Insights 
VT 
The U.S. dollar strengthened against major currencies, approaching a recent two-week high due to enhanced trade sentiment and steady Treasury yields. President Trump mentioned currency policies and trade matters, criticised China and Japan for weakening their currencies, discussed possible trade agreements with the EU, and reiterated his tariff strategies.
EURUSD traded below 1.1750, influenced by option expirations and upcoming talks between Trump and the EU’s Ursula von der Leyen. GBPUSD saw downward pressure from disappointing UK retail sales data, with a closing below its 100-hour moving average, indicating limited corrections.
US Advanced Durable Goods Report
The U.S. Advanced Durable Goods Report for June 2025 indicated a 9.3% decline in total orders, better than expected, following a 16.5% gain in May. The drop was mostly due to transportation equipment, impacting $32.6 billion. Ex-transportation rose 0.2%, while core capital goods fell 0.7%.
Despite a stable 2.4% growth estimate for Q2 2025 from Atlanta Fed’s GDPNow model, traders will observe the upcoming factory orders report. U.S. stock indices closed higher, reaching record highs, driven by tech earnings and anticipation of the Fed decision and GDP release. This reflects a positive market outlook and upcoming pivotal economic events.
Given the tidal wave of upcoming events, we see the current market complacency as a significant risk. The CBOE Volatility Index, or VIX, is trading near 13, which is historically low and suggests traders are not prepared for the potential turbulence from next week’s data and earnings. We are positioning for a sharp increase in volatility by considering options strategies that benefit from large price moves.
Currency Policy and Market Outlook
The President’s comments on currency policy, favoring a strong dollar, reinforce the current trend. With the U.S. Dollar Index (DXY) holding firm above the 106 level, we will be watching the upcoming GDP and Core PCE inflation data to justify further strength. Any temporary dips in the dollar on weaker-than-expected data could present opportunities for us to buy into the uptrend.
For the EUR/USD, the 1.1700 level remains a critical floor, as evidenced by the rebound from that area last week. We will be cautious holding large positions over the weekend, as the trade discussions with von der Leyen could lead to a significant price gap at the market open. The 100-hour moving average will continue to be our main pivot for short-term directional trades.
The pound remains weak, and we view the 200-hour moving average as the key level that must hold to prevent a steeper decline. Following the poor UK economic data, any positive headlines from the meeting with Starmer are likely to create selling opportunities for us. We will look to fade rallies that approach the 1.3500 handle.
With stock indices at all-time highs, we are reducing our long exposure ahead of the crush of mega-cap tech earnings. The combined risk of reports from Microsoft and Apple alongside the Fed’s interest rate decision is too concentrated to ignore. Historically, a hawkish tone from Powell can easily overshadow even the strongest corporate profits, so we are actively hedging our remaining equity positions.
The Federal Reserve’s decision is the main event, and while a rate hold is certain, Fed funds futures are pricing in a nearly 60% probability of a rate cut by September. We will be listening for any change in language from the Fed Chair that could shift those odds, as this will dictate market direction. Friday’s employment report, with economists forecasting around 180,000 new jobs, will be the final confirmation of the Fed’s stance.
