Unlike in the US, in Europe, most loans are made at floating rates, so an increase in the ECB's key rate simultaneously tightens the conditions for both new and existing loans. Thanks to this feature, the transmission mechanism of monetary policy works faster. As a result, fewer rate hikes are needed to cool the economy and, through it, inflation.
A continued decline in these indicators, also faster than forecast, could be a strong argument for ending the rate hike cycle and bringing the reversal to an easing. And that's bad news for the euro, which pulled back to an eight-month low at 1.0511 on Wednesday.
In addition, Europe seems to be reigniting the flames of debt problems as we saw 12 years ago - another consequence of high interest rates coupled with a weakening economy.
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A continued decline in these indicators, also faster than forecast, could be a strong argument for ending the rate hike cycle and bringing the reversal to an easing. And that's bad news for the euro, which pulled back to an eight-month low at 1.0511 on Wednesday.
In addition, Europe seems to be reigniting the flames of debt problems as we saw 12 years ago - another consequence of high interest rates coupled with a weakening economy.
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#WaveAnalysis
#EURUSD broke key support level 1.0530
Likely to fall to support level 1.0420
EURUSD currency pair recently broke key support level 1.0530 (which has been reversing the price from January) intersecting with the 50% Fibonacci correction of the previous upward impulse from November.
The breakout of the support level 1.0530 was accelerated the active impulse waves iii and 3.
Given the strongly bullish USD sentiment, EURUSD currency pair can be expected to fall further toward the next support level 1.0420.
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#EURUSD broke key support level 1.0530
Likely to fall to support level 1.0420
EURUSD currency pair recently broke key support level 1.0530 (which has been reversing the price from January) intersecting with the 50% Fibonacci correction of the previous upward impulse from November.
The breakout of the support level 1.0530 was accelerated the active impulse waves iii and 3.
Given the strongly bullish USD sentiment, EURUSD currency pair can be expected to fall further toward the next support level 1.0420.
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#WaveAnalysis
#USDCHF broke resistance level 0.9150
Likely to rise to resistance level 0.9300
USDCHF currency pair recently broke above the strong resistance level 0.9150 (former multi-month high from May) standing near the 61.8% Fibonacci correction of the previous upward impulse from March.
The breakout of the resistance level 0.9150 was accelerated the active impulse wave 3 of the intermediate impulse wave (C) from the end of August.
USDCHF currency pair can be expected to rise further toward the next resistance level 0.9300 (former top of wave 2 from the middle of March).
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#USDCHF broke resistance level 0.9150
Likely to rise to resistance level 0.9300
USDCHF currency pair recently broke above the strong resistance level 0.9150 (former multi-month high from May) standing near the 61.8% Fibonacci correction of the previous upward impulse from March.
The breakout of the resistance level 0.9150 was accelerated the active impulse wave 3 of the intermediate impulse wave (C) from the end of August.
USDCHF currency pair can be expected to rise further toward the next resistance level 0.9300 (former top of wave 2 from the middle of March).
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Crypto market cap rose 0.7% in 24 hours to 1.053 trillion. This is a return to the levels seen at the end of last week.
Cryptocurrencies saw increased buying when equity markets were under the most pressure and the dollar was gaining momentum.
However, this momentum didn't last long.
#Bitcoin briefly rose to $26.7K but again found resistance at the 50-day MA, which had already fallen to the abovementioned level. These growth impulses promise to remain a bull trap, offering the best opportunity to sell on the upside.
Cryptocurrencies need banking problems or uncertainty about the solvency of governments to generate sustainable growth momentum.
Recent moves in bond markets show that something like this is brewing. But it's too early to call cryptocurrencies a safe haven from the chaos of the traditional financial system.
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Cryptocurrencies saw increased buying when equity markets were under the most pressure and the dollar was gaining momentum.
However, this momentum didn't last long.
#Bitcoin briefly rose to $26.7K but again found resistance at the 50-day MA, which had already fallen to the abovementioned level. These growth impulses promise to remain a bull trap, offering the best opportunity to sell on the upside.
Cryptocurrencies need banking problems or uncertainty about the solvency of governments to generate sustainable growth momentum.
Recent moves in bond markets show that something like this is brewing. But it's too early to call cryptocurrencies a safe haven from the chaos of the traditional financial system.
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The price of a troy ounce of gold fell 1.4% on Wednesday to $1875, its most significant drop since early June, building this week’s loss to 2.7%.
