The USD/JPY pair rebounded to approximately 143.30, ending a three-day decline. This rise was attributed to the Japanese Yen’s weaker performance, as its safe-haven appeal lessened following confirmation of upcoming trade talks between the US and China in Switzerland.

US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer announced they would meet Chinese counterparts to discuss economic matters. These talks are aimed at easing the trade tensions rather than securing a comprehensive deal.

Impact On Safe Haven Demand

This development is perceived as a step towards resolving the trade war, reducing demand for safe-haven assets like the JPY. Despite this, the Yen had previously enjoyed demand due to uncertainties over the US-China trade outlook.

Domestically, there’s scepticism about the Bank of Japan raising interest rates, given current global economic uncertainties. Concurrently, the US Dollar is trading around 99.40 in anticipation of the Federal Reserve’s monetary policy announcement.

According to the CME FedWatch tool, traders expect the Fed to maintain interest rates between 4.25%-4.50%. The focus will be on the Fed’s guidance for the year’s remaining monetary policy rather than any immediate rate changes.

We’ve seen USD/JPY snap back to around 143.30 after three consecutive sessions of decline—largely a reaction to diminishing Yen demand rather than any pronounced strength in the Dollar itself. The shift stemmed from easing market anxiety after the announcement of trade discussions set to take place in Switzerland between top American and Chinese officials. Bessent and Greer will be representing Washington, with economic questions on the table but no expectation for a sweeping trade resolution.

Market Expectations And Strategic Considerations

What this has done is reduce the drag that safe-haven flows typically exert on USD/JPY. Notably, the JPY had been bid up previously due to persistent uncertainty in relations between the two largest global economies. A simple acknowledgement that dialogue is in motion was sufficient to unwind some of those defensive positions, especially among macro-focused desks reacting to headline-sensitive sentiment rotations.

At home, Japanese interest rate expectations remain subdued. With economic data providing no solid case for a policy shift and inflation struggling to become self-reinforcing, there’s little appetite domestically to pull away from yield-curve control. This muted outlook for Japan’s monetary stance keeps the downside for USD/JPY fairly well supported, barring external shocks.

On the US side, all eyes now shift to the upcoming policy signals from the Federal Open Market Committee. The Dollar index holding near 99.40 suggests a market that is hesitant to place large directional wagers ahead of the next decision. As per the CME FedWatch tool, the baseline expectation is that rates will stay in the 4.25%-4.50% range. Thus, the bulk of price action will likely hinge on the character and tone of Powell’s forward guidance.

For those of us engaged in options or futures around USD/JPY, attention should rest squarely on implied volatility into next week. With the Fed decision approaching and geopolitical surprises always a risk, front-end vol could see sharp repricing. It may be prudent to look at risk reversals or calendar spreads if directional conviction is limited but a view on timing is clearer.

Additionally, the softening JPY should not be treated as an all-clear for aggressive carry strategies just yet. Rate differentials still favour Dollar strength, but markets tend to reprice aggressively if Fed rhetoric introduces dovish elements. Should Powell signal that policy is peaking, even without confirming cuts, expect Dollar longs—particularly those in momentum-driven hands—to reduce exposure steadily.

We find that hedging short Yen exposure out two to three weeks could be more important than chasing further Dollar upside at this point, particularly as trader positioning enters a more binary phase heading into summer. Better to stay nimble than overcommitted into a stretch of slower macro data and policy re-evaluation.

Create your live VT Markets account and start trading now.

The EU is set to announce a provisional list of tariffs against the US on Thursday. These tariffs will be enforced if trade talks with the US do not succeed.

The EU’s proposed list targets approximately €100 billion in annual US imports, including Boeing aircraft. This step is viewed as a potential response to ongoing US tariffs.

Approval from EU member states is necessary before any measures can be implemented. The list is expected to be shared imminently but may see revisions.

Trade Tactics In Focus

This announcement serves as a formal warning rather than immediate enforcement, underscoring the EU’s intention to pressure Washington ahead of trade discussions. The inclusion of high-value imports like aircraft is not arbitrary—such items have layered importance for industries reliant on transatlantic supply chains, and Washington is unlikely to overlook the selection.

By preparing these measures in advance of any firm breakdown in negotiations, Brussels is taking a pre-emptive stance. It’s a pointed signal: should talks not achieve mutually acceptable terms, reciprocal tariffs are fully prepared and can be triggered without delay. It also means that market participants, including those involved in pricing risk and volatility across commodities sectors tied to US-Europe trade, must factor in an additional layer of uncertainty.

