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Fed Chair Jerome Powell conveyed in a speech overnight that the central bank sees no immediate need to reduce interest rates quickly. He added that with an "appropriate recalibration" of monetary policy, Fed believes it can sustain economic growth and robust employment while guiding inflation back down to its 2% target in a sustainable manner.

He highlighted that the risks to achieving the Fed's employment and inflation objectives are "roughly in balance," and emphasized that policymakers remain "attentive to the risks to both sides."

Powell noted that Fed is gradually moving policy toward a "more neutral setting". However, he stressed that the path to reaching this neutral rate is "not preset.".

Importantly, Powell remarked that "the economy is not sending any signals that we need to be in a hurry to lower rates." The prevailing economic strength provides Fed with the ability to approach monetary decisions "carefully."

Full speech of Fed's Powell here.

• USD/CHF is facing resistance at the 0.8900 handle after breaking above the 200-day MA.
• The US Dollar Index (DXY) is also at multi-month resistance, raising questions about a potential pullback.
• The Swiss Franc’s recent weakness will be welcomed by Swiss exporters and eases pressure on the Swiss National Bank (SNB).

USD/CHF has run into resistance around the 0.8900 handle having broken above the 200-day MA for the first time since late July. The recent US Dollar rally drove the pair higher as the CHF has faced headwinds due to a lack of safe haven flows in recent weeks.

The USD Index itself has risen to levels last seen in November 2023 around the 107.00 handle. Market participants are no doubt hoping for a pause around this level with a bit of weakness evident in today’s US session with the DXY retreating from multi-month resistance to trade around 106.55 at the time of writing.

US Dollar Index (DXY) Daily Chart, November 14, 2024

Source: TradingView (click to enlarge)

Fundamental Backdrop

The weakness in CHF is not the worst thing in the world, especially where Swiss exporters are concerned. The Swiss economy and businesses in general had made a plea a few months ago to the Central Bank as the Swiss Franc benefitted from safe haven flows to strengthen to multi month highs against G7 counterparts. This had a negative impact on many sectors of the Swiss economy which rely on exports as prices rose.

US data this week has also done little to ease concerns that the Fed may not cut rates as much as expected in 2025. An uptick in PPI data as the labor market appears to be cooling is not really a positive sign as inflationary fears have risen following the election of Donald Trump. For the first time since April 2023, Core PPI and CPI inflation are back above 3.0%.

Ahead we have Fed Chair Powell speaking later in the US session, will we get any change in rate cut expectations? I do doubt any change will take place as I expect the Fed Chair to keep up the rhetoric that the data will decide policy. I take that as the Fed will wait to gauge the impact of incoming President Donald Trump’s policy on tariffs etc and see what the actual impact will be on inflation moving forward.

We wrap up the week with US retail sales tomorrow.

Technical Analysis

From a technical standpoint, USD/CHF has broken above the inner and outer trendline as well as the 200-day MA. USD/CHF has rallied some 500 pips since October 1 but has paused at the resistance level around the 0.8900 handle.

Given the strength of the trend i would expect the bulls to push through this level but there are warning signs flashing that a retracement may be imminent. Looking at the DXY, it has run into multi-month resistance at the 107.00 handle while also hovering in overbought territory. This is a mirror of the USD/CHF which is also now trading overbought territory based on the 14 period RSI and has run into resistance as well.

A lot will hinge on how the DXY navigates the resistance level at 107.00.

If USD/CHF experiences a pullback, immediate support rests at the 200-day MA around 0.8819 with further support offered at 0.8757.

Conversely, a move higher from here will be eyeing the psychological 0.9000 handle before resistance at 0.9040 and 0.9087 come into focus. Based on the rules around trendline, the 0.9040 handle is a key area as it was the second point of contact for the descending trendline and could prove a tough nut to crack.

USD/CHF Daily Chart, November 14, 2024

Source: TradingView (click to enlarge)

Support

• 0.8819
• 0.8757
• 0.8633

Resistance

• 0.8890
• 0.9000
• 0.9040

GBPUSD reversed from strong support level 1.2665
•  Likely to rise to resistance level 1.2840

GBPUSD currency pair recently reversed up from the strong support level 1.2665 (former monthly low from August), standing close to the lower daily Bollinger Band and the 61.8% Fibonacci correction of the upward impulse from April.

The upward reversal from the support level 1.2665 created the daily Japanese candlesticks reversal pattern Hammer Doji.

Given the strength of the support level 1.2665 and the oversold daily Stochastic, GBPUSD currency pair can be expected to rise to the next resistance level 1.2840, former support from the end of October.