Gold has not been so cheap in Dollars since the first half of March when the problems of US regional banks triggered a surge in interest in the metal. That situation put pressure on the dollar, but the picture has changed dramatically.
US government bonds are experiencing a solid capital inflow from domestic investors, for whom the current yield levels look very attractive. Against this backdrop, the gold bulls are capitulating.
Technical factors partly support the sell-off. Gold formed a “death cross” yesterday when the 50-day MA crossed below the 200-day MA —however, the fast MA has acted as stiff resistance since last Monday.
While Wednesday’s move in gold was impressive, history suggests that this is unlikely to be the final leg of the decline.
Gold has not been so cheap in Dollars since the first half of March when the problems of US regional banks triggered a surge in interest in the metal. That situation put pressure on the dollar, but the picture has changed dramatically.
US government bonds are experiencing a solid capital inflow from domestic investors, for whom the current yield levels look very attractive. Against this backdrop, the gold bulls are capitulating.
Technical factors partly support the sell-off. Gold formed a “death cross” yesterday when the 50-day MA crossed below the 200-day MA —however, the fast MA has acted as stiff resistance since last Monday.
While Wednesday’s move in gold was impressive, history suggests that this is unlikely to be the final leg of the decline.
The case of the previous death cross in July 2022 is very similar to the current one. And back then, the price was down 7%. In February 2021, the sell-off stopped after only a 9% drop; in August 2021, it was down almost 7%.
In all these cases, gold pulled back to a previous significant support area before we saw a corrective pullback. The following considerable pivot area in the current situation was $1805-1810.
Mirroring how quickly gold gained $100 from $1810 in March, we could now see an equally quick landing.
But this is where longer-term forces could come into play. The 200-week MA runs through here. Approaching or briefly dipping below it has attracted big buyers over the past six years.
However, it is essential to note that the $1800 area may become where only some bearish gold positions are fixed. It will be necessary to monitor financial market sentiment very closely. With equity indices continuing to fall and long-term yields rising, a further price fall is quite realistic.
In all these cases, gold pulled back to a previous significant support area before we saw a corrective pullback. The following considerable pivot area in the current situation was $1805-1810.
Mirroring how quickly gold gained $100 from $1810 in March, we could now see an equally quick landing.
But this is where longer-term forces could come into play. The 200-week MA runs through here. Approaching or briefly dipping below it has attracted big buyers over the past six years.
However, it is essential to note that the $1800 area may become where only some bearish gold positions are fixed. It will be necessary to monitor financial market sentiment very closely. With equity indices continuing to fall and long-term yields rising, a further price fall is quite realistic.
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German CPI below forecasts
German consumer inflation slowed more than expected in September, according to Destatis' preliminary estimate.
The price growth rate slowed to 4.5% y/y from 6.1% y/y vs. 4.6% y/y expected. However, the monthly rate growth remains elevated, with the last four months adding 0.3% each, bringing the annual rate to 3.6%.
Separately today, Spanish inflation accelerated to 3.5% from 2.6% the previous month and a low of 1.9% in June.
In general, the release of weaker-than-expected inflation and activity data adds to the pressure on the local currency, arguing for easing monetary policy.
Tomorrow's composite data for the entire Euro-Zone is expected to reach 4.5% y/y, slowing from 5.2% in August.
German consumer inflation slowed more than expected in September, according to Destatis' preliminary estimate.
The price growth rate slowed to 4.5% y/y from 6.1% y/y vs. 4.6% y/y expected. However, the monthly rate growth remains elevated, with the last four months adding 0.3% each, bringing the annual rate to 3.6%.
Separately today, Spanish inflation accelerated to 3.5% from 2.6% the previous month and a low of 1.9% in June.
In general, the release of weaker-than-expected inflation and activity data adds to the pressure on the local currency, arguing for easing monetary policy.
Tomorrow's composite data for the entire Euro-Zone is expected to reach 4.5% y/y, slowing from 5.2% in August.
#EURUSD fights for 1.05
On Thursday, the EURUSD had a chance to hold above the 1.05 level thanks to the US currency's weakness against its major rivals. So far, the move looks more like profit-taking on an eleventh consecutive week of gains for the Dollar.
However, without any significant change in the fundamentals (inflation trends and the Fed's rhetoric), this could temporarily consolidate forces and liquidity before the dollar gains further momentum, threatening to push the euro below parity.
