### WTI Crude Oil Futures Analysis WTI crude oil futures closed at $64.60, up by $0.45, which is a 0.70% increase for the day. During the trading session, the price reached a high of $64.70 and dipped to a low of $63.35. Prices briefly fell below the 100-hour moving average of $63.85 but stayed above the 200-hour moving average at $63.33, helping to stabilize the market. The rebound is focused around the 38.2% retracement level from July 30 at $64.91, with resistance seen between $63.85 and $65.27. If the price breaks above this range, it will aim for the $65.10 resistance level established on Monday. Buyers need to surpass this level to gain further momentum. Recent weekly inventory data showed another drop in both crude and gasoline stocks. At this moment, WTI crude oil is at a crucial turning point. The defense of the 200-hour moving average indicates underlying strength, but the resistance near $65.27 poses a significant challenge. Traders should keep an eye on the $64.91 level; if it is not broken in the coming days, it may lead to renewed selling pressure. ### Crude Oil Market Dynamics The inventory drawdowns mentioned earlier support the recent EIA data, which reported a surprising draw of 4.1 million barrels this week. This suggests a tightening market, hinting at potential price increases. This aligns with recent summer trends, where global demand has remained strong at nearly 104 million barrels per day. However, mixed economic signals are creating uncertainty, leading to range-bound trading. Recent US PMI data showed a slight decrease in manufacturing, raising fears about future demand. So, despite positive inventory reports, prices have struggled to break higher. For derivative traders, this means exercising caution before making major bets until a breakout is confirmed. We are also noticing an increase in options volumes, particularly with strategies that benefit from rising volatility, like strangles centered around the $64 strike. This indicates that the market anticipates a significant price move but is uncertain about the direction. This price consolidation is reminiscent of the trading conditions in mid-2023, where similar patterns preceded sharp moves. Back then, market sentiment shifted quickly due to conflicting indicators, like tight supply from OPEC+ cuts and recession worries in the West. Additionally, we must consider the ongoing uncertainty regarding the upcoming OPEC+ meeting in September 2025. Unconfirmed reports of disagreements on production quotas for Q4 may keep buyers cautious for now. Any news from this front could act as the catalyst needed to break the current stalemate. Create your live VT Markets account and start trading now.

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Treasury Secretary Bessent highlights that capital markets are booming under President Trump. Companies are taking calculated risks, spending actively, and making business deals in today’s economy. Since June 1st, there’s been a remarkable $1 trillion in mergers and acquisitions (M&A) announced. In August alone, $300 billion in mergers and acquisitions occurred.

Resurgence In M&A Activity

Bessent calls this summer’s M&A activities the busiest since 2021, showing strong market confidence and strategic planning by companies. The rise in capital markets signals that corporations are confident. With $300 billion in mergers announced just in August, companies are investing aggressively like never before. This environment suggests we should focus on strategies that benefit from upward trends and stable volatility. We can expect market volatility to stay low in the upcoming weeks. The CBOE Volatility Index (VIX) has hit yearly lows, recently trading below 14, and this confidence in deal-making should help maintain that level. Selling puts or setting up put credit spreads on key indices like the S&P 500 is a smart way to earn from this stability. This surge in M&A, the highest since the peak in 2021, points to specific opportunities in certain sectors. A lot of this summer’s activity has been centered around technology and energy, in line with trends from the last 18 months. We should consider using call options on mid-cap companies in these sectors that are involved in takeover rumors.

Strategic Investing In A Risk-On Market

The total of $1 trillion in announced deals since June 1 shows we are in a risk-on market. Recent economic data support this, with unemployment steady at 3.7% and slow wage growth giving the Federal Reserve little reason to intervene. We can take advantage of this positive sentiment by adding long positions through index futures. If we look back, this situation reminds us of the M&A-driven markets in 2006 and 2007, which led to high volatility. While the current outlook is bright, it’s wise to use options to manage risk on any long positions. We should be ready to seize opportunities while staying disciplined, as deal-making cycles can change quickly. Create your live VT Markets account and start trading now.

