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On Wednesday, gold traded around 3,940 USD per troy ounce, stabilising near its lowest levels since early October. The precious metal remains under pressure from a recalibration of interest rate expectations, as markets adopt a more cautious outlook on further easing by the Federal Reserve.

Several Fed officials have recently struck a neutral tone, aligning with Chair Jerome Powell's hawkish rhetoric last week, which suggested the October rate cut could be the final one for the year. Market-implied probabilities for a December rate cut have subsequently fallen to 69%, down sharply from 90% before the latest FOMC meeting.

With the release of official US data hampered by the ongoing government shutdown, investor attention is turning to private-sector labour market reports for guidance. Further headwinds for gold stem from easing trade tensions and China's decision to revoke tax incentives for certain jewellery retailers. This move could dampen physical demand in the world's largest gold market.

Nevertheless, a broader shift towards risk-off sentiment across global markets may renew the metal's appeal as a traditional safe-haven asset.

Technical Analysis: XAU/USD

H4 Chart:

On the H4 chart, XAU/USD is forming a consolidation range around 3,970 USD. A breakdown from this range is expected to trigger a decline toward 3,880 USD, potentially followed by a corrective rebound to 4,020 USD (testing the broken level from below). The subsequent resumption of selling pressure could drive the pair towards 3,660 USD, where the current correction may conclude, setting the stage for a new upward wave towards 4,400 USD. The MACD indicator supports this bearish near-term view, with its signal line below zero and pointing downward, confirming ongoing corrective momentum.

H1 Chart:

On the H1 chart, the market is consolidating around 3,971 USD. A break below this level could trigger a further decline towards 3,790 USD. The Stochastic oscillator aligns with this outlook, as its signal line hovers above 80 and appears poised to reverse downward toward 20, indicating building selling pressure.

Conclusion

Gold remains under pressure as expectations for a Fed cut are scaled back and concerns about physical demand emerge. While risk-off sentiment may provide intermittent support, the near-term technical structure favours further declines. A sustained break below 3,970 USD could accelerate the move towards 3,790–3,880 USD, although a deeper correction to 3,660 USD may ultimately offer a more compelling buying opportunity ahead of the next major rally.

The short-term Elliott Wave outlook for Bitcoin (BTCUSD) indicates that the bearish cycle originating from the October 6, 2025 peak remains incomplete. Price action continues to unfold within an impulsive Elliott Wave structure, suggesting further downside potential. From the October 6 high, wave 1 concluded at $103,530, followed by a corrective rally in wave 2 that terminated at $116,400, as illustrated in the accompanying one-hour chart.

Subsequently, Bitcoin extended its decline in wave 3, which itself subdivides into a smaller impulsive sequence. Within this leg, wave (i) ended at $113,487, and the corrective bounce in wave (ii) peaked at $116,077. The cryptocurrency then resumed its descent in wave (iii), reaching $107,948, followed by a brief recovery in wave (iv) to $111,603. The final push lower in wave (v) concluded at $106,313, thereby completing wave ((i)) of a higher degree.

A corrective rebound in wave ((ii)) ensued, forming a zigzag structure that peaked at $111,129. From there, Bitcoin turned lower again in wave ((iii)). Within this leg, wave (i) ended at $105,300, and wave (ii) retraced to $107,707. The market has since resumed its decline in wave (iii), which has extended towards $98,898. Looking ahead, wave (iv) is expected to provide a corrective bounce, retracing part of the decline from the November 3 peak. However, the broader trend remains bearish. As long as the pivot at $116,400 remains intact, any rally is anticipated to fail in a 3, 7, or 11 swing sequence, paving the way for further downside to complete wave ((iii)).

