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• 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.

Daily Pivots: (S1) 1.2673; (P) 1.2721; (R1) 1.2757; More...

Intraday bias in GBP/USD remains on the downside for the moment. Current fall from 1.3433 should target 100% projection of 1.3433 to 1.2842 to 1.3047 at 1.2456. On the upside, above 1.2768 minor resistance will turn intraday bias neutral first. But outlook will stay bearish as long as 13047 resistance holds, in case of recovery.

In the bigger picture, considering mildly bearish divergence condition in D MACD, a medium term top is likely in place at 1.3433 already. Price actions from there are seen as correction to whole up trend from 1.0351 (2022 low). Deeper decline would be seen to 38.2% retracement of 1.0351 to 1.3433 at 1.2256, which is close to 1.2298 structural support. Strong support should be seen there to bring rebound.

Daily Pivots: (S1) 1.0529; (P) 1.0591; (R1) 1.0627; More...

Intraday bias in EUR/USD stays on the downside for now, as fall from 1.1213 is in progress for 100% projection of 1.1213 to 1.0760 from 1.0936 at 1.0483. Break there will target 1.0404 key fibonacci level. On the upside, above 1.0594 minor resistance will turn intraday bias neutral again and bring consolidations. But outlook will stay bearish as long as 1.0760 support turned resistance holds, in case of recovery.

In the bigger picture, price actions from 1.1274 (2023 high) are seen as a consolidation pattern to up trend from 0.9534 (2022 low), with fall from 1.1213 as the third leg. Downside should be contained by 50% retracement of 0.9534 (2022 low) to 1.1274 at 1.0404, to bring up trend resumption at a later stage.

While Dollar extends recent gains following stronger than expected PPI data in early US session, it's upward momentum was somewhat capped by the retreat in treasury yields as their correlation continues. Nevertheless, the greenback is still staying as the strongest one for the day and the week. It remains to be seen if there is sustainable selling, or profit-taking, to indicate that the greenback has topped.

For now, Yen remains the worst performer for the week. The unusually quietness of Japanese authorities suggests that they might allow Yen to depreciate further towards 160 mark before coming back for verbal intervention again. Sterling is currently the second worst, followed by Aussie. On the other hand, Canadian Dollar is the second best, followed by Swiss Franc. Euro and Kiwi are positioning in the middle.

Technically, US 10-year yield is still struggling to break through 61.8% retracement of 4.997 to 3.603 at 4.465, as well as medium term falling trendline decisively. There is still prospect of a near term pull back. Break of 4.264 support will bring deeper fall back to 55 D EMA (now at 4.127). If that happens, it would be accompanied by corresponding correction in Dollar.

In Europe, at the time of writing, FTSE is up 0.51% DAX is up 1.48%. CAC is up 1.38%. UK 10-year yield is down -0.0178 at 4.505. Germany 10-year yield is down -0.037 at 2.359. Earlier in Asia, Nikkei fell -0.48%. Hong Kong HSI fell -1.96%. China Shanghai SSE fell -1.73%. Singapore Strait Times rose 0.48%. Japan 10-year JGB yield rose 0.0214 to 1.063.

US initial jobless claims falls to 217k vs exp 224k

US initial jobless claims fell -4k to 217k in the week ending November 9, below expectation of 224k. Four-week moving average of initial claims fell -6k to 221k.

Continuing claims fell -11k to 1873k in the week ending November 2. Four-week moving average of continuing claims rose 1k to 1875k, highest since November 27, 2021.

US PPI up 0.2% mom, 2.4% yoy in Oct

US PPI for final demand rose 0.2% mom in October, matched expectations. Most of the rise can be traced to a 0.3% mom advance services. Prices of goods inched up 0.1% mom. PPI less foods, energy, and trade services increased 0.3% mom.

For the 12 month period, PPI accelerated notably from 1.9% yoy to 2.4% yoy, above expectation of 2.3% yoy. PPI less foods, energy, and trade services rose 3.5% yoy, up from prior month's 3.3% yoy.

Fed’s Kugler notes significant disinflation amid steady cooling in labor market

In a speech today, Fed Governor Adriana Kugler said the US sees "considerable disinflation" paired with a "cooling" yet "resilient" labor market. This dual scenario means Fed must continue "paying attention to both sides of our mandate," referring to price stability and maximum employment.

On the inflation side, Kugler acknowledged recent moderation in wage growth and inflation expectations, noting these factors support further progress on inflation. However, she cautioned that persistent inflation in housing and specific goods and services sectors could "stall progress".

Meanwhile, she highlighted rebalancing in the labor market, attributing this to increased labor supply from immigration and a stronger pool of prime-age workers, alongside lower demand resulting from tight monetary policy.

Kugler indicated that if risks arise that impede progress or cause inflation to reaccelerate, it would be appropriate to pause policy rate cuts. Conversely, if the labor market slows down suddenly, Fed should consider continuing to gradually reduce the policy rate.

ECB accounts: Earlier path to 2% inflation, downside risks increase

In reviewing the October meeting accounts, ECB policymakers broadly agreed that the disinflationary trend in the Eurozone is progressing "well on track".

While "upside risks" to inflation persist, they are now viewed as less significant, whereas "downside risks" have increased, influenced by slower economic activity.