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The EURUSD has been rising and has now reached an important range between 1.1692 and 1.17028. In this zone, prices have faced some resistance, causing a small drop. This range is crucial for both buyers and sellers as it clearly indicates risk and possible market direction. Sellers can use this area to enter trades with stop-loss orders set above it.

Importance of the Swing Area

Buyers, on the other hand, need to push prices above this area and hold to continue the upward trend. The video included analyzes the technical factors behind this move and explains why this swing area is essential for the Euro’s future direction. We are closely watching the EURUSD as it approaches the key 1.1700 level, which acts as a significant resistance point. This upward movement follows last week’s unexpected rise in Eurozone inflation to 2.8%, while the U.S. core PCE was slightly below expectations at 3.0%. The market is now anticipating a more aggressive European Central Bank (ECB) compared to a more patient Federal Reserve, creating tension. For traders who expect a reversal at this level, buying put options with a strike price of around 1.1650 limits their risk. This approach aligns with resisting at the resistance level, as the maximum loss is just the premium paid. Historical data shows considerable selling pressure in the 1.16-1.17 range during the second half of 2021, indicating that history could repeat itself.

Trader Strategies Around 1.17000 Resistance

On the flip side, those who believe in a breakout above 1.17028 might want to consider call options to take advantage of potential gains toward the psychological 1.1800 level. A strong daily close above this zone would confirm that buyers have absorbed the existing supply. A call spread could also mitigate the initial cost of betting on this bullish outlook. With the central bank announcements coming up next week, we are in a tight “decision area,” which may increase implied volatility. Traders who have no clear direction but expect significant movement can use a long straddle strategy, buying both a call and a put option at the current price. This strategy profits from a major breakout in either direction, which seems likely given the mixed economic signals. Create your live VT Markets account and start trading now.

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The US Treasury recently sold $44 billion in 7-year notes, with a high yield of 3.925%. This yield was slightly above the When Issued (WI) level of 3.922% before the auction. The auction, however, showed a positive tail of 0.3 basis points, which is a contrast to the 6-month average of -0.9 basis points. This means demand was weaker than usual. The bid-to-cover ratio was 2.49, which is a bit lower than the 6-month average of 2.62. Direct buyers took 12.8% of the notes, down from the 6-month average of 24.3%. On the other hand, indirect buyers, mostly international investors, made up 77.45%, which is higher than the average of 66.2%. Dealer participation was at 9.8%, close to the average of 9.5%.

Underwhelming Auction Results

Even with strong international interest, the auction results were disappointing overall. Today’s 7-year auction indicated stress, as the bond sold at a higher yield than expected just moments before. The positive tail means the Treasury had to offer a higher yield to attract buyers, signaling that domestic investors want more compensation. This suggests that yields are likely to continue rising. This weak demand aligns with broader economic trends. The latest CPI report for July 2025 shows inflation stubbornly at 3.1%, leaving the Federal Reserve with little reason to suggest rate cuts. The market is increasingly accepting the “higher for longer” outlook, especially after the hawkish sentiments expressed at last week’s Jackson Hole symposium.

Bearish Stance on Treasury Prices

Given these developments, we hold a bearish outlook on Treasury prices, expecting yields to rise in the coming weeks. We suggest adding positions that benefit from increasing rates, like shorting 10-year Treasury note futures (ZN) or buying put options on bond ETFs. These strategies will be profitable if bond prices continue to fall, as we anticipate. The weak demand from domestic buyers is a concerning sign, something we haven’t observed this consistently since late 2023’s supply issues. Recent data shows the U.S. labor market remains tight, with 210,000 new jobs added last month, increasing pressure on yields from both Fed policies and debt supply. While foreign demand helped this auction, we cannot depend on it to manage the heavy issuance planned for the rest of the year. Create your live VT Markets account and start trading now.

