USD/JPY has risen above 147.00 as focus shifts to upcoming US Consumer Price Index data. The US Dollar is strengthening against the Japanese Yen, partly due to better interest rates, with USD/JPY’s RSI climbing to 64. The JPY faces pressure because low interest rates are causing funds to move toward higher-yield currencies like the USD. The Federal Reserve’s interest rates, between 4.25% and 4.50%, are influencing this exchange rate, with attention on US CPI data.

Expected CPI Figures

For June, the US CPI is projected to increase by 0.3% monthly and show a yearly growth of 2.7%, up from 2.4% in May. Core CPI, excluding food and energy, is also expected to rise by 0.3% month-to-month, with an annual increase to 3%, up from 2.8% in May. From a technical perspective, USD/JPY is making gains, facing resistance at 148.00, while support holds at the 38.2% Fibonacci retracement level of 147.14. If the price surpasses 148.00, it might retest the 148.65 high and the 149.38 Fibonacci point. Support levels are noted at 146.00 and the 10-day SMA of 145.69. The US Dollar is heavily traded, accounting for 88% of foreign exchange activity, and is largely influenced by the Fed’s monetary policies, including interest rate changes and quantitative easing or tightening measures.

Trader Sentiment and Risks

With the yield gap widening in favor of the USD, we expect the currency pair’s path to lean higher. Still, traders must beware of complacency. Recent US inflation data revealed a year-over-year Consumer Price Index increase of 3.7%, which was higher than expected, supporting the Federal Reserve’s stance of keeping rates high for an extended period. The CME FedWatch Tool indicates a continuous, albeit lower, chance of another rate hike by year-end, boosting support for the dollar during dips. Our attention is not just on the dollar’s strength but also on the yen’s weakness. A rising USD/JPY could be threatened not by a dovish Fed, but by a hawkish Bank of Japan or direct actions from the Ministry of Finance. Japan has previously intervened in the currency markets when USD/JPY surpassed 150, spending over $60 billion to stabilize the yen. With market levels approaching those extremes, Finance Minister Suzuki has issued warnings against “excessive” and “speculative” moves. This serves as a real threat of intervention, which can cause significant drops in minutes. Given these risks, we are positioning our derivative strategies to benefit from upward movements while hedging against possible interventions. We are avoiding outright long positions due to skewed risk-reward. Instead, we prefer buying call spreads, such as purchasing the 148.00 strike call and selling the 150.00 strike call simultaneously. This approach limits our risk and allows profit from continued price increases toward the critical intervention zone, with the sold call making the position less costly. Additionally, we find implied volatility too low considering current events. The market may be underestimating the potential for a sudden policy shift from Japan, where inflation has stayed above the central bank’s 2% target for over a year. Thus, we are also adding long positions in out-of-the-money puts around the 146.00 strike. These should be seen as affordable and crucial insurance against a sudden downturn led by Japan. Create your live VT Markets account and start trading now.

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In June 2025, the US Consumer Price Index (CPI) increased by 0.3% from the previous month, meeting expectations. The Core CPI rose by 0.2%, which was lower than the predicted 0.3%. Year-over-year, the headline CPI reached 2.7%, up from 2.4% in May. The Core CPI also rose to 2.9%, compared to 2.8% the month before. The rise in the headline CPI was mostly due to shelter costs, which went up by 0.2%. Energy prices increased by 0.9%, with gasoline rising by 1.0%. Food prices went up by 0.3%, affecting both grocery and restaurant costs. The Core CPI experienced increases in areas like household furnishings, medical care, and personal care, while seeing declines in used cars, new vehicles, and airline fares.