The emphasis on obtaining backing from individual EU governments also matters. It reflects both a procedural necessity and a political test: there needs to be unity within the bloc before more concrete steps can follow. That backing isn’t always automatic, particularly for measures that affect high-consumption goods or sectors where member states have divergent interests. As a result, the presentation of the draft list is merely the start of a longer process that could reshape expectations in coming sessions.

Markets And Political Pressure

Given that the draft list affects €100 billion of goods annually, this opens considerable scope for price adjustments in currency pairs and options exposed to sectors such as aerospace, machinery, and commercial transport. We’ve already seen sensitivity in contracts that price future growth differentials between the eurozone and US economies; now the focus may rotate towards products more directly sensitive to trade restrictions.

For us, the immediate focus shifts not on whether the tariffs will be enforced, but how markets may reprice their assumptions as the political calendar proceeds. If the EU signals even limited internal resistance to the list, one could reasonably expect short-term repositioning in rate-sensitive trades or a modest recalibration in cross-border equities exposure. Seasoned observers will know to watch for signs of temporary volatility, particularly in forward-rate agreements and swaps that embed risk beyond the standard policy-related movements.

The risk here isn’t around an announcement alone—it’s embedded in when and how quickly corporate leadership on both sides of the Atlantic begins to readjust trade assumptions. This makes hedging strategies for large-cap importers or export-reliant industrials a topic we can’t postpone. In FX derivatives specifically, some desks may observe greater demand for short-term hedges against sharp movements triggered by media soundbites or government briefings.

In truth, we’ve been here before. The intent this time feels more structured, the tactics less reactive. When a basket worth €100 billion is used as a reference point, it tends to shape trading volumes across more than one asset class. Being ahead of that repricing—that’s the difference between managing dislocation and reacting to it. Traders need to translate political actions into practical positioning.

Create your live VT Markets account and start trading now.

CarvanaCo (NYSE:CVNA) has experienced a strong recovery following a 98% drop between 2021 and 2022. The stock bounced back with an 8000% surge from $3.62 to $292, followed by a correction to $142 before entering what could be its next growth phase.

CVNA’s bullish momentum is depicted by its Elliott Wave structure, with the potential for further gains targeting a Fibonacci extension range of $437 – $505. This presents opportunities to engage with CVNA through the Elliott Wave strategy by entering positions after specific corrective sequences.

Federal Reserve Interest Rate Update

The Federal Reserve recently maintained interest rates within the 4.25%-4.50% range, influencing market behavior. This decision affected the EUR/USD, keeping it near the 1.1350 level, and pressured the GBP/USD towards 1.3330 as the US Dollar strengthened.

Gold remained steady, hovering just below $3,400 per troy ounce, amid easing trade tensions. Cryptocurrencies such as Tron, NEO, VeChain, and Conflux saw slight gains, while OKB experienced a minor dip.

Trading in foreign exchange markets involves high risk, as leverage can amplify both profits and losses. Individuals considering FX trading should assess their investment goals, experience, and risk tolerance carefully.

Cvana Stock Performance and Opportunities

The initial content outlines a substantial rebound in CVNA’s stock following a catastrophic fall the year prior. After plummeting nearly entirely—by as much as 98%—the company staged an astonishing return. From a low of $3.62, it shot up 8000% to just under $300 before cooling off. We’ve since seen a pullback to $142. Such retracements are not rare, particularly in assets that have seen speculative or accelerated buying. For those analysing waves and patterns, particularly within the Elliott Wave framework, the current structure hints at further upside if the current retracement unfolds as expected.

Should the correction form into a classic three-wave ABC pattern, that may provide a technically-favourable re-entry point with targets potentially reaching the next Fibonacci resistance range between $437 and $505. This is dependent on continuation behaviour and confirmation on lower timeframes. It’s less about blind faith and more about adhering to rules-based triggers.

From a broader perspective, the Federal Reserve’s decision to keep interest rates steadied between 4.25% and 4.50% added a layer of resistance to certain major pairs. For instance, the EUR/USD has been buoyed close to 1.1350—not materially breaching either direction as the dollar firmed modestly. Sterling, as seen in the GBP/USD, was pushed back towards the 1.3330 threshold, reflecting modest dollar inflows rather than structural weakness in the pound.

Gold, which often acts as a liquid hedge, lingered around the $3,400 level, moving within a relatively calm band. The easing in tariff-related uncertainty did not create urgency in either direction—perhaps due to already priced-in assumptions or fatigue among metals traders.

We also noticed minor moves in the digital market. While assets like Tron and VeChain posted incremental gains, OKB saw a mild retracement. This divergence between tokens may not necessarily stem from fundamental differences, but rather liquidity conditions or positioning imbalances across major exchanges.