Bitcoin (BTCUSD) Latest 60 Minutes Elliott Wave Chart From 11.05.2025 Post market

Bitcoin (BTCUSD) Elliott Wave ChartBTCUSD Elliott Wave Video:

https://www.youtube.com/watch?v=bbG3XOBFF8w

As shown on the Dollar Index (DXY) chart, the strength of the US currency is currently hovering near an important high reached in August. Market sentiment is being influenced by:

→ the ongoing government shutdown, which has already become the longest in history;

→ traders’ assessment of last week’s developments, including the Fed’s interest rate cut, the meeting between the US and Chinese presidents in South Korea, and quarterly earnings reports from major corporations.

Adding to the turbulence is the political factor: according to media reports, Democrats have achieved victories in several local elections. Notably, Zohran Mamdani – a Muslim candidate from the Democratic Party – has been elected Mayor of New York for the first time.

Technical Analysis of the DXY Chart

It is worth recalling that on 19 September we published an important analysis of the DXY chart, in which we:

→ highlighted the false breakout of the 1 July low;

→ suggested a bullish scenario.

Following this, the price rose to the upper boundary of the red channel. In our earlier analysis, we:

→ constructed an ascending channel;

→ anticipated that the upward trajectory would remain relevant.

That scenario played out – demand proved strong enough to overcome:

→ resistance around the 95-point level, where a double-top pattern (a–b) had previously formed;

→ the psychological barrier at 100 points.

It is possible that the 3.7% rise in the Dollar Index over roughly one and a half months could attract sellers. The main intrigue now lies in whether we will see an aggressive reversal accompanied by a false breakout – similar to what occurred in September, but this time in a downward direction.

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Markets

The US tech-heavy Nasdaq led the correction lower on Wall Street, ceding 2% after coming inches of a new record high on Monday. Losses for the Dow Jones (-0.5%) and S&P 500 (1.15%) were more contained, with the focus on lofty AI valuations. The Eurostoxx 50 lost up to 1.8% intraday, but managed to limit losses to 0.34% eventually. This morning in Asia, South Korea and Taiwan are underperforming giving larger exposure to the sector. Fragile risk sentiment in absence of other drivers helped the US trade-weighted dollar to a fifth consecutive trading day gain. DXY exceeded the 100-mark to test the August high at 100.26. The 200d moving average at 100.35 is also nearby. A break higher would have significant technical importance with 101.55 (38% retracement on YtD decline and 101.98 (May high) being the next targets. EUR/USD closed below the 1.15-handle for the first time since the final trading day of July. EUR/USD 1.1392 (Aug low) – 1.1334 (200d mov avg) - 1.1240 (38% retracement on YtD move higher) is the marching order. Core bond gains were all in all modest given the risk sell-off with German and US yields respectively losing around 1.5 bps and 2.5 bps across the curve. General risk sentiment remains today’s overall market driver even if we get some rare US eco data with the October ADP employment report and the US services ISM.

Sterling faced another setback with EUR/GBP closing above 0.88 for the first time since May 2023. GBP/USD is currently hovering just above the 1.30-mark (lowest since April). UK Chancellor Reeves reaffirmed her commitment to the fiscal rules (tax receipts covering day-to-day spending by the end of the decade) and like PM Starmer last week didn’t rule out broad-based tax hikes in the November 26 budget that go against the Labour party’s election manifesto. The Office for Budget Responsibility’s expected 0.3 percentage point downgrade to productivity forecasts means Reeves is looking for at least £35bn to restore her slim £9.9bn fiscal buffer and probably £50bn to create some additional breathing room. That number is floated by the UK’s National Institute of Economic and Social Research (NIESR) this morning. The think-thank said that the trajectory of UK public debt is becoming unsustainable and calls for running primary surpluses, something the UK failed to do since 2001-2002.