Yearly Basis And Market Movements

On a yearly basis, energy prices dropped by 0.8%, but food prices climbed by 3.0%. In the markets, the NASDAQ index gained 143 points, and the S&P index increased by 26.44 points. US Treasury yields stayed mostly steady, with small changes in the 2-year and 5-year yields. This report suggests that the initial stock market rally might be misleading. It is not a clear signal to buy, but rather a warning sign. The lower month-over-month Core CPI figure set off trading algorithms, but the underlying data presents challenges for Powell and the Fed. Year-over-year inflation rates for both headline and core measures have increased, indicating ongoing difficulties. This situation mirrors the tough times from 2023 and 2024 when reducing inflation from 3% to 2% felt impossible. For those trading derivatives, the sensible approach is to take advantage of this quick surge and sell when the prices are high. The VIX, which has remained low for a long time, likely decreased due to this news. This situation presents a good chance to buy volatility at a lower price or create trades that could benefit from a market reversal. Think about call credit spreads on the Nasdaq 100 (NDX) and S&P 500 (SPX) situated just above the new highs after this data release. For more than a year, buying the dips has been successful, but the recent rise in headline CPI from inelastic categories like food and energy could change that trend.

Bond Market Reaction And Currency Implications

The bond market’s lack of response is significant. The 10-year yield remains nearly the same. This indicates the bond market is not excited about a dovish report; instead, it sees persistent shelter costs and rising energy prices, concluding the Fed still has work to do. Any hopes for a quick rate cut have receded. In the Fed funds futures market, chances for a rate cut in the next two meetings will likely drop. This strengthens the case for a stronger dollar. The initial drop in the dollar was a misunderstanding; its recovery reflects the true situation. With US inflation still high and the global growth outlook fragile, the dollar benefits from its yield advantage. This data complicates the situation, especially with tariff issues raised by Michalowski’s team. The impact of tariffs has not yet been fully felt in the supply chain. Historically, as seen during the 2018-2019 trade conflicts, tariffs can create baseline costs that build slowly and are hard to reverse. We are increasing positions that will benefit from a stronger dollar and see the equity rally as an opportunity to build short exposure rather than chase after rising prices. The critical issue is not the 0.2% core monthly figure but the annual 2.9% figure, which keeps the Federal Reserve cautious and limits the potential gains for risk assets. Create your live VT Markets account and start trading now.

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Canada CPI Trim Consistent Dellamotta’s view that the Bank of Canada will stay on the sidelines seems fair, but we believe the market is missing a key detail. The headline rate of 1.9% is misleading. The real issue lies in the core components, which are showing troubling signs that people are overlooking. Core year-over-year CPI is increasing at 2.7%, while the BoC’s preferred median and trim measures are stubbornly at 3.1% and 3.0%, respectively. The idea of a smooth return to the target inflation rate is unrealistic. This isn’t a gentle landing; it’s a rough descent, and there’s a serious risk of needing to pull up. History Repeating Itself We’ve seen this scenario before. In the first half of 2023, the BoC paused rate hikes but had to raise them again in June and July due to persistent inflation. Now, the market is becoming too comfortable, which presents an opportunity. Right now, overnight index swaps suggest nearly 40 basis points of cuts by the end of the year. We believe this is inaccurately priced. The Bank has emphasized its reliance on data, and this report does not support a more dovish stance. If anything, it suggests the opposite. For derivative traders, this situation calls for buying cheap volatility. With the market expecting a steady approach from the BoC, implied volatility on short-term Canadian dollar options has dropped, sitting just above 6.0%. This seems too low given the clear difference between headline and core inflation rates. We plan to buy options structures, like straddles or strangles, ahead of the September and October BoC meetings. If the Bank leans hawkish in its language, it could cause a significant market adjustment, which would benefit our positions. Moreover, the rise in durable goods prices—also noted in the US—adds more complexity. This isn’t only about domestic inflation; external supply chain and trade issues are impacting it too. According to the latest data from Statistics Canada, prices for motor vehicles—a key durable good—have significantly contributed to monthly inflation. This situation complicates the BoC’s task since monetary policy is a blunt tool against such pressures. This persistence leads us to expect a shift away from the market’s dovish pricing. We are positioning for a flatter or even inverted yield curve by paying front-end rates while receiving longer-term rates, anticipating that the market will have to delay its rate cut timeline. Create your live VT Markets account and start trading now.

