The US Dollar (USD) is trading mixed to lower against major currencies, slipping against most G10 currencies as Friday’s sell-off continues. The New Zealand Dollar outperformed following a modest rise in the jobless rate, while the Chinese Yuan is slightly down after a weaker than expected fixing from the People’s Bank of China.<\/p>\n
Stock markets remain steady despite the US threatening increased tariffs on India due to its Russian oil purchases. Crude oil prices are on the rise amid potential US measures to limit Russian supply. Recent US economic data reflects a ‘stagflationary’ trend, with manufacturing and services activity stagnating and employment contracting in both sectors.<\/p>\n
USD sentiment remains soft with the DXY index holding near recent peaks. Short-term charts indicate that key DXY support at 98.55 is under pressure. The US Treasury’s 10-year sale takes place following a lacklustre three-year auction. Federal Reserve speakers are scheduled to participate in events later in the day, but no major US data reports are expected.<\/p>\n
We are seeing signs of a stagflationary environment, which complicates trading decisions. For instance, the latest data from July 2025 showed inflation holding stubbornly at 3.8% while job growth slowed to a mere 80,000, confirming both stagnant activity and persistent price pressures. This tightrope act by the economy means we should prepare for unpredictable market swings.<\/p>\n
This economic backdrop is putting the US Dollar under pressure, with the DXY index now hovering around 98.70. We believe the 98.55 support level is critical, and a break below could signal a deeper correction for the dollar. Looking back at the rate hike cycle of 2022-2023, the dollar eventually softened once growth concerns overshadowed inflation fears, a pattern which may be repeating now.<\/p>\n
The Federal Reserve is in a difficult position, caught between fighting inflation and supporting a weakening economy. This uncertainty is pushing up market volatility, with the VIX index recently climbing from 15 to over 22. Traders should consider buying options to protect against sharp moves, as implied volatility is likely to remain elevated.<\/p>\n
Given the dollar’s softness, we see opportunities in other currencies like the New Zealand Dollar, which is showing relative strength. Selling USD\/NZD call options or buying the pair outright could be a viable strategy. Conversely, the weakness in the Chinese Yuan suggests caution, making pairs like the AUD\/CNH less attractive for now.<\/p>\n
Crude oil is a key focus, with WTI prices pushing towards $95 a barrel amid ongoing supply concerns. Potential new US sanctions on Russian oil exports are keeping a floor under prices. We think buying call options on oil futures or energy stocks offers a way to participate in further upside while managing risk.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD trades mixed; DXY under pressure. Markets steady as oil rises, reflecting stagflationary US economic trends.<\/p>\n","protected":false},"author":62,"featured_media":16966,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28387","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=28387"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28387\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16966"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}