in indicators like the CBOE Volatility Index (VIX), which recently jumped above 14 for the first time in weeks, indicating a rise in market anxiety. Bessent’s call for reviewing the central bank’s mandate adds to the political uncertainty, historically making the US dollar a safe haven.

Trading Strategy Considerations

On the other side, the pound is getting support from recent data, which shows the S&P Global/CIPS UK Services PMI for July holding firm at 53.0, reflecting strong growth in the UK’s largest sector. This positive economic news complicates a solely negative outlook on the pound. However, the market has factored in at least two interest rate cuts by the Bank of England by the end of 2025, limiting the currency’s long-term potential. This situation is reminiscent of the 2018-2019 US-China trade war, where headline risks caused GBP/USD volatility to increase by over 30% in just weeks. During that time, sudden and unpredictable moves became common after policy announcements. We expect a similar pattern of erratic price movements leading up to and right after the August 1 deadline. Therefore, we are preparing to benefit from significant price swings, regardless of the direction. We recommend traders consider purchasing options strategies like long straddles on GBP/USD. This involves buying both a call and a put option at the same strike price and expiry. This strategy allows traders to profit from a major move following the tariff implementation or any surprising UK data releases. Create your live VT Markets account and start trading now.

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Gold prices in Saudi Arabia dropped on Tuesday. The price per gram decreased to 408.80 Saudi Riyals (SAR) from 409.77 SAR the day before. In the same way, the price for Gold per tola fell to 4,768.02 SAR from 4,779.48 SAR. In Saudi Arabia, Gold prices adjust according to global rates converted to local currency.

Historical Role Of Gold

Gold has long been seen as a safe value and a way to trade. It is often viewed as a secure asset during times of economic trouble and inflation. Central banks keep large Gold reserves to help their economies in tough times. In 2022, they added 1,136 tonnes of Gold, totaling about $70 billion—the highest annual purchase on record. Gold typically has an inverse relationship with the US Dollar and US Treasuries. Because it doesn’t have a yield, Gold prices tend to rise when interest rates are low, while a strong US Dollar can push prices down. Gold values may also increase during times of political instability or fears of economic decline. Overall, Gold prices largely depend on what happens with the US Dollar.

Impact Of US Monetary Policy

Given the inverse relationship with the dollar, the recent drop in Gold prices can be attributed to US monetary policy. The US Dollar Index (DXY) has remained strong, recently trading above 105. This strength comes as Federal Reserve officials indicate that interest rates may stay high for an extended period. A strong dollar poses challenges for assets priced in dollars. Traders might want to prepare for continued pressure or sideways movement on Gold in the short term. With May’s Consumer Price Index (CPI) data showing that inflation remains stubborn, the Fed has little reason to lower rates, which limits potential gains for Gold. Strategies like buying put options or setting up bear call spreads could be smart moves to take advantage of possible price stagnation or declines. However, we also need to consider the solid underlying support mentioned in the analysis. The World Gold Council reported that central banks continued buying in the first quarter of 2024, adding a net 290 tonnes to global reserves. This ongoing institutional demand creates a strong base, preventing a major price drop. This situation presents a balancing act for traders. Hawkish monetary policies may pull prices down, while geopolitical risks and buying from official sectors may push them up. Ongoing conflicts in the Middle East and Eastern Europe suggest that any significant price dip is likely to prompt new safe-haven buying, potentially increasing volatility in the weeks ahead. Historically, we’ve seen similar scenarios during intense rate hikes, such as in the early 1980s under Fed Chair Paul Volcker. Although high interest rates eventually drove Gold prices down back then, the initial period was marked by high volatility as markets absorbed mixed signals. We expect a similar situation now, where price movements will be erratic and very responsive to daily economic reports. Create your live VT Markets account and start trading now.

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Gold prices in the Philippines dropped on Tuesday. The cost of gold per gram was PHP 6,213.78, down from PHP 6,225.32 on Monday. For gold priced per tola, the cost fell to PHP 72,475.28 from PHP 72,610.89. Additionally, prices included PHP 62,135.35 for 10 grams and PHP 193,270.40 per troy ounce.

Gold Price Adjustment

Gold prices in the Philippines are adjusted based on international rates and the USD/PHP exchange rate. These updates happen daily in line with market rates at the time of publication. Gold has historically functioned as a store of value and a medium of exchange. It acts as a safe-haven asset during tough economic times, providing protection against inflation and currency devaluation. Central banks are significant purchasers of gold, using it to enhance reserves and strengthen economic stability. In 2022, central banks bought 1,136 tonnes of gold worth around $70 billion. Gold prices often move opposite to the US Dollar and Treasury yields. When stock markets rise, gold prices may drop, while declines in those markets could support gold prices.