As for leveraged instruments like foreign exchange derivatives, they remain double-edged. There’s amplification in reward, yes, but losses compound equally. That makes clarity in strategy and well-defined exposure parameters more important than ever. When assessing near-term opportunities, it’s less about chasing headlines and more about waiting for setups to materialise with discipline at the forefront.

Create your live VT Markets account and start trading now.

The USD is stronger against the three major currency pairs at the start of the US session. The US and China are set to meet in Switzerland to discuss trade, indicating a potential easing of tensions. However, the negotiation process is predicted to be lengthy.

The Federal Reserve will hold a meeting today with no expected change in interest rates. Attention will be on Fed Chair Powell’s remarks and the FOMC statement. For June, there is a 30% chance anticipated for a rate cut of 25 basis points.

Us Stocks Gaining

US stocks are showing gains after two days of declines. The Dow Industrial Average increases by 264 points, the S&P rises by 32 points, and the Nasdaq gains 115 points.

In the US debt market, yields are slightly higher with the 2-year yield at 3.815%, the 5-year at 3.920%, the 10-year at 4.323%, and the 30-year at 4.801%.

In other markets, crude oil is up by $0.60 or 1.03%. Gold decreases by $48 or 1.42%, and silver is down by $0.26 or 0.83%. Bitcoin experiences an increase of $173, bringing it to $96,987.

What we’ve just seen is a firm start for the dollar this session, gaining ground against the most traded currency pairs. Strength here generally reflects either a shift in risk appetite or expectations around interest rate policy. In this case, both are playing a part.

Talks between Washington and Beijing are scheduled in Switzerland, offering a glimmer of optimism around ongoing trade friction. However, the process will almost certainly take time, and there is little in the way of short-term resolutions expected. Even if dialogue is open, it’s reasonable to view progress as a slow drip. For positioning around commodity-linked or export-sensitive currencies, it would be prudent to avoid assuming swift outcomes. We’re choosing to stay reactive, not predictive, in this particular area.

The Fed And Interest Rates

The Fed is not expected to touch rates during the meeting today—no surprises here. What keeps us watching, though, are Powell’s remarks and the language of the accompanying statement. With a 30% probability being priced in for a June cut, the tone today could directly impact short-end rates and implied volatility. The more dovish the language, the more re-pricing we could see in forward contracts. A surprising change in emphasis could catch short positions off guard.

Equities are on the rebound after two sessions in the red. The fact that major indices are pushing higher indicates that investors remain tentatively optimistic, possibly banking on softer central bank language or seeing recent moves as oversold. For us, it’s precautionary rather than euphoric—stock movements like these often lack conviction unless underpinned by strong data or a clear catalyst.

Yield curves are flattening a touch, though all tenors are posting mild increases. Two-year notes sit just under 3.82%, while the 30-year Treasury is holding close to 4.80%. These changes are small but could prove relevant for rate-sensitive spreads. Anyone placing trades based on near-term monetary expectations should notice how carefully rates are creeping up without triggering moves in risk assets. There’s a degree of disconnect here that’s worth watching.

Commodities are a mixed bag. Oil is nudging upwards, but with such a modest move, it hardly demands a rotation. Instead, it reflects broader volatility in demand assumptions. Gold has come off sharply—$48 lower represents a clear retreat from recent strength, and suggests some unwinding of hedge flows linked to geopolitics or inflation. Silver, as it often does, is merely echoing this. In the short-term, precious metals appear open to further downside if real yields climb or if Fed commentary surprises toward the hawkish side.

Bitcoin is extending gains, now trading above $96,000. This could simply be a spillover of broader risk on sentiment, but more likely it’s a function of market participants reaching for yield—or at least perceived momentum—in a week lacking heavyweight data. Either way, it’s not the move itself, but the context behind it that helps steer positioning. We’re watching how other correlated risk assets respond for early confirmation.

Right now, we’re standing in the middle of several moving parts—but each is giving enough clarity to steer directional bias. The key is to avoid overstaying trades tied to in-between sentiment shifts, particularly where volatility remains calculated but reactive.

Create your live VT Markets account and start trading now.

The Euro is consolidating within a tight range in the mid/upper 1.13s. Data releases showed euro area retail sales in line with expectations, with a 0.1% contraction in March, while German factory orders exceeded expectations, and French wage growth accelerated in Q1.

The ECB maintains a dovish stance, with indications of continued rate cuts despite last week’s CPI surprise. US/EU trade developments remain mixed, with ongoing discussions on retaliatory tariffs and proposals for US LNG purchases and direct US investments.

Market Information And Investment Advice

Market information may contain forward-looking statements with associated risks and uncertainties. Instruments profiled are for informational purposes and should not be seen as recommendations for buying or selling assets. Thorough research is necessary before making investment decisions.

