Daily Market Analysis By FXOpen

ETH/USD Growing Rapidly on News from BlackRock


As it became known, BlackRock has filed an application with the SEC for an ETF based on spot Ethereum. Information about the iShares Ethereum Trust appeared on the Nasdaq website.

If such an expression is acceptable, the price of the second cryptocurrency has gone in pursuit of bitcoin, which is rewriting the highs of the year amid expectations associated with the approval of applications for ETFs for spot bitcoin — approval from the SEC already seems inevitable.

In just 10 hours after the news was published, the price of ETH/USD increased by more than 10%. The excitement is fueled by speculation that other Wall Street giants may file bids after BlackRock.

The ETH/USD chart shows that:
→ the price of Ethereum came close to the year’s high at 2140, set in April;
→ RSI indicates that the market is extremely overbought, which means it is vulnerable to a pullback.



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GBP/USD Dips Again While EUR/GBP Gains Strength


GBP/USD started a fresh decline from the 1.2430 resistance zone. EUR/GBP is rising and might climb above the 0.8755 resistance.

Important Takeaways for GBP/USD and EUR/GBP Analysis Today

• The British Pound is showing bearish signs below the 1.2310 support.
• There is a key bearish trend line forming with resistance near 1.2245 on the hourly chart of GBP/USD at FXOpen.
• EUR/GBP is gaining pace and trading above the 0.8720 zone.
• There is a major rising channel forming with support near 0.8735 on the hourly chart at FXOpen.

GBP/USD Technical Analysis


On the hourly chart of GBP/USD at FXOpen, the pair attempted a fresh increase above 1.2370, as discussed in the previous analysis. However, the British Pound failed above 1.2430 and started a fresh decline against the US Dollar.

There was a clear move below 1.2310 and the 50-hour simple moving average. The bears pushed the pair below 1.2250. Finally, there was a spike below the 1.2200 support zone. A low was formed near 1.2187 and the pair is now consolidating losses.

There was a minor move above toward the 23.6% Fib retracement level of the downward move from the 1.2428 swing high to the 1.2187 low.

On the upside, the GBP/USD chart indicates that the pair is facing resistance near the 50-hour simple moving average and a bearish trend line at 1.2245. The next major resistance is near the 50% Fib retracement level of the downward move from the 1.2428 swing high to the 1.2187 low at 1.2310.

A close above the 1.2310 resistance zone could open the doors for a move toward 1.2370. Any more gains might send GBP/USD toward 1.2430.

On the downside, there is a key support forming near 1.2210. If there is a downside break below the 1.2210 support, the pair could accelerate lower. The next major support is near the 1.2185 zone, below which the pair could test 1.2120. Any more losses could lead the pair toward the 1.2040 support.

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EUR/GBP Analysis: Price Reaches 6-month High


In the fall of 2023, bullish sentiment developed in the EUR/GBP market: since September 1, the rate has risen by more than 2%, price dynamics have formed an ascending channel (shown in blue). Moreover, on Friday, the price reached its highest in approximately 6 months.

Growth drivers, among other things, are news related to the policies of the Bank of England and the ECB aimed at combating high inflation, and what signals the economy gives in such conditions.

The latest news about UK GDP turned out to be better than expected (actual = +0.2% for the 3rd quarter, expectations = +0.1%), but the pound sterling did not show a positive reaction, for two reasons from a fundamental point of view:

→ Firstly, the details show that a significant contribution to GDP growth came from imports, a category that tends to be quite volatile between quarters. Other key areas — notably consumption and business investment — posted negative results in the quarter.

→ Secondly, GDP may decline due to the fact that the high rate policy pursued by the Bank of England should be more fully felt in the coming 2024.

If the pound didn't strengthen on Friday on the GDP news, could the bullish trend continue?



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Bank of England Initiates Stress Test In Aftermath of Liz Truss Budget Disaster


In a groundbreaking move, the Bank of England has called upon more than 50 financial institutions in the City to conduct a comprehensive stress test, simulating the repercussions of a sudden and drastic movement in bond prices. This initiative marks the first financial system-wide stress test of its kind, reflecting the central bank's proactive stance in assessing and fortifying the resilience of the financial sector.

The call for stress testing follows the turmoil experienced in bond markets and the sterling aftermath triggered by Liz Truss's mini-budget in September 2022. During this period, pension funds faced significant pressure, and some teetered on the brink of collapse. The pronounced shift in bond prices and corresponding interest rates underscored the inherent risks associated with specific forms of liability-driven investing (LDI), particularly concerning retirement savings.

This pivotal stress test, involving major players such as big banks, asset managers, hedge funds, pension funds, and major insurers, aims to evaluate how these entities would fare in the face of an unforeseen swing in bond prices. The participants are required to model and analyse the potential impacts on their operations, with results due to be shared with the central bank by January.

The stress test encompasses abrupt and sustained fluctuations in the value of both corporate bonds and sovereign debt, encompassing renowned government bonds like UK gilts. The Bank of England's scenario involves a 10-day-long "shock to rates and risky asset prices," combining multiple elements to simulate a comprehensive market disruption.