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Gold is trading today between $3,340 and $3,370. The market is reacting to the possible 30% US tariff on imports from the EU and Mexico, which may start on August 1. This has increased demand for Gold as a safe investment, with current prices around $3,350 and resistance at $3,370. Concerns have risen due to communications from US President Trump to leaders in the EU and Mexico about these tariffs, which has driven more people to buy Gold. On Tuesday, key economic data, including US inflation figures, is expected to affect Gold prices further.

Shift In Momentum

Gold has broken out of a triangle pattern on daily charts, indicating a shift in momentum. The price moving above the 20-day Simple Moving Average (SMA) near $3,340 shows more bullish sentiment. However, resistance at the 23.6% Fibonacci retracement level around $3,371 poses a challenge. If Gold closes above $3,371, it could move toward $3,400 and potentially rise to the June high of $3,452. If it fails to stay above the 50-day SMA at $3,327, attention may return to support at $3,300. The Relative Strength Index at around 56 suggests bullish momentum, with room for more gains before reaching overbought conditions. Given the current situation, we believe traders in derivatives should brace for increased volatility rather than a clear trend in the weeks ahead. The geopolitical issues, especially related to tariffs, are becoming more real. The Biden administration’s recent tariffs on Chinese electric vehicles and semiconductors, starting August 1, have been mostly factored into the market. However, the possibility of retaliatory actions from Beijing keeps the safe-haven demand for Gold active, providing a price floor. The main driver remains the Federal Reserve’s struggle with inflation.

Technical Analysis And Strategy

The most recent Consumer Price Index (CPI) report revealed inflation dropping to 3.3% in May, which initially seemed positive for Gold. However, the Federal Reserve later indicated only one potential rate cut this year, down from three anticipated in March. This “higher for longer” approach limits Gold’s upside potential since it makes holding non-yielding assets less appealing. We find ourselves caught between a geopolitical support and monetary resistance. Traditionally, Gold tends to perform well after the last rate hike in a cycle, but the ongoing pause is creating uncertainty. From a technical viewpoint, Gold appears to be coiling. After failing to maintain record highs above $2,400, it is now in a consolidation phase. The price is currently hovering around its 50-day moving average, which is a crucial test of short-term confidence. The Relative Strength Index in the low 50s supports this neutrality, indicating potential movement in either direction before overbought or oversold conditions arise. Therefore, our strategy has shifted from focusing on a specific direction to trading on volatility. For traders expecting a sharp move after the upcoming economic data, a long strangle (buying an out-of-the-money call and an out-of-the-money put) for August expiration could be wise. This strategy benefits from significant price fluctuations, regardless of direction. For those with a slightly bullish bias who want to reduce costs, we suggest bull call spreads, like buying the August $2,350 call and selling the $2,425 call. This approach limits risk and potential rewards while aiming for movement toward the higher end of the current range without needing a full breakout above the tough resistance established by the June high. Alternatively, those holding long positions might consider collars, which involve buying protective puts financed by selling covered calls to protect against a drop below critical support around the $2,300 level. Create your live VT Markets account and start trading now.