No guarantee is made that the information is error-free or timely. Investing carries risks, including potential total loss of investment and emotional distress. Errors and omissions are excepted, and liability for any resulting damages from the use of information is disclaimed.

The author and sources mentioned are not registered investment advisors. The article does not provide personalised investment advice nor suggest business relationships with mentioned companies.

With the Euro remaining within a narrow range, just under the 1.14 mark, it’s now apparent that upward momentum is lacking decisive follow-through. That the euro area’s March retail sales figure arrived as expected—with a minor 0.1% contraction—suggests that consumer demand remains tepid. While not deeply worrying on its own, when seen alongside accelerating French wage growth, it raises questions about disposable income not translating into output.

Germany’s stronger-than-forecast factory orders provide some relief. It was a slightly stronger outcome, hinting that industrial resilience remains intact despite weak consumption. That doesn’t necessarily mean a directional shift for the broader macro picture, but rather that the region offers contradictory signals that are unlikely to force monetary policy changes in the near term.

Central Bank Policy And Trade Developments

From the central bank’s side, Lagarde continues to steer expectations toward easing, even after sticky inflation showed up in last week’s surprise CPI reading. This posture remains consistent—they appear committed to signalling future rate reductions to support underlying economic softness. If inflation stays above ideal levels, earlier guidance may turn out to be less reliable. That disconnect between market expectations and pledged actions could drive unexpected volatility.

Against this backdrop, the back-and-forth in US-EU trade matters adds shaky external pressure. While talks around LNG purchases and transatlantic tariffs may seem peripheral, they inject uncertainty into certain commodities-related positions and offer added noise to broader market functioning. Longer-term implications for growth and capital flows aren’t clear—not yet—but language on both sides suggests that friction could continue surfacing across energy and manufacturing sectors.

In light of these layered developments, we are recalibrating focus towards near-dated rate expectations and their impact on volatility compression. Option skews are reflecting hesitation from one-week to one-month tenor, while gamma remains reactive to data-driven gaps. This means shorter expiries may continue to underprice actual realised movement, especially around scheduled macro releases in Germany and France.

The trading strategy involves fading rallies nearing 1.1450 and buying downside vol when intraday ranges contract to below 40 pips. In other words, lean on asymmetry in short-term moves that diverge from implied volatility readings. Monitoring open interest around options expiry dates reflects a build-up of positions clustering at 1.1350 and 1.1450, indicating both resistance and demand for protection at either edge.

Meanwhile, carry trades against the Euro may retain some appeal with a dovish tone persisting, but the margins narrow when dollar strength feeds into Fed hawkishness. Futures spreads between the ECB and Fed outlooks keep offering tradable divergence if approached with caution around central bank commentary windows.

We continue adjusting exposure based on divergence between forward rates and actual issuance demand. Watching issuance calendars and bond auction performance remains a useful lens into flight-to-quality moves that might be disguised under light volume periods. Carry remains at risk when duration buying increases—timing will matter more than positioning.

What we’ve seen is a data environment that provides just enough fuel for FX volatility, but not enough for conviction in large directional bets. Stay aware of rate cut pricing mismatches and skew moves, as those tend to move faster than spot in response to changes in outcomes.

Create your live VT Markets account and start trading now.

There is a strong anticipation surrounding the first trade deal, which is expected to influence interest rate expectations significantly.

For the Fed, there is a 99% probability of no change, with rates at 78 basis points (bps). The European Central Bank has a 92% probability of a rate cut, bringing rates to 62 bps. The Bank of England is at a 91% probability for a rate cut, with rates at 94 bps.

Central Bank Probabilities

The Bank of Canada is less certain, showing a 54% probability of a rate cut and rates at 48 bps. The Reserve Bank of Australia has a 97% probability of a rate cut, bringing rates to 110 bps. The Reserve Bank of New Zealand is at 67% probability for a rate cut, with rates at 72 bps.

The Swiss National Bank is seeing a 99% probability of a rate cut, with rates at 44 bps. The Bank of Japan is likely to remain unchanged, with a 97% probability and rates at 10 bps.

The SNB’s position is influenced by recent dovish comments and lower-than-expected Swiss inflation data. The first trade deal is anticipated to impact these interest rate expectations, especially for the Fed in 2025.

Current pricing shows that rate expectations have shifted firmly toward cuts across most major central banks. These probabilities aren’t just numbers floating in a vacuum – they reflect real trades made on the basis of central bank commentary, inflation prints, and, lately, trade developments that we’ve monitored daily. What’s clear is that global monetary policy is entering a more accommodative stance, not on the margins but quite visibly, and the market has not hesitated to reflect that.