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Dollar Falls against Euro and Rises against Yen


Last week, markets analyzed the results of the speech of US Federal Reserve Chairman Jerome Powell at a meeting organized by the International Monetary Fund (IMF). Representatives of the American regulator doubt that borrowing costs have reached their peak. Thus, the head of the US Federal Reserve noted that he fully admits one or more interest rate increases if the current economic situation requires it. Officials supported the idea of a possible tightening of monetary conditions if the rate of decline in inflation lags behind expectations. At the same time, the department is aware of the additional risks that a further increase in borrowing costs brings with it, but considers the American economy to be quite stable. In addition, on Friday, investors were disappointed by data on the consumer confidence index from the University of Michigan: in November, the indicator fell sharply from 63.8 points to 60.4 points, while the forecast was 63.7 points. Today in the United States the October report on federal budget execution is expected to be published: forecasts suggest a significant reduction in the deficit from -$171.0 billion to -$30.0 billion.

EUR/USD


The EUR/USD pair shows mixed trading dynamics, consolidating near the 1.0685 mark. The immediate resistance can be seen at 1.0690, a breakout to the upside could trigger a rise towards 1.0711. On the downside, immediate support is seen at 1.0664, a break below could take the pair towards 1.0648.

On Friday, the single currency fell moderately, updating local lows from November 3 against the backdrop of statements by representatives of the US Federal Reserve regarding the prospects for monetary policy. Last Friday's European statistics also failed to significantly support buying sentiment in the market. Thus, industrial production in Italy showed zero dynamics in September after growing by 0.3% in the previous month, while analysts expected -0.2%, and in annual terms the figure rose from -4.2% to -2.0 %. The focus of investors' attention today will be a summary of economic forecasts from the European Commission.

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BTC/USD Analysis: JP Morgan Analysts Warn of a Possible Correction


Last week, the BTC/USD rate rose to the level of USD 38k per coin on the excitement associated with the expected launch of a spot Bitcoin ETF.

However, as the week begins, bitcoin price performance shows signs that the hype appears to be waning:

→ the speed with which the price dropped from the upper boundary of the channel and the high of the year to the middle of the channel (about -USD 1,700 in a few hours) indicates the aggressiveness of sellers;
→ the price tried to resume its upward trend, but failed. This can be seen from the downward reversals from the level of 37,500
→ the fact that the slopes of trend lines (shown in black) become less sharp is also a sign of weakening bullish sentiment.

It turns out that after a pronounced surge last week, the price has already dropped below the median line of the channel, and the MACD remains in the red zone.



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Morgan Stanley Analysts Raise Forecasts for S&P 500


According to them:
→ the price of the S&P 500 index will reach 4,500 at the end of the year (previous forecast = 4,200);
→ the dollar will continue to remain strong.

According to Goldman Sachs analysts, published yesterday, the price of the S&P 500 index will fluctuate around current levels, forming a consolidation zone.

That is, a decline in the S&P 500 is not a priority scenario. An important test that will provide more important information about current market sentiment will occur today: US inflation data will be published at 16:30 GMT+3. According to forecasts, it will slow down from 3.7% to 3.3%.



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London Markets Anticipate Opening Decline with Focus on US Inflation and UK Jobs Data


As investors remain attuned to the imminent US inflation report and scrutinise the latest UK jobs data, London stocks are poised to open on a downward trajectory.

The FTSE 100 opened approximately 10 points lower at 7,416 this morning in the London session.

Earlier figures from the Office for National Statistics unveiled that wage growth in the three months to September experienced a mild deceleration. However, earnings growth surpassed inflation, while the unemployment rate maintained its stability.

Including bonuses, average wage growth dipped to 7.9%, down from an upwardly-revised 8.2% the previous month. This contrasts with the 6.7% inflation rate. Economists had anticipated a decline to 7.4% in wage growth, including bonuses.

Excluding bonuses, wage growth eased to 7.7% in the same period, slipping from 7.8%. The unemployment rate remained steady at 4.2%.

The Office for National Statistics in the UK noted that labour market figures depict a relatively unaltered scenario, with proportions of employed, unemployed, and those not actively seeking employment showing marginal changes from the previous quarter.

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Major Currency Pairs in Correction Phase


After a sharp strengthening of the American currency at the end of the week, the main currency pairs entered the correction phase. The dollar's rise was largely due to the hawkish statements of Jerome Powell. The head of the Federal Reserve said that if necessary, the American regulator will continue to raise the base rate, taking into account incoming macroeconomic indicators. Jerome Powell's statements contributed to the USD/JPY pair renewing its recent high at 151.70. Commodity currencies fell to recent lows, with the pound and euro giving up much of their recent gains.

GBP/USD


The British currency, after a spectacular rise to 1.2400, returned to 1.2200. However, buyers of the pair managed to gain a foothold above the alligator lines on the daily timeframe, and as long as the range 1.2200-1.2180 remains in support status, the likelihood of a resumption of the upward movement is quite high.

Today is an important fundamental day for the British currency. At 9:00 GMT+3 we are waiting for the publication of data on average wages for September, taking into account bonuses. Indicators on the unemployment rate for the same period will also be released.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.