News & Views

New Zealand labour market conditions eased further in the third quarter. The unemployment rate rose from 5.2% to 5.3%, a level not seen since 2016. After four quarters of negative quarterly job growth, employment growth stabilized in Q3. Still it was weaker than expected and 0.6% lower compared to the same period last year. The participation rate eased further from 70.5 to 70.3%, the lowest level since 2020. Wage inflation (salary and wage rates including overtime, LCI) over all sectors rose a modest 0.4% Q/Q and 2.1% Y/Y (from0.6% Q/Q in Q2). Ongoing soft labour market data are reinforcing the case for additional easing by the Reserve Bank of New Zealand at its next meeting scheduled for November 26. A 25 bps rate cut is now fully discounted. NZD dollar this morning touched a ST low at NZD/USD 0.5631. Due to a divergent monetary policy, the NZD/AUD cross rate this morning also briefly dropped below the September 2022 low (0.8703), touching levels not seen since 2013.

The Bank of Japan published the Minutes of the September 19 monetary policy meeting. The BoJ left its policy rate unchanged at 0.50%, but at that meeting two members proposed to raise the policy rate by 25 bps to 0.75%, which was rejected by the majority. Some members indicated that the conditions for gradually raising rates are falling into place especially considering the domestic economic developments in Japan. Other members still indicated that in considering to costs and benefits of waiting, the MPC should take into consideration the long experience of deflation in the country. A number of them also wanted to avoid surprising the market with a rate hike at that time. As the internal debate within the BoJ is moving to a further step at the December 19 meeting, the market currently discounts a 50-50 chance of a rate hike of that happening, with the focus still being on further sustained (real) wage growth.

Key takeaways

• Nikkei 225 correction: The index fell 6.6% from its record high of 52,664, testing a key support zone at 49,370/48,450 that may trigger a short-term bullish reversal.
• Macro resilience: Japan’s Citigroup Economic Surprise Index rose to 16.8, indicating continued economic outperformance and reinforcing long-term bullish fundamentals.
• Technical setup: Oversold RSI and a bullish hammer candlestick near the 20-day moving average signal potential bullish momentum.

The Japan 225 CFD Index (a proxy of the Nikkei 225) has staged the expected rally and surpassed the highlighted short-term resistance zone of 50,860/51,030. It printed a new record peak of 52,664 on Tuesday, 5 November 2025, before it tumbled by 6.6% to print a current intraday low of 49,099 on Wednesday, 6 November 2025, at the time of writing.

Bearish animal spirits in the US stock market, driven by stretched valuations in several major US stocks with an Artificial Intelligence (AI) theme, such as Palantir Technologies and Advanced Micro Devices, triggered a negative feedback loop in the Japanese stock market despite sound fundamentals, and an announcement made on Tuesday, 4 November, by Japanese Prime Minister Takaichi that her administration will roll out a new proactive growth strategy by next summer.

Japan’s recent economic data is showing more positive surprises

Fig. 1: Japan Citigroup Economic Surprise Index with Nikkei 225 as of 31 Oct 2025 (Source: MacroMicro)

The Citigroup Economic Surprise Index (ESI) for Japan has remained above the zero line since July 2025, indicating that Japan’s economic data continues to outperform market expectations. The ESI measures the gap between actual economic results and consensus forecasts, with positive readings signalling stronger-than-expected performance.

Recently, Japan’s ESI climbed to 16.8 on Friday, 31 October, up from 13.2 on 28 October, a positive trend that reinforces the ongoing medium- and long-term uptrend in the Nikkei 225 (see Fig. 1).

Next up, we will focus on the short-term (1 to 3 days) trajectory, key elements, and key levels to watch on the Japan 225 CFD Index from a technical analysis/momentum perspective.

Preferred trend bias (1-3 days) – Potential bullish reversal at 20-day moving average

Fig. 2: Japan 225 CFD Index minor trend as of 5 Nov 2025 (Source: TradingView)

Bullish bias with 49,370 as key short-term pivotal support, and a clearance above 50,090 increases the probability of a minor bullish reversal towards the next intermediate resistances at 51,090 and 51,730 in the first step (see Fig. 2).