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The Euro is making a comeback against the US Dollar after dropping to a two-week low, influenced by trade tensions between the US and EU. The EUR/USD pair faced challenges due to US tariff threats but is now recovering, showing some cautious optimism about negotiations. ## Current Market Performance Right now, the EUR/USD pair is trading at approximately 1.1689, bouncing back from an intraday low of 1.1654. The US Dollar Index is steady, just below 98.00, as traders wait for upcoming US Consumer Price Index (CPI) data and more updates on trade issues. In light of US tariff threats, the EU plans to keep its retaliatory tariffs on hold until August in hopes of reaching an agreement. The proposed US tariffs could disrupt trade significantly, prompting the EU to prepare €21 billion in targeted tariffs, with a larger €72 billion package ready if needed. European Trade Commissioner Maroš Šefčovič announced a second set of countermeasures that may affect €72 billion worth of US imports, showing the EU’s readiness to act if talks break down. However, the EU prefers to find a negotiated solution. Looking ahead, key economic reports will influence the EUR/USD, especially US CPI figures and Eurozone inflation data. Inflation remains a concern for the US Federal Reserve, which is working to manage rising prices. ## Strategy And Market Outlook We believe the Euro’s current sideways movement is misleading, hiding built-up pressure. While the market seems quiet, factors for a major breakthrough are aligning. For derivative traders, this is not the time to choose a direction; it’s about buying volatility. Implied volatility now appears unusually cheap, with the Cboe EuroCurrency Volatility Index (EUVIX) dipping below 6.0, a low level that feels overly relaxed given the looming challenges. History tells us that low volatility periods, like before the 2018 trade-war escalations, often lead to sharp, significant movements. The situation presents a dual threat. First, the geopolitical standoff. We shouldn’t view Šefčovič’s countermeasures as mere rhetoric; that €72 billion package is a serious card in negotiations. A sudden agreement before the August deadline could push the Euro sharply higher, while a failure to negotiate and implementation of tariffs would likely send the Euro plummeting below recent lows. This binary outcome is ideal for long options strategies. Second, the inflation disparity is becoming more pronounced. The latest US CPI reading has slightly cooled to a 3.3% annual rate, giving the Federal Reserve some room, but it does not solve its core issue. In contrast, Eurozone inflation has risen to 2.6% in May, complicating the European Central Bank’s situation after its recent rate cut. This tension creates fundamental pressure that needs to be resolved. Therefore, we think the best strategy in the coming weeks is to prepare for a significant move, regardless of direction. A long straddle or a slightly wider and cheaper long strangle with options expiring after the August tariff deadline looks particularly appealing. You’re essentially betting that the current calm is misleading and that one of these strong forces—either a trade resolution or central bank reactions to inflation data—will push the EUR/USD pair out of its narrow range decisively. Paying a small premium now to capitalize on a potentially explosive move seems to be the smartest trade available. Create your live VT Markets account and start trading now.

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The US Consumer Price Index (CPI) data is likely to show a 0.3% increase for both the headline and core Month-over-Month (MoM) figures. The Year-over-Year (YoY) headline figure is expected to rise to 2.6% from 2.4%, while the core figure is projected to reach 3.0%, up from 2.8%. The USD stayed mostly steady, except for a slight increase of 0.15% against the JPY. Other currency movements include the GBP down by 0.10%, EUR down by 0.06%, and NZD down by 0.33%. The USD also declined against CHF, CAD, and AUD.

Financial Markets Overview

In the financial markets, earnings results from major banks and investment firms exceeded expectations, leading to a rise in premarket trading. Citigroup reported earnings of $1.96 per share, beating the expected $1.60, while JPMorgan Chase posted earnings of $4.96, surpassing the forecast of $4.47. U.S. indices had mixed results: the NASDAQ rose by 145 points, and the S&P gained 27.69 points, while the Dow saw a slight decline. U.S. yields were mixed, with the 2-year yield up by 2.9 basis points and the 30-year yield down by 1.0 basis points. Crude oil prices fell to $66.89, and Bitcoin dropped to $117,075. This morning’s focus is not just on predicting the CPI number but on preparing for the market’s reaction. Bessent’s sentiment resonates—one data point does not create a trend. Inflation has shown ups and downs, not a steady decline. In the last 12 CPI reports, six came in higher than expected, indicating the uncertainty the market faces. The real market movement often occurs after the initial shock. We believe implied volatility is currently mispriced. The VIX index, which measures expected stock market volatility, typically falls by an average of 5% to 7% in the 24 hours following a CPI release. As uncertainties are resolved, the focus shifts. Therefore, our strategy is to exploit the uncertainty by selling short-dated strangles on the SPX or NDX after the initial price spike, aiming to profit from the anticipated decline in volatility and time decay.