USDCAD broke resistance level 1.3950
•  Likely to rise to resistance level 1.4050

USDCAD currency pair rising strongly after the earlier breakout of the resistance level 1.3950 (former multi-month high from August).

The breakout of the resistance level 1.3950 accelerated the active short-term impulse wav 3 of the higher order impulse wave (3) from the end of September.

Given the continuation of the bullish US dollar sentiment seen across the FX markets today, USDCAD currency pair can be expected to rise to the next resistance level 1.4050.

• Ethereum hovers above a key support level
• Profit-taking put a stop to the recent rally
• Momentum indicators could turn bearish soon

Ethereum has benefited from Trump’s win, reaching a four-month high, but it failed to close above the 3,500 level and thus remains quite far from its March 2024 high. The 20% post-US election rally triggered some profit-taking, pushing ethereum lower towards the 3,114 area. The short-term trend, though, remains bullish.

Meanwhile, the momentum indicators could be close to turning bearish. The RSI is edging lower, thus pointing to weaker bullish pressure in ethereum. Interestingly, the stochastic oscillator has dropped below both its overbought area (OB) and moving average. Should the stochastic oscillator fail to return inside the OB area, and instead it resumes its descent, it would be seen as a strong bearish signal.

Should the bulls remain confident, they would try to keep ethereum above the 38.2% Fibonacci retracement level of the October 13, 2023 – March 12, 2024 uptrend at 3,115, and then gradually push its towards the 3,490 level. If successful, and assuming that the April 2022 high at 3,582 is easily surmounted, the path could then be open for a move towards the 4,000 area.

On the other hand, the bears will try to regain the upper hand. A move below 3,115 could be the first step of a more protracted move lower. The bears could then test the resistance set by the 200-day simple moving average (SMA) at 2,953, which currently stands a tad above the 50% Fibonacci retracement at 2,811.

To conclude, ethereum’s post-US election rally has temporarily paused, with the world’s second biggest cryptocurrency trading above a key support level.

Market Picture

Cryptocurrencies continued to surge, pushing the total capitalisation of this market to a new high of $3 trillion. It was just $2.2 trillion on November 5th. In other words, over 10 days, the increase was more than 35%.

Bitcoin has gained nearly 20% since the start of the week, barely slowing at the $80K mark. It wasn’t until it approached $90K that we saw any significant shakeout of positions. On Wednesday, Bitcoin stormed to $93K, but after 4 hours, it was at $88K. We also saw a similar intraday range of over 5% on Tuesday.

At these levels, more and more crypto enthusiasts are switching to looking for interesting altcoins as they lock in profits in the first cryptocurrency. The easiest choice is Dogecoin, which has gained over 200% from the lows of November 3rd to the present. Given bitcoin’s 60% share of the total crypto market capitalisation, which we last saw in 2021, the altcoin season has yet to begin.

Elon Musk has joined forces with former presidential candidate Vivek Ramaswamy to lead the US government’s new Department of Government Efficiency (DOGE). The idea for DOGE was first floated in August during Musk’s interview with Donald Trump. While it has nothing to do with the cryptocurrency itself, mentions of the word are supporting the rise in price of Dogecoin, which became the first major meme coin and was created as a joke.

News Background

Glassnode notes that realised profits for both short—and long-term holders of Bitcoin remain below previous peaks at the all-time high (ATH). In such circumstances, many investors are willing to wait for higher prices to lock in profits.

According to Bitwise CIO Matt Hougan, the first cryptocurrency will remain in the “early stages” and will only enter the maturity phase when it reaches $500K. Until Bitcoin equals gold and becomes a familiar asset for central banks and institutional investors, it will remain in the “early stage.”

ConsenSys CEO Joseph Lubin said Ethereum “stands to gain more than any other cryptocurrency” from Donald Trump’s victory in the US presidential election. He attributed this to ETH’s greater ‘maturity’ compared to its competitors.

The Italian government will increase the capital gains tax on cryptocurrencies to 28%, down from the previously proposed 42%. From 2023, the country’s citizens will be obliged to pay 26% to the state if the profit from cryptocurrencies exceeds €2,000.

