The EUR/USD currency pair remained depressed around 1.1550, driven by a stronger US Dollar and a general risk-averse sentiment. Political uncertainties in France further influenced the Euro, as changes in leadership were anticipated.

British Pound Hits Two Month Low

The GBP/USD pair fell to a two-month low, dropping below 1.3300 due to ongoing interest in the US Dollar and market risk aversion. The continuous demand for the Greenback has pressured the British currency significantly.

Gold prices decreased to $3,950 amid broad demand for the US Dollar, despite geopolitical tensions and potential rate cuts providing some support. The risk-averse atmosphere has led to a sell-off in the precious metal market.

Bitcoin and other cryptocurrencies, such as Ethereum and Ripple, experienced a retreat as investors engaged in profit-taking. The cryptocurrency market faced general downward pressure, with Bitcoin nearing the $121,000 mark.

Privacy-focused Zcash saw an uptick in demand, eyeing a move above $200. Efforts to enhance privacy protocols within the digital asset space continue to drive interest in Zcash.

Higher Than Expected Core Inflation In Mexico

The higher-than-expected core inflation in Mexico, coming in at 0.33% for September, complicates things for Banxico. While the central bank’s recent minutes hinted at more rate cuts from the current 9.75% level, this persistent inflation may force them to hold steady. We see this creating significant two-way volatility, making USD/MXN straddle or strangle options an interesting way to trade the potential for a large move regardless of direction.

The US Dollar remains the dominant force, and Federal Reserve Governor Barr’s warning about inflation risks confirms why. With the latest US CPI data for September 2025 still showing inflation at a stubborn 3.5%, well above the Fed’s target, the case for a hawkish Fed and a strong dollar persists. We believe buying out-of-the-money call options on the US Dollar Index (DXY) or put options on pairs like GBP/USD provides a cost-effective way to ride this powerful trend.

This widespread risk-off sentiment is clearly visible in the market’s fear gauge. We have seen the VIX index jump from a low of 15 to over 22 in the past two weeks, indicating rising anxiety among investors. In this environment, purchasing put options on broad market indices like the SPDR S&P 500 ETF (SPY) serves as a direct hedge or a speculative bet on further downside.

Gold’s sharp drop from its recent highs above $4,000, despite geopolitical uncertainty, is a direct result of the dollar’s overwhelming strength. We saw a similar pattern in late 2022 when a surging dollar also put a ceiling on precious metals before they eventually rebounded. For now, the path of least resistance appears to be lower, and a bear put spread on gold futures could capture this downward momentum while defining risk.

Digital assets are behaving like high-beta risk assets, with Bitcoin retreating towards $121,000. The price action is reminiscent of the 2022 market downturn, where cryptocurrencies showed a high correlation to tech stocks as institutional investors reduced exposure. This suggests that as long as the dollar is strong and sentiment is weak, crypto is likely to face more selling pressure, making shorting futures a viable strategy for bearish traders.

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