Key elements

• The price action of the Japan 225 CFD Index (a proxy of the Nikkei 225 futures) has formed an hourly bullish “Hammer” candlestick pattern after a retest on its upward-sloping 20-day moving average.
• The hourly RSI momentum indicator has reached a prior extreme oversold level of 13.9 seen on 10 October 2025, which led to the start of the prior bullish impulsive up move sequence that rallied by 16.6% (high to low) from the 10 October 2025 low to the 4 November 2025 current all-time high of 52,664.

Alternative trend bias (1 to 3 days)

Failure to hold at the 49,370 key short-term support invalidates the bullish reversal scenario on the Japan 225 CFD Index to trigger a deeper corrective decline towards the 48,450 key medium-term pivotal support.

Market mood got hammered yesterday — for all the reasons we’ve been citing over and over: overstretched tech valuations, an increasingly narrow rally, and the circularity concerns around Big Tech that are reviving dot-com bubble comparisons. Add to that the fading dovish hopes for a December rate cut from the Federal Reserve (Fed), signs of a weakening US economy, lingering inflation risks and the thickening fog as official US data remains elusive — and you’ve got a recipe for unease.

Yes, but the sour cocktail of all these arguments didn’t prevent major US indices from rallying to uncharted territories since April, and there is no certainty that yesterday’s selloff will be the beginning of a broader correction wiping 10–20% off valuations in the coming weeks. It’s a possibility — one that many investors and large-company CEOs expect — but it’s not a preset course.

Counterarguments exist: earnings are better than expected; the Fed might not cut by another 25bp but could end QT. The latter would bring extra liquidity to markets. Recent data also shows the Fed has been adding liquidity via reverse repo operations and the People’s Bank of China (PBoC) is back to purchasing bonds to support growth. Meanwhile, AI deals keep coming in — Nvidia is reportedly expanding partnerships beyond the US, including a recent one with Deutsche Telekom — and the company hasn’t said its last word this earnings season.

So yes, the latest moves and the bearish reaction to strong Big Tech earnings call for caution. The VIX index is rising, another sign that market stress is ticking higher. The latest 13F filings also showed that “Big Short” investor Michael Burry is betting against AI champions — about 66% of his portfolio is reportedly in Palantir puts and another 13.5% in Nvidia puts. But hopefully, all this doesn’t mean the apocalypse is upon us! Over the past 15 years, the S&P500 rebounded higher after a 10-20% selloff.

Yesterday, the S&P 500 and Nasdaq fell yesterday after Palantir’s record and better-than-expected results failed to attract fresh buyers, triggering fears that valuations may have gone too far — with price-to-sales ratios for buzzy tech names getting stretched. There’s no doubt some of the Magnificent 7 stocks don’t deserve their lofty valuations (I’m looking at you, Tesla). Palantir, for instance, has a P/E ratio near 500, which is insane. Thankfully, that’s not the case for the rest of Big Tech. The others trade at relatively high, but not extreme, multiples — the average P/E for the Magnificent 7 is now above 30, versus around 20 for the S&P 493. Google’s P/E is 32, Microsoft’s 36, and Nvidia’s 60 — but that will likely moderate once it reports earnings. Jensen Huang already hinted that up to $500 billion in revenue could flow in from Blackwell and Rubin chip sales between this year and next. A correction would be healthy given how fast the market has risen in the past three years – and since April, but there might not be a dot-com-style crash when companies are printing such strong growth and profits. Smaller, buzzy names could get hit hard, yes — but the tech behemoths have means to weather a selloff.

Now, coming back to earnings, AMD also faced an unpleasant negative reaction despite strong — and stronger-than-expected — results. Revenue rose 32% to $7.69 bn, beating estimates (~$7.41 bn). The company guided for Q3 sales around $9.9 bn. Nevertheless, the share price fell about 3.7% in after-hours trading. The good news is that Nasdaq futures are sold less severely this morning, suggesting downside pressure could ease. But it may take more than a few earnings beats to bring the bulls back.