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European stock markets had mixed results today. The German DAX dropped by 0.03%, while France’s CAC rose by 0.24%. The UK’s FTSE 100 fell by 0.42%, but Spain’s Ibex and Italy’s FTSE MIB increased by 0.34% and 0.23%, respectively. In the US, major stock indices moved upwards. The Dow gained 32 points (0.07%) to reach 45,597. The S&P index rose by 13 points (0.20%) to 6,493.70. The NASDAQ index climbed by 97 points (0.45%), finishing at 21,687.36.

US Bond Yields Varied

Before the 7-year note auction, US bond yields showed mixed signals. The 2-year yield went up to 3.633%, a rise of 1 basis point. The 5-year yield fell by 0.9 basis points to 3.697%. The 10-year yield decreased by 2.3 basis points to 4.214%, and the 30-year yield dropped by 2.8 basis points to 4.84%. In other markets, crude oil fell by $0.51 to $63.65. Gold increased by $17, now priced at $3,415.50. Bitcoin rose by $1,232, reaching $112,505. The US dollar weakened, with the EURUSD rising to new session highs. It also declined against commodity currencies like the CAD, AUD, and NZD.

Differences in Markets

There’s a noticeable difference: US tech stocks continue to rise, while European markets show uncertainty. This suggests using an options strategy like a call spread on the NASDAQ 100 to capture more upside while managing risk. The mixed performance in Europe, especially the UK’s FTSE 100 lagging, suggests caution with European index futures. The bond market seems to tell a different story. The rising 2-year yield contrasts with falling longer-term yields. Following last week’s Jackson Hole symposium, where the Fed indicated a long-term higher rate scenario, this raises worries about future growth. An inverted yield curve often signals an economic slowdown, similar to the 2023 trend. Traders may want to consider buying puts on economically sensitive sectors. The US dollar’s weakness against commodity currencies and the Euro is supporting a gold rally above $3,400 an ounce. This trend indicates that traders are seeking safety from inflation, especially as CPI figures remain above 3.5%, and potential economic slowdown in the US. Long positions in gold futures or related ETFs could be a good hedge against stock market volatility. Crude oil’s drop below $64 a barrel, despite a weaker dollar typically supportive of oil prices, highlights concerns about growth in the bond market. Recent data showed unexpected increases in US crude inventories for three weeks straight, indicating softening demand. This could favor put options on major energy stocks or selling crude oil futures during any rallies. Given the conflicting signals between rising stocks and cautious bond markets, we can expect increased volatility in the coming weeks. The CBOE Volatility Index (VIX), currently near a low of 14, may experience a significant spike. Buying VIX call options or straddles on the S&P 500 could be a cost-effective strategy to profit from rising uncertainty as we approach September’s economic data releases. Create your live VT Markets account and start trading now.

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US pending home sales fell by 0.4% in July, slightly worse than the expected 0.1% decrease. Last month, sales dropped by 0.8%. The pending home sales index now measures 71.7, just below June’s 72.0. Compared to last year, there is a year-over-year increase of 0.7%. Home sales changed across regions: the Northeast had a decline of 0.6%, while the Midwest saw a bigger drop of 4%. In contrast, the West and South saw increases of 3.7% and a slight decrease of 0.1%, respectively. According to the REALTORS® Confidence Index survey, 16% of NAR members believe buyer traffic will increase, while 21% expect to see more sellers entering the market.