Influencing Factors

Gold prices are affected by geopolitical tensions, interest rates, and the value of the US Dollar. Lower interest rates can push gold prices up, while a strong Dollar typically keeps prices lower. The recent slight decrease in the Philippines is part of a larger global trend following the record highs above $2,400 per ounce in April. This minor pullback is not a sign of a major shift but reflects the market adjusting to significant gains amid mixed economic signals. Traders should be ready for ongoing pressure from a strong US Dollar and ongoing inflation data. The market has significantly lowered its expectations for interest rate cuts by the U.S. Federal Reserve in 2024, which historically strengthens the dollar and works against non-yielding assets like gold. A firm monetary policy from the U.S. central bank will likely limit substantial upward price movements in the short term. However, strong support for gold remains. Central banks added a net 290 tonnes to global reserves in the first quarter of 2024, showing a clear strategy to reduce dependence on the dollar. This institutional demand, along with ongoing geopolitical issues, creates a solid price foundation. For derivative traders, this mix of conditions suggests that volatility is the main factor to keep an eye on. Instead of making a simple directional bet, it may be wiser to prepare for significant price swings. The tension between strict central bank policies and strong physical demand could lead to sharp movements in the coming weeks. Historically, after a strong rally like the one seen earlier this year, gold tends to trade sideways before its next major move. A drift down towards the low $2,300s per ounce could lead to increased buying interest, reinforcing its status as a safe-haven asset. Monitoring the USD/PHP exchange rate closely is advisable, as local currency fluctuations will add more volatility to domestic prices. Create your live VT Markets account and start trading now.

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Markets are watching trade updates closely, especially with the August 1 deadline for possible new tariffs approaching. There is still doubt about whether tariffs will actually be enforced this time. Previously, on July 9, Trump sent out tariff letters but did not go through with implementing tariffs. He is now saying that those who received letters must negotiate or risk higher tariffs by August 1.

Status of Negotiations with the EU

Negotiations with the EU are in a fragile state, and a compromise seems unlikely. The EU is ready to retaliate if the U.S. imposes higher tariffs. India and Japan, both key U.S. allies, are facing their own challenges. India is hesitant to agree to a limited deal and hasn’t received a tariff letter. There is a chance they could face initial tariffs of 26%. Japan has engaged in many talks but has yet to reach an agreement, partly due to political uncertainty in Tokyo. It seems doubtful that a resolution will be found by the deadline. U.S. officials have suggested that the August 1 date might not lead to immediate agreements, emphasizing the need for “quality” deals instead. With ten days left, the situation is still changing, and everyone is awaiting updates.

Market Opportunities Amid Tariff Speculation

As the market holds its breath before the August deadline, we see a chance to capitalize on volatility. The CBOE Volatility Index (VIX), which measures market anxiety, is around a low 14, indicating calm. Generally, unexpected tariff announcements have pushed the VIX above 25, suggesting that options might be undervalued right now. The situation with the EU is especially significant, as total U.S.-EU trade in goods and services exceeded $1.3 trillion last year. If no agreement is reached, retaliatory actions could have a serious impact on sectors like automotive and luxury goods. Buying protective put options on European-focused ETFs or major automakers could serve as a solid safeguard against this risk. For the stalled negotiations with Japan and India, the uncertainty itself creates trading opportunities. Currency markets, especially the USD/JPY pair, are sensitive to these discussions and have experienced increased volatility during past trade disputes. We can utilize options strategies like straddles, which profit from significant price movements in either direction, to benefit from the potential outcomes of a deal or new tariffs. Bessent’s comments downplaying the deadline might give many investors a false sense of security. This presents an opportunity to establish long volatility positions at a lower cost before any last-minute policy shocks arise. We are preparing for a market reaction if his remarks are a strategy to ease anxiety before a less favorable outcome. This trade uncertainty coincides with recent CPI data indicating ongoing inflation concerns. New tariffs would raise costs for imported goods and complicate the Federal Reserve’s policy decisions. Therefore, we are also exploring positions in interest rate derivatives to mitigate the broader economic impact of renewed trade conflicts. Create your live VT Markets account and start trading now.

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Gold prices in the UAE dropped on Tuesday. The price per gram fell to AED 400.24, down from AED 401.15 the day before. The price per tola also decreased to AED 4,668.28, down from AED 4,678.92. The US Dollar Index is stable at about 97.90 after a recent decline of over 0.50%. A stronger dollar makes gold pricier for buyers using other currencies, which impacts its price.