The latter will be particularly true if yields on Italian and other eurozone debt continue to rise because of the failure to control public spending and revive the economy.
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On Thursday, the EURUSD had a chance to hold above the 1.05 level thanks to the US currency's weakness against its major rivals. So far, the move looks more like profit-taking on an eleventh consecutive week of gains for the Dollar.
However, without any significant change in the fundamentals (inflation trends and the Fed's rhetoric), this could temporarily consolidate forces and liquidity before the dollar gains further momentum, threatening to push the euro below parity.
The latter will be particularly true if yields on Italian and other eurozone debt continue to rise because of the failure to control public spending and revive the economy.
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The crypto market has been torn, rising over 2% in the last 24 hours to $1.076 trillion. The excitement came after the approval of the Ethereum Futures ETF from Valkyrie. It's not the victory everyone expected, as they were waiting for a long list of spot Bitcoin ETFs. But the positive news coincided nicely with a rebound in equity markets and US Dollar nosediving.
#Bitcoin surged above $27K on Thursday, gaining over $800 (3.2%). The momentum allowed it to climb above its 50-day moving average, something it has been unable to do since early August. The ability to hold levels above this curve will be the first confirmation of a change in trend and will turn observers' attention to the 27.5 area, where the previous local highs are located. In our view, a move above $28K will attract even more buying interest.
#Ethereum gained over 3.2% in 24 hours, briefly topping $1685. Technically, it has managed to reverse the downtrend, boosting optimism for Bitcoin and the entire crypto market.
#Bitcoin surged above $27K on Thursday, gaining over $800 (3.2%). The momentum allowed it to climb above its 50-day moving average, something it has been unable to do since early August. The ability to hold levels above this curve will be the first confirmation of a change in trend and will turn observers' attention to the 27.5 area, where the previous local highs are located. In our view, a move above $28K will attract even more buying interest.
#Ethereum gained over 3.2% in 24 hours, briefly topping $1685. Technically, it has managed to reverse the downtrend, boosting optimism for Bitcoin and the entire crypto market.
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#WaveAnalysis
#WTI reversed from resistance level 92.00
Likely to fall to support level 87.00
WTI crude oil earlier reversed down from the pivotal resistance level 92.00 (which reversed the price strongly at the end of 2022) intersecting with the upper weekly Bollinger Band and the 50% Fibonacci correction of the downtrend from the middle of the last tear.
The downward reversal from the resistance level 92.00 will create the second consecutive weekly candlesticks reversal pattern Doji – signalling the strength of the resistance level 92.00.
Given the strength of the resistance level 92.00, WTI crude oil can be expected to fall further toward the next support level 87.00.
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#WTI reversed from resistance level 92.00
Likely to fall to support level 87.00
WTI crude oil earlier reversed down from the pivotal resistance level 92.00 (which reversed the price strongly at the end of 2022) intersecting with the upper weekly Bollinger Band and the 50% Fibonacci correction of the downtrend from the middle of the last tear.
The downward reversal from the resistance level 92.00 will create the second consecutive weekly candlesticks reversal pattern Doji – signalling the strength of the resistance level 92.00.
Given the strength of the resistance level 92.00, WTI crude oil can be expected to fall further toward the next support level 87.00.
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#WaveAnalysis
#EURCAD reversed from long-term support level 1.4245
Likely to rise to resistance level 1.4400
EURCAD currency pair recently reversed up from the long-term support level 1.4245 (which has been reversing the price from January) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 1.4245 created the daily candlesticks reversal pattern Bullish Engulfing – strong buy signal for this currency pair.
Given the strength of the support level 1.4245, EURCAD currency pair can be expected to rise further toward the next resistance level 1.4400 (top of the previous wave iv).
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#EURCAD reversed from long-term support level 1.4245
Likely to rise to resistance level 1.4400
EURCAD currency pair recently reversed up from the long-term support level 1.4245 (which has been reversing the price from January) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 1.4245 created the daily candlesticks reversal pattern Bullish Engulfing – strong buy signal for this currency pair.
Given the strength of the support level 1.4245, EURCAD currency pair can be expected to rise further toward the next resistance level 1.4400 (top of the previous wave iv).
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#Crypto
The crypto market cap has risen over 2.7% in the last 24 hours to over $1.11 trillion.
#Bitcoin managed to hold above its 50-day MA over the weekend, which it surpassed in a strong move on the 28th of September.