Banking Sector Performance

The strong results from the major banks provide a solid foundation. When prominent banks exceed estimates, it suggests the underlying corporate economy is strong, making a prolonged market panic less likely. This bolsters our confidence in selling downside protection. We see a promising opportunity in selling put credit spreads on the S&P 500. This strategy enables us to collect premium with a high likelihood of success, as robust earnings create a supportive base for the market, even if inflation rises. In the currency markets, the Japanese yen stands out. While the dollar is stable elsewhere, its small gain against the yen is notable. The interest rate difference between the US and Japan, over 500 basis points, supports a higher USD/JPY. For derivative traders, this means using options to build bullish positions with limited risk, like call spreads, to take advantage of the ongoing carry trade appeal likely to last for weeks. Lastly, the Treasury Secretary’s comments on the Fed succession process introduce a long-term variable. This presents a political risk that the market may not fully consider. While the immediate focus is on CPI, this uncertainty suggests that longer-term volatility, especially in the 6-to-9-month range, may be undervalued. We see an opportunity to gradually acquire long-dated VIX calls or far out-of-the-money puts on major indices as an inexpensive hedge against potential political and monetary policy uncertainty later this year. Create your live VT Markets account and start trading now.

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The US Dollar Index (DXY) is under pressure as it starts the week trading below the 98.00 level. Geopolitical tensions have recently emerged due to tariff threats from the US directed at the EU and Mexico, alongside worries about Federal Reserve Chair Jerome Powell’s role. On Tuesday, the June Consumer Price Index (CPI) will be released, providing a fresh update on US inflation. This could affect expectations about Federal Reserve policies and the DXY’s direction. As the second-quarter earnings season kicks off, major US financial institutions will report their results, offering insights into the health of the US financial system.

Technical Indicators of the Dollar

Although the DXY has slightly recovered from 96.38, it remains below the 98.00 resistance level. The 20-day simple moving average (SMA) is at 97.70, and the 50-day SMA is at 98.84, both acting as barriers. These averages trending downward suggest a bearish outlook for the Dollar. The RSI is neutral at 49, indicating the Dollar lacks momentum for a positive shift. The US Dollar is widely traded, making up more than 88% of foreign exchange transactions, with its value largely influenced by Federal Reserve policies. Previous interest rate changes and measures such as quantitative easing (QE) have impacted the Dollar’s strength. Given this situation, the next few weeks are crucial for positioning against the Dollar. The indicators point to a bearish trend, with moving averages suggesting further decline. The market is closely watching for the timing of the first rate cut by the central bank, which often signals Dollar weakness. Looking back to the easing cycles that began in 2001 and 2007, the DXY experienced significant falls as the market anticipated lower interest rate differences compared to other major currencies. We expect a similar scenario to emerge.

Strategizing Against Dollar Decline

Our strategy should focus on building positions that benefit from a falling Dollar. The latest CPI showed a year-over-year increase of 3.3% for May, which was lower than many expected and strengthens the case for an earlier policy shift. This isn’t mere guesswork; the derivatives market reflects this sentiment. The CME FedWatch Tool indicates a greater than 65% chance of a rate cut by the September meeting. This outlook supports strategies to short the Dollar. For derivative traders, this means considering long put options on Dollar-tracking ETFs like the Invesco DB US Dollar Index Bullish Fund (UUP). This approach allows for a defined risk while profiting from a potential decline in the index. The neutral RSI reading suggests that a rebound is less likely, making bearish positions easier to enter. At the same time, we are exploring call options on currencies that typically rise when the Dollar falls. The Euro and commodity-based currencies are strong candidates in this scenario. The beginning of earnings season adds another layer of complexity that options can help navigate. If major financial institutions report a sharper-than-expected economic slowdown, it could pressure Powell to take action, further pushing the Dollar down. We can use weekly options to trade around these earnings announcements and the next CPI release, leveraging expected spikes in volatility while maintaining a bearish view on the Dollar for the medium term. Create your live VT Markets account and start trading now.

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GBP/USD fell by 0.18% in the North American session, trading at 1.3453. This drop came after US President Donald Trump introduced 30% tariffs on imports from the EU and Mexico, which initially hurt market sentiment. US inflation is expected to rise to 2.7% year-over-year, influenced by these tariffs. Excluding food and energy, inflation could reach 3% YoY. This situation is putting pressure on the Federal Reserve, with some officials anticipating at least two rate cuts by 2025.

