The US pending home sales for June showed a decrease of 0.8%, compared to the expected 0%. This decline suggests a slowdown in the housing market.
The AUD/USD fell to a five-week low amid a strengthening US Dollar due to robust economic data and a hawkish tone from Chair Powell. The pair has been declining for five consecutive sessions, indicating pressure on the Australian Dollar.
The Euro and US Dollar
EUR/USD saw a decline to early-June levels, as the US Dollar strengthened following the Fed’s decision to maintain interest rates. This marks the fifth day of decline for the currency pair.
Gold prices dropped to fresh lows in the $3,270 area after the Federal Reserve kept interest rates unchanged. The US Dollar’s strength continued after Chair Powell emphasized that data would guide the central bank’s decisions.
Ripple (XRP) maintained support above $3.00 amidst speculations surrounding upcoming US government crypto policies. Concerns remain with market reactions expected after the Federal Reserve’s interest rate decisions.
The Bank of Canada and USD Implications
The Bank of Canada held its key rate at 2.75% for a fourth meeting, following a cut from 5% over the past year. The pause indicates a cautious approach after prior rate adjustments.
Based on the market’s reaction, we see the US Dollar as the dominant force for the near future. The Federal Reserve’s hawkish tone, combined with its decision to hold rates, is strengthening the dollar against other major currencies. This suggests we should position ourselves for continued dollar upside in the coming weeks.
The pressure on the AUD/USD and EUR/USD is a direct result of this dollar strength and policy divergence. Looking back at the 2022-2023 period, we saw how aggressive Fed tightening could push the EUR/USD below parity, showing a historical precedent for this trend. With recent US Core PCE inflation data for June 2025 holding firm at 2.9%, we expect the Fed to remain hawkish, making short positions on these currency pairs through futures or put options an attractive strategy.
The slowdown in US pending home sales is a clear consequence of high borrowing costs, with the national average for a 30-year fixed mortgage recently ticking up to 7.1%. This cooling in the housing market is a trend we can trade on. We should consider buying put options on homebuilder ETFs as a way to capitalize on potential further weakness in the sector.
Gold’s drop to the $3,270 level is a classic reaction to a strong dollar and firm US interest rates. With the 10-year Treasury yield holding steady around 4.5%, the opportunity cost of holding non-yielding gold is high. Therefore, we anticipate more downward pressure and could look to sell call options against gold positions or purchase puts on gold ETFs.
The Bank of Canada’s decision to hold its rate at 2.75% presents a clear policy divergence from the US. Canada’s latest inflation figures, which cooled faster than expected to 2.5%, support their more cautious stance. This fundamental difference reinforces the case for a stronger USD relative to the CAD, making long USD/CAD positions through futures a logical trade.
In the cryptocurrency space, Ripple’s stability above $3.00 is happening amid major uncertainty from both the Fed and pending government policy. Implied volatility on XRP options has remained elevated, indicating the market is bracing for a significant price swing. This suggests we could use strategies like long straddles or strangles, which would profit from a large move in either direction once there is more regulatory clarity.
