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Betting against the market has proved to be very costly this year, with all sorts of dips being bought fairly quickly. But is this another such scenario or is it different this time around – especially with US presidential election now just three weeks away?

EUR/USD is hugging its cycle lows and gold sits at a technical juncture ahead of today's highly anticipated inflation report.

Yes, I may have just given the USD the kiss of death with that headline. Besides, the dollar has already rallied for four days into the release, so it may take a strong report overall to avoid a profit-taking pullback.

Gold, silver and copper were dragged lower with appetite for risk on Tuesday, although it may be the latter two which show the greater potential for bears going forward.

If ISM manufacturing deteriorates further, it could helped EUR/USD reclaim the 1.11, handle, even if the weekly timeframe looks like it can still move lower beyond any such bounce.

Nvidia’s earnings report on Thursday has the potential to drive sentiment for the Nasdaq 100, particularly if it misses estimates for the first quarter in seven. Traders will then focus on the PCE inflation report on Friday to assess Fed policy – assuming Jerome Powell hasn’t made it crystal clear what to expect at his Jackson Hole speech later today. Which seems unlikely.

Momentum finally turned lower on Wall Street after two Fed members forced traders to question their increasingly dovish positioning, ahead of Jerome Powell’s speech at Jackson Hole. USD/JPY may have already seen the swing low I've been seeking this week.

Large speculators flipped to net-long exposure to yen futures for the first time since February 2021, fuelled by a surge in long bets and plunge of shorts. Yet asset managers are taking a more cautious approach to being bullish the yen.

AUD/USD received a tailwind thanks to a pickup of risk appetite, as cooler jobless claims figures pointed expectations back towards a soft landing for the Fed. However, the risk-on 'rally' pales in comparison to the selloff which preceded it.

Financial markets have been a lot calmer thanks partly to reassuring words from the Deputy Governor of the Bank of Japan yesterday. This has had a positive impact across the financial markets, including global equity markets, Bitcoin, and metals prices. We have also had stronger-than-expected US jobless claims data today, helping to ease concerns over an economic slowdown in the US. This comes after a stronger ISM services PMI on Monday, both helping to offset weaker macro pointers last week.

Gold’s slight weakness in recent days was probably due to the sharp sell-off in stocks, which forced the liquidation of leveraged long trades, including gold. However, as I have mentioned before, the downside should be limited for gold. The fundamental gold outlook remains positive, and new all-time highs are still within reach.

Risk assets may be on the rise, but it is more due to a pause in risk off as opposed to buyers rushing back in. Still, it could still allow for some bullish wriggle room on AUD/USD and bitcoin if sentiment allows.

After starting the day well in the green, the major US indices were coming under a bit of pressure again at the time of writing, with investors unable to shake off the recent turmoil impacting financial markets. For now, the Nasdaq 100 forecast remains mildly bearish after the recent breakdown. More evidence of a bottom is needed to excite the bulls again even if there is a sense of calmness observed in price action over the past two days or so.

The absence of new bearish news and a light economic calendar have helped improve risk appetite somewhat. While not completely out of the woods, the market's realignment with fundamentals offers a more optimistic outlook. Stay tuned for further updates as the DAX tries to establish a base around its 200-day average.

The spotlight is on the USD/JPY and other yen crosses right now, with a particular focus on the ongoing unwind of carry trades that continues to make waves across financial markets.

Market turbulence often presents lots of opportunities, but there is still excess froth to be shed as the unwinding of leveraged carry trades persists for now. For now, the greenback has rebounded, helped in part by the stronger ISM services PMI. Still, in light of the recent events and expectations of a sharper pivot by the Fed than was previously expected, the EUR/USD outlook remains mildly positive.

Market reactions over the past 24 hours have been well covered. But the VIX is worthy of a closer look, given it just posted its strongest single-day rally on record.