This shift in balance suggests that inflation may reach the 2% target "somewhat earlier" than anticipated, with projections potentially indicating a lower inflation rate in 2025 than previously forecast.

Divergent views emerged regarding the precise impact of weaker economic growth on inflation, with members agreeing to revisit a more detailed assessment in December when updated projections become available.

A critical element behind the decision to cut rates was "risk management." Members widely agreed that if the current economic slowdown proves "temporary", cutting rates now could be seen as "having brought forward" a December cut. However, if data reveals "persistent weakness," the move would constitute a "timely adjustment".

In light of this economic environment, ECB Governing Council reached a consensus to lower rates by 25 basis points.

ECB’s de Guindos: Inflation easing, but growth falls short of expectations

ECB Vice President Luis de Guindos shared a mixed outlook today, highlighting progress in inflation but tempered growth prospects.

“There’s good news with inflation and not so good news on economic growth,” he remarked, noting ECB’s expectation that services inflation will ease over the coming months.

De Guindos added that inflation is expected to “converge in a clear and stable manner towards price stability, 2%,” a target that reinforces the bank’s commitment to maintaining price control.

On the economic front, de Guindos admitted "recovery we were anticipating is not happening with the intensity we expected". Although household incomes have seen some improvement, it has yet to translate into stronger consumer spending.

Eurozone industrial production falls -2.0% mom in Sep, EU down -2.0% mom too

Eurozone industrial production dropped significantly by -2.0% mom in September, underperforming market expectations of a -1.2% mom decline. Production for capital goods took a steep hit, falling by -3.8% mom, while energy output also dropped by -1.5% mom. Intermediate goods production stayed flat, and non-durable consumer goods saw increase of 1.6% mom, along with smaller rise of 0.5% mom in durable consumer goods.

The broader EU recorded a matching -2.0% mom fall in industrial output, with notable declines in countries like Ireland (-10.7%), Denmark (-5.0%), and the Netherlands (-2.9%). On the upside, Croatia, Portugal, and Slovenia saw increases of 5.8%, 2.7%, and 1.6%, respectively, although these gains were not enough to offset the overall downturn.

RBA's Bullock: Policy to stay restrictive until demand cools to sustainable levels

RBA Governor Michele Bullock commented at a panel discussion today on Australia's economic and labor market conditions, noting that the economy is still operating at a level that risks fueling inflation.

According to Bullock, while labor market tightness has eased slightly, “it’s still not easy to get staff,” indicating persistent hiring challenges for businesses.

Bullock attributed the resilience in the job market to strong "demand" and "population growth". These factors, she noted, continue to support employment levels despite some easing in labor market constraints.

Comparing RBA’s policy stance with other central banks, Bullock remarked that while others have already moved to lower rates, RBA remains "not as restrictive."

Nevertheless, she emphasized that the bank considers its policy "restrictive enough" to address inflation risks and is committed to maintaining this stance until there’s clear evidence of a sustained "downward trajectory in demand."

Australia's employment growth 15.9k in Oct, slowest rate in recent months

Australia's employment grew modestly in October, rising by 15.9k or 0.1% mom, falling short of the anticipated 25k increase. This represents the slowest pace of employment growth in recent months, following a period of more robust gains averaging 0.3% per month over the last six months. Full-time positions rose by 9.7k, while part-time jobs increased by 6.2k, both contributing to the incremental rise.

Unemployment rate remained steady at 4.1%, matching expectations, although the participation rate saw a slight dip from 67.2% to 67.1%. The number of unemployed rose by 1.3% mom, adding 8.3k to the job-seeking pool. In terms of labor utilization, monthly hours worked inched up by 0.1% mom, reflecting only minimal expansion in total labor demand.

This marks the third consecutive month with an unemployment rate of 4.1%, which stands 0.6% points higher than June 2023 low of 3.5%. Nonetheless, this rate remains 1.1% below the pre-pandemic level of 5.2% in March 2020.

The deceleration in employment growth could indicate a stabilizing labor market, aligning with recent RBA commentary on maintaining a restrictive policy stance until clear demand cooling is observed.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0529; (P) 1.0591; (R1) 1.0627; More...

Intraday bias in EUR/USD stays on the downside for now, as fall from 1.1213 is in progress for 100% projection of 1.1213 to 1.0760 from 1.0936 at 1.0483. Break there will target 1.0404 key fibonacci level. On the upside, above 1.0594 minor resistance will turn intraday bias neutral again and bring consolidations. But outlook will stay bearish as long as 1.0760 support turned resistance holds, in case of recovery.

In the bigger picture, price actions from 1.1274 (2023 high) are seen as a consolidation pattern to up trend from 0.9534 (2022 low), with fall from 1.1213 as the third leg. Downside should be contained by 50% retracement of 0.9534 (2022 low) to 1.1274 at 1.0404, to bring up trend resumption at a later stage.

US initial jobless claims fell -4k to 217k in the week ending November 9, below expectation of 224k. Four-week moving average of initial claims fell -6k to 221k.

Continuing claims fell -11k to 1873k in the week ending November 2. Four-week moving average of continuing claims rose 1k to 1875k, highest since November 27, 2021.

Full US jobless claims release here.