In metals and currencies, gold interestingly isn’t picking up the risk-off trades; it’s acting like a risk-on asset, falling in tandem with equities. The yellow metal struggles to hold ground near the $4,000 per ounce mark — it probably rose too far, too fast, to attract risk-averse investors. Bitcoin is also failing to play safe haven, testing the $100K level to the downside.

The US dollar, on the other hand, is strengthening against most majors, acting as a safe haven after months of heavy selling. The EURUSD slipped below 1.15 yesterday, Cable is preparing to test the 1.30 psychological support ahead of Thursday’s Bank of England (BoE) meeting, while the AUDUSD fell back below 0.65 despite the Reserve Bank of Australia’s (RBA) cautious tone this week, as it refrained from cutting rates and flagged lingering inflation risks. None of this is surprising — the dollar had been heavily shorted this year, so the rebound looks healthy and justified.

Among G10 currencies, the Japanese yen stood out as Japan’s Finance Minister said he was not enchanted by the yen’s rapid depreciation — a comment that likely prompted speculative shorts to close positions to avoid getting caught in a reversal. Still, given the dollar’s strong momentum and the dovish shift in BoJ expectations, the USDJPY will likely continue to attract brave dip buyers.

Today, services PMI figures will be in focus, along with earnings from McDonald’s, Qualcomm, and Arm Holdings. Let’s see how they perform — and how investors react!

In focus today

In the US, the October ADP private sector employment report is due for release this afternoon. The release is likely to get more attention than usual due to the delays to the BLS's monthly jobs report. ADP's early estimate based on weekly employment data until 11 October indicated small, but positive employment gains (+14k) after a negative reading in September (-32k). The ISM Services index for October will also be released. US Treasury will publish additional details of its quarterly refunding announcement (QRA), we expect the Treasury to maintain its forward guidance of unchanged coupon auction sizes 'for the next several quarters'.

In Sweden, the Riksbank will announce its rate decision. We expect the policy rate to stay unchanged at 1.75%, in line with market expectations and the Riksbank's guidance. As the meeting is also a "smaller" one without forecast updates, there are few reasons to expect any shift from the Riksbank.

In the euro area, we will receive the final services and composite PMI for October. The services PMIs surprised strongly on the upside in the flash release to 52.6. We expect the composite PMI to confirm the flash release of 52.2 as the final manufacturing print released on Monday was similar to the flash release of 50.0. Read more in Euro Area Macro Monitor - Better than expected growth, 5 November.

In Poland, the National Bank of Poland (NBP) is set to announce its rate decision. While the consensus view is another cut to 4.25%, we expect the NBP to hold rates steady. Recent communication from the Board has been mixed, with some members calling for a near-term pause in rate adjustments. Over the past years, the NBP has a track record of surprising markets, suggesting that consensus expectations do not necessarily carry much weight in their internal discussions.

In Japan, wage data for September is released overnight. A pick-up in wage growth is a prerequisite for a Bank of Japan hike following a few disappointing revisions lower of the otherwise promising wage data over the summer.

Economic and market news

What happened overnight

In the US, Democrats secured major victories in the first significant elections of Trump's second term, winning governor races in Virginia and New Jersey and the New York City mayoral race. Zohran Mamdani's victory in the New York City mayoral race marks a significant shift in political sentiment, with his campaign focused on addressing affordability concerns resonating strongly with voters. These wins, coupled with California's approval of a Democratic-leaning redistricting plan, offer momentum to the party ahead of next year's mid-term elections.

In US-China relations, China's State Council tariff commission announced the suspension of the additional 24% tariff on US goods for one year, while retaining a 10% levy. Additionally, tariffs of up to 15% on certain US agricultural goods, including soybeans, will be lifted from 10 November. The decision follows the consensus reached in the China-US economic and trade consultations last week.

