The CFTC data on Eurozone positions shows a decrease, with current numbers at €1073K, down from €111.8K. This change highlights shifts in the market and the Eurozone economy. Major currencies are experiencing ups and downs. The EUR/USD pair fell to a daily low of 1.1630, partly due to some strength in the US Dollar. Similarly, the GBP/USD pair declined to about 1.3320 after US consumer sentiment data exceeded expectations.

Gold Prices Reversal

Gold prices have dropped back to around $4,200 as the Dollar gains strength and US Treasury yields rise. Despite this dip, gold still looks promising because of expectations for more monetary easing from the Fed. In cryptocurrency, Bitcoin remains steady above $91,000, while Ethereum is above $3,100, indicating confidence in the market before the Federal Reserve’s upcoming meeting. However, Ripple is under pressure, trading at $2.06, even with stable inflows into its ETFs. The Fed’s upcoming meeting is expected to consider a rate cut, and market watchers are keeping an eye on central banks like the RBA, BoC, and SNB. Many are focused on the Federal Reserve’s meeting on December 10, where a rate cut is already priced into the market. This expectation is driving recent moves across different asset classes. Traders should prepare for volatility during this event, especially if the Fed’s comments differ from the expected dovish stance.

Euro Positioning Shift

There has been a significant change in Euro positioning, with net long contracts for non-commercial traders jumping to over €1 million. This suggests that large traders are betting heavily on Euro strength against the Dollar. Given this momentum, buying call options on EUR/USD or selling puts can align well with this trend, especially as the pair stabilizes around 1.1650. The recent inflation data for Eurozone’s HICP in November showed a slight increase at 2.8%, contrasting with the cooling PCE data from the US. This difference strengthens the case for a stronger Euro, as the European Central Bank is likely to remain firm while the Fed eases. We haven’t seen the EUR/USD stabilize this strongly at the 1.16 level since the recovery period of late 2021. Gold remaining firm at $4,200 per ounce shows a strong belief in a dovish Fed and ongoing weakness in the US Dollar. This price level represents nearly a 70% rise from previous all-time highs in 2024. Traders might consider buying call options on gold futures or gold ETFs to benefit from potential increases driven by expected monetary easing. The crypto market, with Bitcoin steady above $91,000, is also reacting to the expectations of looser financial conditions. Last week, digital asset investment products attracted over $2 billion in inflows, indicating that institutional capital is returning. This sets up crypto derivatives, especially long positions on Bitcoin and Ethereum futures, as a high-risk play on the “Fed pivot” story. Create your live VT Markets account and start trading now.

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