UK GDP and CPI Analysis

In the UK, GDP data indicated an economic slowdown, increasing the likelihood of potential rate cuts by the Bank of England. The market is now waiting for UK CPI figures; weak data could push GBP/USD lower after it hit a yearly high of 1.3788 on July 1. GBP/USD has dipped below the 1.3500 level, and bearish momentum indicators suggest it might decline further. However, if it recovers above 1.3500, resistance could be found around 1.3583. The British Pound has shown mixed performance against major currencies, performing best against the Japanese Yen. In this context, there is a clear mismatch in the narratives of the central banks that traders can take advantage of. The Fed is under pressure from the former President’s trade policies and rising inflation forecasts, creating a complex situation. While some officials are looking at future cuts, we are concentrating on current events. Current data shows US CPI around 3.1%, limiting the Fed’s immediate options. According to the CME FedWatch Tool, markets still foresee over a 60% chance of a rate cut by the second quarter of next year, highlighting the conflict between current data and future expectations.

Comparison of Central Bank Policies

This situation is quite different from that in the United Kingdom. The noted economic slowdown is a significant factor, but it clashes with UK inflation, which remains high at 4.6%. This is over double the Bank of England’s target rate. They face a stagflationary predicament: cutting rates to encourage growth could lead to a spike in inflation. This tension before the upcoming CPI figures is a potential trigger for volatility. Historically, sharp divergences in central bank policies, like during the 2013 “taper tantrum,” have caused significant shifts in currency pairs. Our strategy for the coming weeks involves trading the expected volatility rather than just predicting direction. With the pair currently below the important 1.3500 level, buying straddles or strangles around key support levels before the UK inflation data is appealing. A worse-than-expected CPI could spark speculation of rate cuts, pushing the pair down toward 1.33, while a surprisingly high CPI would dampen those hopes and might push it back to around 1.3583. Both scenarios favor a long-volatility position. For those with a directional preference, the bearish momentum indicators and the UK’s poor growth outlook suggest that puts are the better option. We’re considering purchasing put spreads to reduce entry costs and define our risk, targeting strikes below 1.3400. Additionally, we are closely monitoring the pound’s strength against the yen, which serves as a classic risk indicator. A flight to safety would negatively impact GBP/JPY, but if the Bank of England must remain hawkish while the Bank of Japan continues its loose policy, long GBP/JPY futures might serve as a useful hedge against a purely bearish GBP/USD outlook. Create your live VT Markets account and start trading now.

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The session has been calm, focusing on the upcoming US Consumer Price Index (CPI) release. Strong labor market data suggests that even if the CPI figures are lower, the Federal Reserve is unlikely to cut rates in July. However, market expectations may shift towards potential rate cuts starting in September, which could influence the US dollar and benefit risk assets. If CPI figures are higher than expected, it may lead to significant market movements. While one number doesn’t set a trend, it could change how the market views inflation risks. A stronger US dollar might lead to corrections in asset prices, with traders locking in profits on riskier investments. The consensus expects a Core Year-over-Year figure of 2.9-3.0% and a Core Month-over-Month measure of 0.2-0.3%. Any notable differences from these estimates could cause major market reactions.

Focus on US and Canadian Data

Although the Canadian CPI release is anticipated, most market attention is on the US data. The German ZEW index has shown improvement, signaling optimism due to easing trade war worries and supportive fiscal measures. US-EU trade talks are progressing well, with no immediate issues. US Treasury Secretary Bessent indicated that Trump does not intend to replace Powell, suggesting that the CPI figure may initially carry less weight, as longer-term trends are more critical. The market has finally received the anticipated deviation. The Core Month-over-Month print was 0.2%, below expectations, fueling the soft-landing narrative. This led to the expected response: the dollar weakened and risk assets soared. For example, the S&P 500 quickly rose to new all-time highs after the release. However, the celebration was short-lived due to messaging from the Fed only hours later. This is where the real opportunity for traders lies. While the inflation data was clearly positive, the Fed’s updated dot plot leaned hawkish, indicating only one rate cut for 2024. Powell reinforced the need for more than one data point to build confidence. Bessent’s suggestion of a higher CPI didn’t materialize, but his emphasis on the “trend” is what the Fed is focusing on to justify its patience. This creates an interesting and tradable divergence.

