Insights 
VT 
Germany’s retail sales show a modest increase of 0.2% in September, a decrease from the previous 1.8%. This reflects a slowdown in growth compared to earlier data.
In European trading, the EUR/USD pair maintains a cautious stance above 1.1650. This occurs as the US Dollar gains strength, driven by a reduction in Federal Reserve dovish bets and improved US-China trade relations.
The Gbp Usd Pair
The GBP/USD pair remains steady around 1.3150, near its five-month high. The US Dollar remains strong due to easing trade tensions with China and reduced expectations of a Fed rate cut.
Gold prices recover slightly during early European trading, but the overall bias remains negative. The US Dollar’s firmness, supported by the Federal Reserve’s hawkish stance, continues to affect gold’s appeal.
Meme cryptocurrencies like Dogecoin, Shiba Inu, and Pepe face pressure. In a broader market sell-off, they test their support levels, risking further declines.
The Ai Sector Remains A Central Focus
The AI sector remains a central focus in global markets. Despite other influences like Fed policy and US-China trade relations, artificial intelligence continues to play a key role in shaping market dynamics.
The German retail sales data is a major red flag, showing growth collapsing from 1.8% to just 0.2% year-over-year. This indicates the European consumer is pulling back sharply as we head into the final quarter. This is the weakest reading we have seen in over a year, suggesting a significant economic slowdown.
Given this slowdown, we see continued pressure on the Euro, especially against a firm U.S. Dollar. The U.S. economy looks stronger, with the most recent non-farm payrolls data showing a solid 210,000 jobs were added last month, keeping the unemployment rate low at 3.7%. Therefore, buying put options on the EUR/USD could be an effective way to position for a potential decline toward the 1.1500 level.
This consumer weakness in Germany is not just a currency story; it’s a direct threat to corporate earnings. We believe this makes the German DAX index vulnerable to a pullback from its recent highs. Traders should consider buying put options on DAX futures or related ETFs to protect against a potential downturn in European equities.
The European Central Bank is unlikely to consider raising rates, with inflation just holding at 2.1% and trending lower from over 3% earlier in 2025. This policy divergence from a more hawkish U.S. Federal Reserve reminds us of the setup we saw back in 2014, which kicked off a multi-year run of dollar strength. This historical pattern supports the view that the current trend favoring the dollar has more room to run.
With a strong dollar and the Federal Reserve pushing back against rate cuts, gold’s appeal will likely continue to fade. The metal has struggled to gain traction, and this environment will only add to the pressure. We expect that selling call spreads on gold futures could be a prudent strategy, capitalizing on limited upside potential.