BTCUSD surged over $1000 with a 4% gain, hitting a 7-week high of $28.3K. Contrary to the upward momentum at the end of last week, the intraday rally may be too stretched for now. After a long march, the price touched the technically and emotionally important 200-day moving average (currently $28K). There is a risk that we could see a repeat of the August 29 reversal to the downside. But that's a risk, not the main scenario.
Bitcoin ended September up 4.1% at $27.1K, bucking the seasonal trend of the worst month of the year, which was hard to expect in an environment of a rising dollar and a falling S&P 500. Over the past 12 years, bitcoin has ended October higher on eight occasions. The average gain was 29.6%, and the average loss was 15.2%.
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The crypto market cap has risen over 2.7% in the last 24 hours to over $1.11 trillion.
#Bitcoin managed to hold above its 50-day MA over the weekend, which it surpassed in a strong move on the 28th of September.
BTCUSD surged over $1000 with a 4% gain, hitting a 7-week high of $28.3K. Contrary to the upward momentum at the end of last week, the intraday rally may be too stretched for now. After a long march, the price touched the technically and emotionally important 200-day moving average (currently $28K). There is a risk that we could see a repeat of the August 29 reversal to the downside. But that's a risk, not the main scenario.
Bitcoin ended September up 4.1% at $27.1K, bucking the seasonal trend of the worst month of the year, which was hard to expect in an environment of a rising dollar and a falling S&P 500. Over the past 12 years, bitcoin has ended October higher on eight occasions. The average gain was 29.6%, and the average loss was 15.2%.
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#Review
#Gold lost almost 4% last week to $1835, the biggest drop in over two years.
Gold's sell-off last week looked like a capitulation of the bulls, with a break of multi-month support. It is often at times like this that market inflexion points are formed.
The last time gold traded at such a low was over six months ago, when the US regional banking crisis triggered an influx of buyers, pushing the price away from support around $1810.
In the short term, gold is oversold, creating the potential for a corrective bounce. On the daily chart, the RSI oscillator has dropped to 21.6. The last time the indicator recorded such low levels was in June and August 2018, when a reversal from decline to growth was forming in gold for the following years.
#Gold lost almost 4% last week to $1835, the biggest drop in over two years.
Gold's sell-off last week looked like a capitulation of the bulls, with a break of multi-month support. It is often at times like this that market inflexion points are formed.
The last time gold traded at such a low was over six months ago, when the US regional banking crisis triggered an influx of buyers, pushing the price away from support around $1810.
In the short term, gold is oversold, creating the potential for a corrective bounce. On the daily chart, the RSI oscillator has dropped to 21.6. The last time the indicator recorded such low levels was in June and August 2018, when a reversal from decline to growth was forming in gold for the following years.
It may well be that this acceleration in gold's decline is a sign that the fall is nearing its end, but it is still a case where it is better to be a little late to the rally than to buy in.
After falling below $1890, gold has been in thin air territory since March with no significant support levels. The nearest support remains at $1810. Around this level, gold found buyers with deep pockets in March.
Not far from this level is the 200-week moving average. This is an essential indicator of the ultra-long-term trend. Over the past six years, gold has been bought on dips below this line, keeping it below 3.5%. This lower line of defence is not far from $1750.
If a further $80 drop from current levels is not appetising enough for long-term buyers, a new bear market in gold will have to be established.
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After falling below $1890, gold has been in thin air territory since March with no significant support levels. The nearest support remains at $1810. Around this level, gold found buyers with deep pockets in March.
Not far from this level is the 200-week moving average. This is an essential indicator of the ultra-long-term trend. Over the past six years, gold has been bought on dips below this line, keeping it below 3.5%. This lower line of defence is not far from $1750.
If a further $80 drop from current levels is not appetising enough for long-term buyers, a new bear market in gold will have to be established.
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#WaveAnalysis
#EURCHF reversed from resistance level 0.9680
Likely to fall to support level 0.9600
EURCHF currency pair recently reversed down from the key resistance level 0.9680 (former strong support from May) intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the downward impulse from June.
The resistance level 0.9680 was strengthened by the resistance trendline of the daily down channel from February.
Given the clear daily downtrend, EURCHF can be expected to fall further toward the next support level 0.9600 (former resistance from August).
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#EURCHF reversed from resistance level 0.9680
Likely to fall to support level 0.9600
EURCHF currency pair recently reversed down from the key resistance level 0.9680 (former strong support from May) intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the downward impulse from June.