Monetary Policy Trends

Powell’s position remains consistent with a long pause, and at 78 bps, we’re seeing interest rate traders fully factoring in no immediate change in June. However, that doesn’t mean complacency. The emphasis has subtly shifted towards what could materialise in the first quarter of next year. With U.S. data showing gradual moderation, there’s little incentive for abrupt moves, but we’re not ignoring the sensitivity to inflation surprises. Any hint of sticky pricing or labour market resilience could temporarily shake current positioning.

Lagarde’s situation appears more straightforward. With a 92% chance of a cut and pricing at 62 bps, traders have already taken the view that weaker demand across the eurozone justifies action. The energy base effects have worn off, and the current inflation trajectory supports an easing bias. Those with existing euro exposure would do well to consider whether to hold onto short-end receivers for now or start trimming, depending on exposure to periphery curve steepening.

At Threadneedle Street, pricing has leaned in the same direction, mirroring Frankfurt’s expected move. At 91% probability and 94 bps, the expectation is nearly baked in. What drove this? Softening labour market reports and surprisingly dovish MPC commentary. The key focus for the next fortnight will be wage data and services CPI – both likely to steer rate cut timing but not upend the broader path. Sterling rates traders have shown restraint, and it’s justified. That said, we’re watching the August meeting closely, as market breathers signal more volatility on policy clarity.

Macklem’s position is less tidy. The pricing suggests a near toss-up on whether the BoC will cut, with probabilities sitting at 54%. The CAD curve has adjusted somewhat chaotically over the past week as inflation beat marginally but remained within anticipated bounds if you adjust for volatile components. Still, traders would be wise to watch Canadian housing data and core CPI revisions very closely. These pose a risk to forwards currently pricing a mild downtrend into autumn. Those long duration up north may be running slightly ahead of policy signals.

Over in Sydney, Lowe’s successor inherits a rate environment easily swayed by external factors. With the market expressing a 97% chance of easing and current pricing at 110 bps, it’s an open secret that the RBA is viewed as behind the curve. Australia’s recent retail sales slump and falling consumer expectations have fuelled this. Even so, cross-market positioning in rates has not aligned with the same energy as the ECB or BoE trade yet – meaning there’s still scope for relative value to be captured across AUD versus EUR or GBP structures.

The policy stance from Wellington shows less consensus than Canberra. At 67% probability for a cut and 72 bps on the curve, the RBNZ faces pressure from poor business sentiment and falling construction demand, but its more hawkish legacy tone still lingers in some market corners. We’ve seen index-linked expectations widen marginally, especially on forward inflation, suggesting traders aren’t rushing to heap duration on front books just yet.

Jordan’s path is the clearest of them all – the Swiss bank is practically guaranteed to cut again, with rates at 44 bps. The dovish tone emerging from recent communications aligns with trends seen in both real and headline inflation, and the FX market has responded in kind. We’re seeing only minor optionality priced in for a hold, and no real disagreement on direction. There may be trades unwinding soon as expectations for further cuts consolidate.

Ueda’s bank stands alone, with near-unanimous belief of no imminent move. At 97% and 10 bps flat, there is little on the surface to spark re-pricing. Even the yen’s underperformance has failed to stir much response. Japanese inflation pulses higher for now, but not wide enough to test the BoJ’s patience. Unless wage prints—or imported inflation from weaker exchange rates—begin to shift consistently, derivatives here will likely remain tame.

As for broader implications from the trade deal expected soon: we’re already seeing anticipatory movements, particularly in U.S. rate futures further out the curve. The nature and clarity of the agreement will matter. If it reduces geopolitical uncertainty meaningfully, we could see some curve flattening – especially in markets already pricing monetary easing. There’s no hiding from it. One-off headlines can still shift tactically, but trend conviction in rate cuts is strong where macro data justifies it.

In this environment, we find clarity in volatility. Short-term adjustments have been rapid, but long-dated expectations still hint at inflation normalisation. Traders would do well to calibrate exposure across curves rather than rely on directionality alone. Our desks have seen increased appetite for conditional steepeners, especially in jurisdictions where cuts are priced in with high certainty. Watch the weeklies – they’ll tell you if positioning has gone too far too fast.

Create your live VT Markets account and start trading now.

The Oil price seeks to move beyond $60.00 as prospects of US-China trade war easing surface. US-China talks are happening this week, aiming to de-escalate the tariff conflict.

West Texas Intermediate (WTI) hopes to climb past the $60.00 mark during European trading. Optimism surrounds potential de-escalation between the US and China, which could influence Oil prices.

