Insights 
VT 
Market Overview
In September, Spain’s Consumer Price Index recorded a slight decrease, performing better than anticipated. The actual decline was 0.3%, compared to the expected 0.4% drop.
In the foreign exchange market, the Euro/USD advanced beyond 1.1600 amid a weakening US Dollar, influenced by potential Federal Reserve rate cuts. Similarly, the GBP/USD pair regained previous losses, reaching above 1.3350, with market attention directed towards upcoming speeches by BoE and Fed officials.
Gold experienced further gains, reaching $4,200, driven by ongoing US-China trade tensions and a potential prolonged US government shutdown. Cryptocurrencies such as Bitcoin, Ethereum, and Ripple paused their resurgence, facing challenges at key technical levels.
Interest in silver has grown as traders seek alternatives amidst gold’s high prices, with silver beginning to attract attention. Meanwhile, FXStreet highlights several brokers as the best options for currency trading by 2025, including those offering low spreads, high leverage, and suitable platforms for various regions.
It is crucial to note, as per FXStreet, that investing involves risks and careful consideration is essential. They do not provide personalised recommendations, and the information shared aims to be informative rather than advisory.
Currency and Commodity Trends
The Federal Reserve’s dovish tone is the primary market driver, with expectations for two more rate cuts this year weakening the US Dollar. This environment suggests maintaining a short-dollar bias through currency derivatives. The Dollar Index (DXY) has been under consistent pressure, a trend we expect to continue in the near term.
In Europe, the situation remains stagnant, as shown by Spain’s negative Consumer Price Index and the ECB’s decision to hold rates steady. The recent move in EUR/USD above 1.1600 is less about Euro strength and more a reflection of broad dollar weakness. Therefore, any long euro strategies should be viewed through the lens of a falling dollar.
Safe-haven demand is extremely high, pushing gold to a record of $4,200 amid renewed US-China trade tensions and domestic political uncertainty. We saw a similar playbook unfold back in 2019 when a dovish Fed pivot preceded a major rally in precious metals. This historical precedent suggests the upward trend has room to run.
However, with gold at record highs, a rotation into silver appears to be the more strategic play for the coming weeks. The gold-to-silver ratio, a measure of how many ounces of silver it takes to buy one ounce of gold, is currently elevated. When we saw the ratio spike to over 110 back in 2020, it was followed by a period where silver dramatically outperformed gold.
For forex traders, buying call options on currency pairs like EUR/USD and GBP/USD offers a defined-risk way to profit from continued dollar weakness. The current environment, with a clear central bank driver, makes directional option strategies particularly suitable. This allows participation in the upside while capping potential losses if the trend unexpectedly reverses.
In commodities, long positions in silver futures or options could offer better relative value than chasing gold at its peak. Given the historical performance of silver after gold makes a significant run, this secondary move is a high-probability trade. We should look to build positions on any minor dips over the next few weeks.