The resistance level 0.9680 was strengthened by the resistance trendline of the daily down channel from February.
Given the clear daily downtrend, EURCHF can be expected to fall further toward the next support level 0.9600 (former resistance from August).
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#WaveAnalysis
#GBPCHF reversed from resistance level 1.1200
Likely to fall to support level 1.1070
GBPCHF currency pair earlier reversed down from the key resistance level 1.1200 (which has been reversing the pair from July) intersecting with the upper weekly Bollinger Band and the 38.2% Fibonacci correction of the downward impulse (1) from June.
The downward reversal from the resistance level 1.1200 started the active short-term impulse wave 3.
Given the strength of the Swiss franc inflows, GBPCHF can be expected to fall further toward the next support level 1.1070 (which has been reversing the pair from April).
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#GBPCHF reversed from resistance level 1.1200
Likely to fall to support level 1.1070
GBPCHF currency pair earlier reversed down from the key resistance level 1.1200 (which has been reversing the pair from July) intersecting with the upper weekly Bollinger Band and the 38.2% Fibonacci correction of the downward impulse (1) from June.
The downward reversal from the resistance level 1.1200 started the active short-term impulse wave 3.
Given the strength of the Swiss franc inflows, GBPCHF can be expected to fall further toward the next support level 1.1070 (which has been reversing the pair from April).
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Crypto market cap fell by 2.5% to $1.09 trillion. The market failed to accelerate but remains in an uptrend despite the general decline in demand for risk assets.
After peaking above $28.5K on Monday, #Bitcoin gradually slid shortly after the main US session. At one point on Tuesday morning, the price fell to $27.3K, where the first cryptocurrency found buyers. However, it's easy to see that buyers dominate in a calm state. Excluding short-term spikes and pullbacks, it is easy to see a steady upward trend since the 25th of September.
Bitcoin received support when it touched the area of previous highs, turning resistance into support. This is a bullish sign that sets up another test of the 200-day ($28K) with potential for further strength.
According to CoinShares, investments in crypto funds rose by $21 million last week after six weeks of outflows. Bitcoin investments increased by $20 million, while Ethereum investments fell by $1.5 million. Solana investments rose sharply, up $5 million at a time.
After peaking above $28.5K on Monday, #Bitcoin gradually slid shortly after the main US session. At one point on Tuesday morning, the price fell to $27.3K, where the first cryptocurrency found buyers. However, it's easy to see that buyers dominate in a calm state. Excluding short-term spikes and pullbacks, it is easy to see a steady upward trend since the 25th of September.
Bitcoin received support when it touched the area of previous highs, turning resistance into support. This is a bullish sign that sets up another test of the 200-day ($28K) with potential for further strength.
According to CoinShares, investments in crypto funds rose by $21 million last week after six weeks of outflows. Bitcoin investments increased by $20 million, while Ethereum investments fell by $1.5 million. Solana investments rose sharply, up $5 million at a time.
Oil prices fell for the fourth session in a row after hitting 13-month highs. The spot price of a barrel of WTI approached $94 in what looked like a desperate last-ditch attempt by the bulls to assert their superiority.
However, this appeared to be the third wave of gains in the rally since the price collapse in June. Since last Thursday, intraday rallies have been suppressed by heavy sell orders. WTI briefly dipped below $87 on Tuesday, down 7.5% from last week's peak.
Concerns over a slowing global economy triggered heavy sell orders that overwhelmed intraday rallies. This sustained pressure appears to be more than just a moment of market cooling and is in line with the typical wave pattern, which now suggests three downward impulses.
Last month, RSI formed a divergence on a daily timeframe. This is often a sign of exhaustion of bullish momentum.
The next downside target is the $84.4, where there are 50-day MA and local peaks in early August and mid-April.
However, this appeared to be the third wave of gains in the rally since the price collapse in June. Since last Thursday, intraday rallies have been suppressed by heavy sell orders. WTI briefly dipped below $87 on Tuesday, down 7.5% from last week's peak.
Concerns over a slowing global economy triggered heavy sell orders that overwhelmed intraday rallies. This sustained pressure appears to be more than just a moment of market cooling and is in line with the typical wave pattern, which now suggests three downward impulses.
Last month, RSI formed a divergence on a daily timeframe. This is often a sign of exhaustion of bullish momentum.
The next downside target is the $84.4, where there are 50-day MA and local peaks in early August and mid-April.