Trump Powell Allegations

US President Donald Trump has denied plans to fire Fed Chairman Jerome Powell, despite reports suggesting otherwise. Meanwhile, Congresswoman Anna Paulina Luna accused Powell of lying about the Federal Reserve’s headquarters renovations. Views on interest rate cuts differ among US central bank officials. Some worry that delaying cuts may lead to aggressive actions later. Fed Governor Christopher Waller indicated a possible rate cut in July due to economic risks. Gold prices in the UAE reflect international rates and are updated daily based on market changes. Local prices may vary slightly from these benchmarks. Gold is considered a safe haven asset, and central banks hold it as a reserve. Its price is influenced by geopolitical factors, interest rates, and the US Dollar’s performance.

Gold Price Trends

Recently, the decline in gold prices is linked to the stronger US dollar, which reached a multi-week high above 105 on the index. This strength makes gold more expensive for buyers outside the US, putting pressure on its price. Traders should pay close attention to this. The differing opinions among US central bank officials create uncertainty, but market data offers clarity. The CME FedWatch Tool indicates that traders see over a 60% chance of a rate cut by September, even as annual consumer prices rose by 3.3%. Waller’s comments about a potential rate cut align with this perspective, pointing to a dovish outlook. Political issues, like Luna’s accusations against Powell, may cause short-term volatility but are unlikely to set long-term trends. Traders should focus on economic data that affects central bank policies, rather than political news. Historically, gold prices are more influenced by interest rates and currency changes than internal political matters. Historically, during easing cycles, including in 2019, gold often rises in the months before the first interest rate cut as markets anticipate the change. The current situation offers traders a chance to prepare for potential policy shifts. Anticipation can be more profitable than the actual event. With uncertainty but a probable trend towards easing, derivative traders should explore strategies to benefit from price movements. Buying call options can be an easy way to tap into a possible price rally from future rate cuts. Increased volatility also raises option premiums, so selling put options might be a good strategy for those who believe prices will hold steady. Create your live VT Markets account and start trading now.

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Bitcoin is holding steady above an important support area, with traders expecting a breakout for its next big move. After a recent rally, which was fueled by strong U.S. economic data and lower inflation, Bitcoin’s momentum has temporarily slowed down. Since hitting a low on April 9, market growth and liquidity have remained positive. The upcoming August 1 tariff deadline may impact market behavior, but delays or softer approaches are possible. Overall, the market outlook is optimistic, with few bearish influences. Risks to watch for include growth concerns related to tariffs or unexpected changes in interest rate expectations. On the 4-hour chart, Bitcoin is consistently bouncing off a crucial support zone around $116,000, indicating that buyers are stepping in when prices dip. There’s a clear risk of a downturn if it falls below this trendline, as traders are targeting new all-time highs. If it breaks below this support, we could see a deeper correction down to the $110,000 trendline. The 1-hour chart shows a descending triangle pattern in recent price movements. Prices can break out in either direction from this pattern, often leading to a strong price shift. This market consolidation offers a great opportunity for derivative traders. With the descending triangle pattern on the short-term chart, we expect a significant breakout soon. This suggests that strategies based on volatility, like buying a straddle or strangle, could be profitable by taking advantage of a big price swing in either direction. We believe the easiest path for Bitcoin is upwards, supported by positive macroeconomic conditions. The latest U.S. Consumer Price Index data shows inflation dropped to 3.3%, which raises hopes for potential Federal Reserve rate cuts later this year. Options data also reflects this sentiment, as the 25-delta skew for Bitcoin options remains neutral to slightly positive, indicating traders are not heavily betting on a price decline. A high level of open interest in futures, exceeding $30 billion across major exchanges, shows that there’s significant capital ready for a move. Although realized volatility has decreased during this period of consolidation, implied volatility in options has remained steady. This difference often signals sharp price movements on the horizon. However, we need to be cautious about the risk of a downturn below the key support zone, which we set around $65,000. If tariff policies cause a growth scare or interest rate expectations become more aggressive, we could see prices drop further toward the $60,000 level. A smart strategy would involve buying protective puts with strike prices below the current support level to safeguard against this risk. This phase of sideways price action resembles what we observed in the fourth quarter of 2020, just before a major market breakout. That extended period of consolidation drained sellers and absorbed excess supply before a strong trend began. We view the current market structure similarly, indicating it is gearing up for its next significant move.

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