The US dollar weakened in early US trading due to allegations of mortgage fraud against FOMC member Lisa Cook. This has led to speculation that President Trump might appoint a new nominee to the Federal Reserve.
In the EUR/USD market, sellers pushed the price near a 50% retracement from the July 1 high, but buyers stepped in during the European session. The price advanced above the 200 and 100-hour moving averages, currently between 1.1664 and 1.1668, with a recent peak at 1.1673.
Attraction Of Bullish Signals In USD CHF Trading
In USD/CHF trading, the price fell to a new session low of 0.8054 after previously trading above the moving averages, which lay between 0.8066 and 0.8073. The next support stands near recent lows and a 50% retracement level at 0.8041, with a further descent possibly increasing bearish pressure.
For USD/CAD, the price dropped below 1.38607 after briefly rising above the August 1 high of 1.38786. To regain upward movement, the price would need to surpass the swing area of 1.3891–1.3904, aiming for the 38.2% retracement level at 1.39229.
In stocks, the S&P is down by 5 points, the Dow is up by 28 points, and the NASDAQ is down by 41.5 points in premarket trading.
The fresh allegations against an FOMC member are injecting significant uncertainty into the Fed’s future path, causing the US dollar to weaken. We see this being reflected in the derivatives market, where implied volatility on major dollar pairs has jumped nearly 5% in today’s session alone. Given the speculation of a new presidential appointment, this uncertainty is likely to persist, making long volatility strategies like straddles on the EUR/USD pair attractive for the coming weeks.
Potential Opportunities In EUR USD Market
For the EUR/USD, the rebound from the 50% retracement level and the move above key hourly moving averages is a clear bullish signal. We believe buying near-the-money call options for September expiration is a prudent way to capitalize on further dollar weakness, especially as recent data from August 15th showed Eurozone industrial production unexpectedly grew by 0.5%. This fundamental strength in the euro provides a solid backdrop for a continued rally if the dollar’s political headwinds continue.
The breakdown in USD/CHF below its moving averages points to a flight to safety, with the Swiss franc benefiting from the turmoil in Washington. This is reminiscent of the market action we saw during the US banking stress in the spring of 2023, where the franc strengthened considerably. We are therefore looking to buy put options on this pair, targeting a move below the 0.8041 support level in the short term.
In the case of USD/CAD, the failed breakout attempt signals that sellers are still in control. The pair’s inability to hold gains is particularly bearish when you consider that WTI crude oil prices have remained resilient, closing above $85 per barrel yesterday for the fifth straight session. This combination of a weak dollar and strong oil prices suggests that selling USD/CAD futures or buying puts is the favored position.
The mixed open for US stocks, with the tech-heavy NASDAQ showing weakness, suggests investors are getting nervous. The VIX, a key measure of market fear, has climbed above 18 today, a level not seen since early July 2025. This indicates a growing demand for portfolio protection, and we recommend considering buying put options on major indices like the S&P 500 to hedge against a potential downturn driven by Fed policy uncertainty.