Us China Trade Discussions

US and Chinese officials, including Treasury Secretary Scott Bessent, plan to discuss trade issues in Switzerland. The intent is to ease tariff tensions, with current US tariffs on China at 145% and China’s retaliation at 125%.

Reduced trade war fears boost Oil prices, as China is the world’s biggest Oil importer. OPEC+ plans to increase oil production by 2.2 million barrels per day since September 2022, affecting Oil price momentum.

WTI Oil, a type of Crude Oil, is often quoted in media and is a benchmark for Oil markets. Supply and demand, global growth, political instability, OPEC decisions, and US Dollar value affect WTI prices.

Oil inventory reports by the API and EIA impact WTI prices by indicating supply and demand changes. OPEC influences Oil prices through production quotas, affecting supply levels.

Market Reactions To Ongoing Negotiations

At present, we’re seeing Oil trudging upwards, with WTI poised nearby the $60.00 level. What’s propelled this move is the apparent thawing of tensions between Washington and Beijing, with talks this week stirring fresh belief that tariffs may soon be scaled back. While nothing definitive has emerged yet, markets are behaving as though progress is expected, and prices are responding accordingly.

The dialogue planned in Switzerland, where Bessent and his counterparts are to meet, appears to be more than symbolic. Tariffs remain high—145% on Chinese imports into the US and 125% the other way—so even minor revisions downward could revive trade flows between the two largest economies. That, in turn, has an immediate and visible impact on energy markets.

Remember, China continues to be the largest Oil importer globally. Any signal that its purchasing power could increase, whether through improved growth prospects or reduced tariff burdens, shifts the near-term balance in Oil markets. Notably, traders have already begun adjusting exposure in anticipation.

At the same time, OPEC+’s production levels continue to matter. The announced lift in collective output—2.2 million barrels daily since Q3 last year—adds volume to the system, tilting the supply side. Still, despite the ongoing supply expansion, prices have held above major support levels, largely due to demand optimism linked to restored geopolitical business flows. We’re not seeing a collapse in Oil even as more barrels enter the market, which says much about buyers’ expectations.

Price action around API and EIA stockpile figures continues to produce short-term movement. Recent inventory drawdowns have supported upward pressure, especially when falling stock levels contradict rising supply trends. It’s a data set fewer are ignoring now, particularly on Wednesday evenings and Thursday mornings, when volatility briefly spikes.

As traders, it’s essential to watch not just the output figures or macro headlines but also foreign exchange implications. The value of the US Dollar, for instance, has quietly grown in influence again, especially as the Fed maintains a hawkish stance. A stronger Dollar tends to limit Oil’s upside, making contracts more expensive in other currencies. So movements in USD can undermine otherwise bullish Oil flows, including those powered by geopolitical improvements.

With all this colliding, there’s a clear hierarchy taking shape in terms of drivers. International diplomacy is pulling sentiment upward, and unless talks break down, the immediate skew appears upward-bias. That said, with production still rising and refiners yet to show a marked increase in activity, supply levels can offset too much enthusiasm. The reaction over the next API release will give us better colour on buying momentum.

Position sizes should reflect the current volatility and the somewhat binary outcome of these trade discussions. A break above $60.00 needs confirmation through either further political agreement outcomes or another stockpile draw. Without them, buyers may not have the resolve to hold the line. We’ll seek clarity through December on whether improving demand or persistent oversupply tips the balance, but for now, response remains highly news-driven.

Create your live VT Markets account and start trading now.

For the week ending 2 May 2025, mortgage applications in the US increased by 11.0%, according to the Mortgage Bankers Association. This marks a recovery from the previous week’s decline of 4.2%.

Both purchase and refinancing activities saw an upturn, contributing to this growth. However, the average rate of the most popular US home loan remains high, hovering just below 7% after a notable rise in April.

Mortgage Application Insights

The noted rise in mortgage applications for the week ending 2 May 2025, up by 11.0%, tells us something fairly direct about current borrower behaviour — despite high borrowing costs, demand has bounced back. This appears to follow a somewhat lacklustre week prior, which featured a 4.2% drop in applications. As we’ve seen before, a couple of active days in the bond market can set off a reaction, which then shows up here in mortgage data a week or so later.

What stands out more though is not so much the swing upwards, but that it happened while the average 30-year fixed rate hangs just below 7%. That’s not small. It reflects sustained pressure in funding markets and broader expectations around rate cuts coming later than thought. People still borrowing at these levels — for both new home purchases and refinancing — indicates either a shift in sentiment or perhaps a belief that rates may not fall much soon. There’s always the chance too that folks are readjusting expectations after months of waiting on the sidelines.