Pending Home Sales Insights

Pending home sales come from signed contracts, but reports show a high contract cancellation rate of 15%. Even though mortgage rates have improved and homes are becoming more affordable, many buyers are hesitant to commit to such a significant financial decision. Rising mortgage applications indicate that serious buyers are in the market, but many are still hesitant to proceed. The pending home sales index remains low, influenced by high interest rates, prices, and limited supply. After experiencing low mortgage rates post-Covid, many homeowners have little incentive to sell. Former President Trump is looking to encourage the Federal Reserve to lower rates, but the steepening yield curve presents challenges. The 10-year yield is at 4.23%, near its 100-week moving average, affecting 30-year mortgage rates. Recent housing data indicates ongoing struggles in the market. July’s pending home sales reduced by 0.4%, worse than expected, continuing a trend of weakness from previous months. Additionally, a record 15% of signed contracts are being canceled, signaling that even interested buyers are backing out before closing.

Factors Influencing the Market

This situation keeps attention on the Federal Reserve, whose interest rate policies are crucial to the market’s performance. The 10-year Treasury yield, which greatly affects mortgage rates, is currently at 4.23%, maintaining high borrowing costs for potential homebuyers. The CME FedWatch Tool shows a 68% chance of a rate cut by the November 2025 meeting. With uncertainty stemming from weak economic data and possible actions by the central bank, we should expect increased market volatility. Options on the iShares U.S. Home Construction ETF (ITB) provide an avenue to navigate this, as its implied volatility has risen to 31%, indicating trader caution. Strategies like straddles or strangles may prove effective in the coming weeks. We must also remain alert to the steepening yield curve, which suggests the bond market is concerned about future inflation, even if the Fed does cut rates. This could relate to worries over possible tariffs and their impact on prices. A pair trade, buying 10-year Treasury note futures while shorting 2-year Treasury note futures, offers a way to capitalize on this expectation. Reflecting back to 2021, the average 30-year mortgage rate dropped below 3%, sparking a housing boom. This has led to the current situation, as homeowners who secured those low rates have no reason to sell, resulting in a supply shortage. This structural issue indicates that even a few rate cuts from the Fed are unlikely to quickly revive sales activity. Create your live VT Markets account and start trading now.

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In early trading, U.S. stock indices are showing mixed results. The Dow Jones Industrial Average is at 45,493.95, down 71.28 points, or 0.16%. The S&P 500 is at 6,476.84, down 4.56 points, or 0.07%. Meanwhile, the Nasdaq Composite is slightly up by 4.28 points, reaching 21,594.42. Nvidia’s shares have dipped a bit after its earnings report. The S&P 500 recently achieved its 19th record close of the year and is now targeting the 6500 mark. Although there’s a slight gain, the Nasdaq is still below its peak of 21,713.14 from August 13. Technically, the Nasdaq remains above its 100-hour moving average of 21,483.92. If it falls below this level, it could disrupt the current upward trend.

Recent Market Movements

Last week, the Nasdaq fell below its 100- and 200-hour moving averages, which raised some concerns. However, Fed Chair Powell’s speech on Friday boosted the market, pushing the Nasdaq above these averages. This recovery has shifted the short-term outlook upwards, making the 100-hour moving average a key indicator for future movement. The market is showing signs of consolidation after reaching another record high. With the S&P 500 near the 6500 mark and the VIX at a low 14.5, implied volatility is low. This suggests that selling out-of-the-money put spreads on the SPX could be a smart way to gather premium, provided the market stays within this tight range. We are watching the Nasdaq’s ability to maintain its 100-hour moving average around 21,480. A drop below this level could indicate a loss of momentum, especially since the market breadth is weakening, with only 52% of Nasdaq 100 components trading above their 50-day average. For traders expecting a potential pullback, buying weekly puts on the QQQ would allow for a defined-risk strategy to profit from a decline. The positive response to Fed Chair Powell’s Jackson Hole speech last week highlighted our sensitivity to monetary policy. However, with the July 2025 PCE inflation rate still at 2.8%, we shouldn’t be too complacent. This ongoing inflation makes upcoming economic data a likely trigger for significant market moves. Thus, long straddles on volatile tech stocks like Nvidia could be an appealing strategy around future data releases.

