EUR/USD surpassed last week’s high of 1.1720, due to speculation that the currency demand is related to asset rotation from equities, government bonds, and credits. There is growing interest in euro-denominated products, with issuers meeting this demand.
Technical indicators suggest potential EUR/USD support after weeks of consolidation. However, if USD/JPY remains stable and US housing data improves, EUR/USD could return to the 1.1680 area.
Expectation For EUR/USD
EUR/USD retraces toward 1.1700 as demand for the US Dollar grows, influenced by trade optimism from a new US-Japan deal. The US President announced a trade deal with Japan implementing 15% tariffs on imports, impacting various markets.
GBP/USD maintains its position around 1.3550 as risk-on sentiment prevails. The US-Japan trade agreement supports the higher-yielding Pound, while the US Dollar’s recovery struggles to gain momentum, influencing currency movements.
The gold price remains weak despite recovering from early session lows, with US-Japan trade deal optimism affecting safe-haven demand. Meanwhile, BNB reached a new peak of $804.70, exceeding Solana’s market cap and boosting its market valuation above $110 billion.
Six months into President Trump’s second term, turbulent policy changes are noted, yet markets remain steadfast. His administration prioritises “America First” across various sectors, including trade and national defence.
Opportunity In Current Market Conditions
We view the current EUR/USD chop as an opportunity to sell options. With Eurozone inflation recently reported at 2.4% and the European Central Bank signaling potential rate cuts, the currency’s upside seems limited against a dollar supported by a more hesitant Federal Reserve. This suggests that selling call options with a strike price above 1.1750 could be a sound strategy to collect premium.
For the pound, its sideways movement around 1.3550 reflects a market waiting for a catalyst. Given the Bank of England is holding rates steady amid persistent services inflation, we don’t foresee a major breakout in either direction. Therefore, we are considering iron condors on GBP/USD, a strategy designed to profit from low volatility and a stable price range.
The slump in gold is directly linked to the strength in other assets and rising government bond yields, with the 10-year US Treasury yield holding above 4.4%. As long as the administration’s trade deals continue to fuel this risk-on appetite, we expect further pressure on non-yielding safe havens. We are looking at buying put options on gold futures, anticipating a potential test of lower support levels.
In the cryptocurrency market, the surge in BNB, which has extended its market cap lead over rivals to more than $40 billion, signals a strong momentum play. This is a high-volatility environment where we would use long-dated call options to participate in the trend while strictly limiting our potential downside. The goal is to capture the upside from the current speculative interest without overexposing capital.
The President’s “America First” policy historically creates market swings, similar to the volatility spikes seen during the 2018-2019 trade disputes. This backdrop makes long volatility strategies, such as buying straddles on major stock indices like the S&P 500, an appealing hedge. We are positioning for potential policy surprises that could quickly shift market sentiment.