From our perspective, this bit of data feeds directly into short-term rate positioning, particularly in rates volatility trading. We should treat these kinds of weekly figures as more than just housing stats — they serve as a form of sentiment gauge. When purchase and refi levels both move up at the same time during a high-rate period, it tends to reflect confidence that borrowing conditions aren’t worsening further — which makes short-end steepening trades less attractive in the immediate term.

Recent Policy Impacts

From Powell’s remarks last week and recent FOMC minutes, we already had a sense that policy will remain tight longer than many originally pencilled in. This acts as a weight over the belly part of the curve, but has kept the frontend stubbornly grounded. That situation doesn’t favour a meaningful fade in implied vol. A decent bit of the recent flattening has been unwound, but strength in mortgage activity — particularly this broad-based — could stall any immediate steepening. We can’t move too fast on rate-cut-dated positions just yet.

Also keep in mind that mortgage rates respond less to the Fed funds rate directly and more to the 10-year yield. The fact that activity bounced before yields made a persistent move down suggests that household expectations are now in flux. If we see follow-through next week, things might start looking a bit too hot for comfort for policymakers. That would likely keep pressure up on swaps spreads and act as a minor drag on duration-heavy exposure.

All told, in pricing terms, this data raises questions more than it settles them. If housing activity perks up this strongly while lending rates remain elevated, it’s not what usually happens when a downturn is underway — and that matters for how options are priced across the curve. A data point like this can shift skew and influence the upper strikes in payer ladders across multiple tenors, especially those aligned with cuts in late Q3 or Q4. The shape of SOFR futures tells us not enough of that is priced in yet.

From here, we watch to see if next week shows continuity or if this week’s pop is just mean reversion. Either way, the window for adding low-delta exposure at attractive levels is shrinking.

Create your live VT Markets account and start trading now.

Bitcoin has managed to hold above a critical resistance level, with prospects of reaching all-time highs. Recent movements are influenced by improving expectations around trade tariffs, which have also propelled stock market performance.

Currently, Bitcoin is stabilising while awaiting new developments, particularly details of the first trade agreement. The Federal Reserve is withholding rate cuts amidst this uncertainty, pending labour market impacts. The focus is thus on the anticipated trade deal, expected to be revealed by the week’s end, or Monday at the latest.

Market players are assessing whether a 10% rate is the floor, as higher rates could prompt a selloff. Conversely, lower rates might accelerate Bitcoin towards all-time highs. On the daily chart, Bitcoin broke through a resistance zone near 90K, stabilising around 95K as it awaits trade resolution news.

From a technical standpoint, buyers see good risk to reward at 90K for a rally, whereas sellers anticipate a break downward to push prices to 85K. Four-hour chart analysis shows an expanding rising wedge pattern. While buyers focus on maintaining upward momentum, sellers eye a pullback to the 90K level. The FOMC decision may present a chance for buying on market dips, as optimism endures regarding the trade negotiations.

With Bitcoin hovering above a pivotal zone, what we’re seeing now is a market in a holding pattern — not frozen, but pausing to gather direction. Price has cleared a major area near 90K and, with limited new drivers, begun consolidating just above. Stability just below 95K reflects cautious positioning ahead of macroeconomic data and clarity on trade policy.

Looking backwards, much of the rally appears to have been underpinned not only by better than expected signals from trade talks, but also by the broader relief that monetary tightening may ease sooner rather than later. Stock indices climbing in parallel have only added to this directional bias, offering a tailwind to risk assets across the board. However, the wind isn’t without gusts — it’s the calibration of forward policy that remains the missing piece.

From a rate-setting standpoint, the Fed has deliberately stepped aside, withholding further action while awaiting confirmation of economic softness or resilience. Labour data has provided enough ambiguity to keep speculation alive. All eyes rest now on whether the upcoming agreement alters inflation expectations sharply enough to sway policy. It’s a waiting game, but not one we can ignore.

In the shorter-term charts, patterns indicate less conviction than the daily timeframes would imply. The expanding wedge on the four-hour highlights that, although highs are being probed, the base remains vulnerable. A slip under the lower trendline opens a straightforward path to 90K. This level, previously a ceiling, is being watched closely to step into support. Movement here may not be dramatic, but timing will be key.

From where we stand, the market isn’t overleveraged, yet derivatives positioning shows a shift in balance. Premiums on perpetual swaps are starting to flatten, and the long-to-short ratio has dipped slightly. Traders who had anticipated instant continuation higher are now de-risking, although there isn’t clear evidence yet of aggressive shorts stepping in. Instead, there’s suggestion the market wants to reset some of that froth before potentially pushing again.