Market Strategies

This scenario of new highs with low volatility reminds us of the market conditions in late 2021, just before the aggressive rate hikes of 2022. Given this context, a calendar spread on the SPY—selling a front-week option while buying a longer-dated one—may position us well. This strategy would take advantage of the current market’s sideways movement while positioning for a potential rise in volatility as autumn approaches. Create your live VT Markets account and start trading now.

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The USDCHF has been moving downward since yesterday’s US session, nearing the important swing area of 0.7986 to 0.7994. Sellers pushed the pair down to 0.7993, but buyers stepped in to defend this support level, leading to a reversal and rise in the hours that followed. This rebound was fueled by better-than-expected U.S. initial jobless claims and a stronger GDP revision, which helped lift the dollar. As a result, USDCHF climbed back above the 50% midpoint of its trading range since the July 1 low and broke through the 0.8017 to 0.8023 swing zone. This raises questions about whether this rebound is just a short-term correction or the start of a longer rally.

Volatility and Moving Averages

Recently, major currency pairs, including USDCHF, have seen increased volatility. Over the last three to four weeks, the pair has been trading around the 100- and 200-hour moving averages, making it hard to determine a clear direction. Despite this, the overall trend is still downward, as indicated by the consistent downward slope of the 100-hour moving average. Looking ahead, the next resistance level is the 100-hour moving average at 0.80356. If the pair surpasses this level, it may encourage buyers to continue the rebound. However, if it fails, sellers could regain control, driving the pair back toward previous swing lows. We are observing the USDCHF bounce off the key 0.7990 support level, which is significant following the recent downward trends. This rebound was supported by strong U.S. economic data, leading us to wonder if the month-long bearish trend is losing strength. The move has brought the pair back into the middle of its recent trading range.

US Economic Data and Policy Divergence

The trigger for this was yesterday’s U.S. initial jobless claims, which came in at a solid 225,000, better than the expected 240,000. Additionally, the upward revision of second-quarter GDP to 1.7% suggests that the U.S. economy remains stronger than many anticipated. This dollar strength is a key factor in the current reversal. This contrasts sharply with the Swiss National Bank, which has had a dovish stance throughout 2025. They made a proactive rate cut in June 2024, and with Swiss inflation staying below 1.5%, there’s little incentive for them to change course. This growing policy difference between a strong U.S. economy and a cautious Swiss stance supports a higher USDCHF. For those who believe this rise marks the start of a new trend, buying short-dated call options with a strike price above the 100-hour moving average at 0.8035 could be a solid strategy. Given the recent market volatility, using options allows for defined-risk exposure to a potential breakout. This strategy would be beneficial if strong U.S. data continues to fuel the dollar’s rise in the weeks ahead. On the other hand, if the USDCHF fails to break and hold above the 0.8035 resistance level, sellers may take control again. Traders who expect a return to the broader downtrend might consider buying put options to target a move back down to the 0.7990 lows. This would be a bet that the recent strength is merely a temporary correction in a larger downward trend. It’s also important to consider that the pair could remain stuck in a range, a pattern we’ve seen over the last four weeks. The constant fluctuations around key moving averages indicate uncertainty from both buyers and sellers. For traders anticipating this volatility to continue, selling an options strangle could be an effective strategy to profit from sideways price action. Create your live VT Markets account and start trading now.

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US GDP growth for the second quarter of 2025 has been updated to 3.3%, up from the previous estimate of 3.1%. Preliminary sales also improved, rising to 6.8% from 6.3%, and consumer spending increased from 1.4% to 1.6%. The GDP deflator and Core PCE Prices were in line with expectations, though Core PCE was slightly under the predicted 2.6%. The preliminary PCE prices were 2.0%, down from 2.1%, while PCE excluding food and energy remained stable at 2.2%.