In Japan, the Bank of Japan's September minutes revealed growing support for resuming rate hikes, as concerns over the potential impact of higher US tariffs on Japan's fragile economy begin to ease. While the board kept rates steady at 0.50% during both its September and October meetings, some members now favour a gradual approach to hiking as domestic economic conditions show signs of improvement.

What happened yesterday

In Denmark, the Danish central bank made no FX interventions in October, as revealed in yesterday's balance sheet statement. This, combined with easing pressure on the DKK, has reduced the risk of a rate hike by the central bank.

Equities: US equities sold off sharply yesterday, driven lower by a retreat in AI-related tech. The S&P 500 fell 1% and the Nasdaq 2%. While it may sound like a major pullback, it merely takes the Nasdaq back to levels seen about a week and a half ago. The selloff was concentrated in tech - primarily hardware and semiconductors - with Micron -7%, Intel -6%, and Nvidia -4%, while hyperscalers fared much better. As a result, we are also seeing significant pullbacks this morning in Asia, the world's key hardware region, with the KOSPI and Nikkei down 3-4%.

The trigger: interestingly, media reports attributed the weakness to "Wall Street CEOs" warning of a correction in the sector due to valuations at a financial summit in Hong Kong. We find that explanation unconvincing. Stretched valuations in tech are hardly new, and yesterday's selloff was more concentrated in lower-valued hardware names than in hyperscalers. Rather, this appears to reflect stretched positioning and a sharp rally during earnings season. It is also worth noting that this was not a macro-driven selloff; banks actually closed higher, and the Dow Jones ended only 0.5% lower.

FI and FX: Amid sour risk sentiment, the JPY and the USD gained yesterday, where especially the Scandies struggled. EUR/USD fell below 1.15. EUR/SEK rose above 11.00 yesterday ahead of the Riksbank meeting today. Bond yields fell slightly across the curve and regions yesterday.

Daily Pivots: (S1) 1.1459; (P) 1.1496; (R1) 1.1520; More…

Intraday bias in EUR/USD remains on the downside for 100% projection of 1.1917 to 1.1540 from 1.1727 at 1.1350. Decisive break there would prompt downside acceleration to 38.2% retracement of 1.0176 to 1.1917 at 1.1252. On the upside, above 1.1540 minor resistance will turn bias neutral and bring consolidations first, before staging another fall.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top is likely in place at 1.1917, just ahead of 1.2 key psychological level. As long as 55 W EMA (now at 1.1306) holds, the up trend from 0.9534 (2022 low) is still expected to continue. Decisive break of 1.2000 will carry larger bullish implications. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep outlook bearish.

Daily Pivots: (S1) 153.99; (P) 154.14; (R1) 154.38; More...

Intraday bias in USD/JPY stays neutral and more consolidations would be seen below 154.47. Further rally is expected as long as 151.52 support holds. Above 154.47 will resume larger rise from 139.87 to 100% projection of 146.58 to 153.26 from 149.37 at 156.05. Break there will pave the way to 158.85 key structural resistance.

In the bigger picture, current development suggests that corrective pattern from 161.94 (2024 high) has completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. On the downside, break of 145.47 support will dampen this bullish view and extend the corrective pattern with another falling leg.

Daily Pivots: (S1) 1.2972; (P) 1.3059; (R1) 1.3108; More...

Intraday bias in GBP/USD stays on the downside, and fall from 1.3787 should now target 61.8% retracement of 1.2099 to 1.3787 at 1.2744 next. Sustained break there will pave the way to 1.2099 support next. On the upside, above 1.3095 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 1.3247 support turned resistance holds, in case of recovery.

In the bigger picture, the break of 55 W EMA (now at 1.3185) is taken as the first sign that corrective rise from 1.0351 (2022 low) has completed. Further break of 1.2099 support should confirm this bearish case. Meanwhile, in case of another rise, strong resistance should emerge below 1.4248 (2021 high) to cap upside to preserve the long term down trend.