Markets

More dollar strength pulled EUR/USD to a first 1.05-quote since October 2023, but that level triggered some rebound action higher. It’s only a matter of time though for a test (and potential) break of the 1.0448 range bottom in place since 2023. Next support levels stand at 1.0406 and 1.0201 which are respectively 50% and 62% retracement on EUR/USD’s bounce from 0.9536 to 1.1276 in 2022-2023. The trade-weighted dollar touched 107 with the 2023-top at 107.35 being the near-term technical reference. USD/JPY changes hands at 156, making way to the 160 potential intervention area. The Ministry of Finance conducted FX purchases both in April and in July after passing this threshold. Fed governor Kugler - labelled amongst the most dovish FOMC members together with governor Cook, Chicago Fed Goolsbee and Philly Fed Harker on Bloomberg’s hawk-dove spectrometer - said that the Fed must focus on both inflation and jobs goals. “If any risks arise that stall progress or reaccelerate inflation, it would be appropriate to pause our policy rate cuts,” she said. “But if the labor market slows down suddenly, it would be appropriate to continue to gradually reduce the policy rate.” Kugler’s comments seem to be skewing to the upside inflation risks (stubborn housing inflation and high inflation in certain goods and services) which obviously carries some weight given her more dovish status. US eco data played second fiddle with weekly jobless claims and producer prices squeezed in between yesterday’s CPI data and tomorrow’s retail sales. Weekly claims continue to hover at low levels (217k from 221k). Headline PPI rose by 0.2% M/M as expected, following an upwardly revised 0.1% in September. Core PPI excluding volatile food and energy categories climbed 0.3% M/M and 3.1% Y/Y (vs consensus of +0.2% M/M and 3% Y/Y). Both services costs and goods prices rose by 0.3% in October. The data triggered a tick lower in US Treasuries, but the magnitude was smaller than the past days’ declines and like in the dollar was met with a countermove following one-way traffic. Daily changes on the US yield curve currently range between -5.9 bps and -3.6 bps with the wings of the curve outperforming the belly. German Bunds outperformed again, especially at the front end of the curve (2-yr yield -5.6 bps). We retain some interesting comments coming from Minutes of the October ECB meeting, pointing out that the disinflationary process was gathering steam with initials improvements in services as well. The ECB stance might approach neutral levels earlier than thought, cementing at least another 25 bps rate cut in December.

News & Views

In its November monthly report the International Energy Agency (IEA) forecasts world oil demand to rise by 920k b/d this year and just shy of an additional 1m b/d in 2025 (2024 102.8 mb/d, 2025 103.8 mb/d). The slowdown in growth from recent years reflects the end of the post-pandemic pent-up demand and below-par underlying global economic conditions, as well as clean energy technology deployment, the IEA assesses. This slowdown in growth compares to a growth of close to 2m b/d last year and 1.2 m b/d on average over the 2000-2019 period. China’s marked slowdown has been the main drag on demand, with 2024 growth to average just a tenth of the 1.4m b/d increase in 2023. Regarding the demand-supply balance, the IEA expects ongoing healthy supply growth. It expects non-OPEC supply growth at 1.5m b/d this year and next year, mainly driven by US production alongside higher output from Canada, Gyana and Argentina. OPEC+ postponed a scheduled increase of 180k b/d earlier this month and will reassess its policy at a meeting early December. However, even in a scenario where OPEC+ cuts remain in place, IEA expects global supply to exceed demand by more than 1m b/d next year.

Polish GDP growth unexpectedly contracted by 0.2% Q/Q in Q3, bringing the Y/Y-growth to 2.7%. Q2 growth was strong at 1.2% Q/Q and 3.2% Y/Y. The consensus expected Q3 growth at 0.3% Q/Q. The office didn’t release any details yet. A more in depth/detail release will be published on November 28. Poor retail sales data suggest a weak performance of private consumption. The National Bank of Poland recently indicated that uncertainty on the path of inflation probably will provide little to no room to cut the policy rate before March next year. MPC member Wnorowski today reconfirmed that the NBP could start to discuss rate cuts in Q1. Even so, the Polish 2-y yield today declined slightly more than regional peers (- 8 bps to 4.98%). The zloty held strong as EUR/PLN eased from near 4.3325.

Daily Pivots: (S1) 154.67; (P) 155.15; (R1) 155.95; More...

Intraday bias in USD/JPY remain son the upside at this point. Current rally from 139.57 should target 61.8% projection of 141.63 to 153.87 from 151.27 at 158.8. On the downside, below 153.40 minor support will turn intraday bias neutral again first. But near term outlook will remain bullish as long as 151.27 support holds, in case of retreat.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). The range of medium term consolidation should be set between 38.2% retracement of 102.58 to 161.94 at 139.26 and 161.94. Nevertheless, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 0.8817; (P) 0.8841; (R1) 0.8883; More…

Intraday bias in USD/CHF remains on the upside for the moment. Sustained break of 61.8% retracement of 0.9223 to 0.8374 at 0.8899 will pave the way to 0.9223 high. On the downside, below 0.8835 minor support will turn intraday bias neutral and bring consolidations, before staging another rally.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern. Rise from 0.8374 is seen as the third leg. Overall outlook will continue to stay bearish as long as 0.9223 resistance holds. Break of 0.8332 low is in favor at a later stage when the consolidation completes.