What’s important now is focus — not simply on levels, but on how the market reacts to the incoming data. Volatility around macro news releases may offer short windows for position-building, especially if liquidity remains thin during off hours. Minor retracements are worth watching, particularly if pushed by headlines rather than changes in on-chain flows. Momentum does not appear exhausted — if anything, it’s pausing for breath.

In terms of signals, bid depth in order books shows underlying interest building near 91K and thinning notably below 88K, hinting at where buyers are most comfortable adding risk. Short-term demand still favours rebounds from micro dips, but continuation will require either a breakout narrative from the trade front or firm detail from upcoming central bank commentary.

For now, we act with precision. Passive entries closer to technical inflection points — supported by data rather than guesswork — provide the clearest opportunities. Until headline risk fades, there’s no need to chase. Let the market come to you.

USD/CAD increased to around 1.3800 as markets anticipate the Federal Reserve’s interest rate decision, expected to maintain the current rate range of 4.25%-4.50%. This development occurs alongside a rise in the US Dollar Index, marking a value around 99.50.

Expectations that the Fed will keep rates stable is a result of uncertainty within the US economy. Concerns involve the impact of higher tariffs imposed by the US government, potentially leading to increased consumer inflation.

Trade Discussions And Tensions

Global market sentiment improved as the US and China planned trade discussions, although a major trade deal remains unlikely. Concurrently, trade tensions between the US and Canada have heightened, following comments by US leadership.

Attention turns to upcoming Canadian employment data for April, due on Friday, which will impact the Canadian Dollar. The economic indicators will provide insights into the health of Canada’s labour market.

The US Dollar holds a prominent position globally, constituting over 88% of worldwide foreign exchange turnover. Monetary policy decisions by the Federal Reserve continue to play a pivotal role in determining the Dollar’s value.

Quantitative easing and tightening are non-standard policy measures the Fed may use, affecting the Dollar’s strength accordingly. While easing generally weakens the Dollar, tightening tends to strengthen it.

USD CAD Rate Dynamics

The existing publication discusses the recent climb in USD/CAD to the 1.3800 mark, which has caught market participants’ attention as it coincides with general sentiment ahead of the Federal Reserve’s next interest rate decision. In essence, traders are betting that the central bank will opt to hold rates where they are: between 4.25% and 4.50%. That expectation is largely due to lingering doubts about the resilience of the US economy, particularly in light of newer trade policies which include higher tariffs. These tariffs could translate into further cost pressures on households, making goods more expensive and nudging inflation in an unfavourable direction.

Added to that is the broader strength of the US Dollar, reflected in the US Dollar Index moving closer to 99.50—a solid upswing. This shows increased demand for dollar-backed assets, often a sign that institutions are seeking safety or positioning themselves for tighter monetary conditions in the months ahead. Any strengthening in the greenback tends to influence dollar-based currency pairs such as USD/CAD, naturally pulling them higher unless offset by emerging strength in the Canadian side of the pair.

We also observe that despite some warming of relations between the US and China—that could ease commercial tension marginally—optimism over any comprehensive deal remains modest at best. Forward-looking statements and scheduled talks aren’t yet translating into decisive movement on policy. On the northern front, trade rhetoric between Washington and Ottawa has sharpened, and that friction could start working its way into economic figures and investor bias toward Canada-focused exposures.

All eyes now shift toward Friday’s labour report from Canada. Employment figures will paint a clearer picture of how well the domestic job market is coping. The loonie’s direction could be heavily influenced by whether hiring is keeping pace with wage growth and population dynamics. If the data tilts weaker than expected, especially in full-time employment or wage inflation, it could weaken CAD further against the USD as domestic rate expectations fade. Meanwhile, a stronger reading might prompt a rapid revision of those expectations, inviting some strength back into CAD.

It’s worth mentioning that with the US Dollar involved in nearly nine out of every ten foreign exchange transactions globally, shifts in Federal Reserve policy carry weight well beyond North America. The Fed also has a toolkit that can tilt the dollar’s direction even when interest rates are unchanged. Its use of balance sheet management—either by letting assets roll off (tightening) or buying more (easing)—has implications for broader liquidity and investor risk appetite. Depending on how Fed officials phrase their outlook, or how decisively they use such tools, we could witness noticeable shifts in USD valuation that spill over into correlated currency pairs.

Given these developments, we’ve observed that setups based on implied volatility are becoming more sensitive to both data and communication. Therefore, exposure needs to be adjusted with extra care amid such a macro-sensitive environment. Keeping an adaptable horizon, while re-assessing exposure both pre- and post-data release intervals, remains advisable. Fluctuations in central bank tone or domestic economic surprise could quickly reverse directional momentum built over consecutive sessions.

Create your live VT Markets account and start trading now.