Contributions to GDP Growth

Consumer spending added +1.07% to the 3.3% GDP growth. However, investment and government spending decreased by -2.70% and -0.03%, respectively. Net trade gave a notable boost to GDP, contributing +4.95%. When comparing the second quarter to the first, consumer spending rose slightly by +0.31%, while investment surged by +3.9%. In Q1, imports negatively impacted GDP, but in Q2 their rapid growth helped improve the situation. US stock market performance mirrored these changes, with slight gains in major indices. The Dow industrial average gained 80 points, the S&P rose by 3.35 points, and the NASDAQ index climbed 3.15 points.

Underlying Economic Weakness

Although the revised GDP figure of 3.3% looks impressive, it can be misleading. The growth was mainly due to changes in net trade, stemming from temporary shifts in inventory due to tariffs. The reality is that private investment is weak, and consumer spending remains modest, indicating that the economy might not be as strong as it seems. This underlying weakness is reflected in recent data, such as the July 2025 jobs report, which showed hiring slowed to 179,000 and the unemployment rate climbed to 4.0%. The ISM Manufacturing PMI for July also fell into contraction at 49.1, which aligns with the sharp decrease in business investment noted in this GDP report. We’ve seen strong headlines cover underlying issues before, like during the trade disputes in 2018 and 2019. The softer Core PCE inflation rate of 2.5% is a key figure. It eases pressure on the Federal Reserve to raise rates, especially after their cautious stance in July 2025. We should expect the market to price in a more dovish Fed, possibly favoring options on interest rate futures that benefit from stable or declining rates. With the economic growth factors looking skewed, the small rally in stocks today might present a chance to prepare for more uncertainty. We recommend buying volatility through VIX futures or index options in the coming weeks. Specifically, a weaker outlook for consumers suggests considering put options on consumer discretionary ETFs as a focused approach to capitalize on this expected slowdown. Create your live VT Markets account and start trading now.

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US jobless claims fell to 229,000, which is a bit lower than the expected 230,000. The previous number was revised down from 235,000 to 234,000. Continuing claims stand at 1,954,000, which is better than the forecast of 1,970,000. Earlier continuing claims were adjusted down from 1,972,000 to 1,961,000.

Strong Labour Market Indications

These results point to a strong labor market, especially with the drop in continuing claims. Attention will now turn to the ISM PMIs employment components, the ADP report, and the upcoming Non-Farm Payroll report. Given the ongoing strength in the labor market, we need to reconsider when the Federal Reserve might cut interest rates. Core inflation has stayed steady around 3% for most of 2025, so this solid employment data weakens the case for easing monetary policy. The market currently sees a reduced chance of a rate cut this year, with Fed funds futures indicating less than a 25% likelihood of a cut before December, down from over 50% just two months ago. This change in expectations could put pressure on short-term bond futures. Traders might look to position for higher yields by selling Treasury futures or buying puts on bond ETFs. The consistent downward revisions to continuing claims, a trend we’ve seen for the past quarter, highlight the economic momentum that the Fed cannot ignore.

Impacts on Equity Derivatives

For equity derivatives, this “good news is bad news” situation poses challenges, especially for interest-sensitive sectors like technology. We are considering strategies to guard against downside risks, such as buying puts on the Nasdaq 100 or setting up bearish call spreads. The market’s reaction to strong labor data in late 2023, which halted a market rally, serves as a useful historical reference for our current context. Now, all eyes are on the upcoming Non-Farm Payroll (NFP) report, which is expected to drive volatility. Implied volatility on index options is likely to rise soon, with the VIX increasing from its recent low of 13. We see an opportunity in buying straddles or strangles on major indices to capitalize on expected price fluctuations, regardless of direction. We should also consider the “soft landing” narrative, which suggests a strong economy could support corporate earnings and prevent a major market downturn. In this light, the robust labor market is a significant positive that may cushion any sell-off. This perspective supports strategies like selling out-of-the-money puts on the S&P 500 to collect premiums based on the belief that a strong economy will uphold stock prices. Create your live VT Markets account and start trading now.

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