Opportunities for Derivative Traders

For derivative traders, this situation signals a chance to “buy cheap volatility.” The market is pricing in ideal disinflation while the central bank pushes back. The VIX has stagnated around the 12-13 range, which usually indicates extreme calmness. We believe that buying protection here is not only sensible but a smart opportunity. We’re not predicting a crash, but the cost to insure against a summer correction using August or September puts on the SPX or NDX is currently very low. The market has factored in good news but isn’t ready for any surprises, whether from resilient labor market data or a stubborn inflation report next month. In the rates market, the divergence is even clearer. This week, Fed Funds futures are still pricing in about a 60% chance for a rate cut by September, directly conflicting with the Fed’s median projection. This tug-of-war between market optimism and Fed caution suggests bond market volatility could awaken. The MOVE index, which measures Treasury market volatility, has dropped significantly. We see value in structures like straddles on Treasury ETFs (like TLT), which would benefit from a large movement in either direction as this pricing gap narrows. On the currency side, the dollar’s direction is now uncertain. The soft inflation data suggests weakness, but a hawkish Fed offers support. This situation is no longer a straightforward bet. We recommend using options to define risk, perhaps through collars on major pairs like EUR/USD. This approach allows for participation in potential price movements while limiting losses if the market starts to react to Powell’s actual statements rather than what traders hope he means. Create your live VT Markets account and start trading now.

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Silver prices have reached a 14-year high, currently trading around $38.60 after hitting $39.13. This rise is due to increased demand for precious metals amid growing trade tensions and geopolitical uncertainties. The recent increase in tariffs by the U.S. on the European Union and Mexico has raised fears of bigger trade conflicts. As a result, many investors are turning to assets like silver for safety. Silver is being closely watched, especially with the upcoming U.S. Consumer Price Index data, which could influence Federal Reserve rate expectations and silver’s short-term direction. Right now, silver is in a strong upward trend that began in April after breaking past the $37.00-$37.30 resistance zone. This trend is supported by technical indicators showing buyers are in control, with the price above the 9-day EMA at $37.36. However, the RSI at 73.15 hints at potential limits to immediate gains. If silver stays above $38.50, it may reach the $40.00 level, while support is around $37.30. The industrial demand for silver is significant, especially in electronics and solar energy, due to its conductivity. This demand can lead to price changes based on global economic activity. Given the current situation, we view silver as poised for growth, and our strategy must be both bold and tactical. Staying above the critical $37.30 support is more than a technical sign; it’s a fundamental indicator. We need to look past merely the headlines of trade disputes. For instance, the U.S. has recently increased tariffs on Chinese electric vehicles and solar cells, serving as a major catalyst. According to the Silver Institute, industrial demand for silver is expected to rise by 9% this year, reaching a record 690 million ounces, with photovoltaic demand alone projected to climb 20% to 232 million ounces. This represents a direct demand surge that futures traders should consider. Therefore, our main approach in the futures market is to keep and expand our long positions. Many share this viewpoint. The latest Commitment of Traders report shows that managed money funds have increased their net-long positions, aligning with us on price growth. Although the RSI suggests overbought conditions, we see this as a reason to carefully manage risk rather than sell. History reminds us that in 2011, silver surged to $50 before a sharp drop, which influences our strategy. This is where options become a crucial part of our toolkit. For those looking to take advantage of the anticipated rise toward the critical $40 level, we recommend bull call spreads. This involves buying a call option just above the current price while selling another with a strike price close to or slightly above $40. This strategy helps manage risk and targets specific profit areas, allowing us to benefit from upward movement without being overly exposed to sudden reversals, like we saw over a decade ago. For portfolios with strong long positions in futures, protection is key. We are purchasing out-of-the-money put options with strikes centered around the $37.30 support. Think of this as affordable insurance. If U.S. inflation data comes in higher than expected and raises concerns about a hawkish Federal Reserve, these puts will protect our profits from quick declines. We are not anticipating a drop, but we are preparing for the likely volatility that comes with these multi-year highs. Our goal is to ride the wave of strong industrial and geopolitical trends upward while using options to create a safety net against market fluctuations.

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