The EUR/USD pair is struggling to make a decision, sitting below 1.1500 due to the strong performance of the US Dollar. This strength comes from better-than-expected US ADP and ISM Services PMI reports for October. GBP/USD found temporary support just above 1.3000 after recent losses and managed a brief rebound. Gold has had a hard time keeping its recent gains, staying below $4,000 as the market looks for new direction amidst US Dollar changes and government impacts.

Ethereum’s Upward Movement

Ethereum is rising from short-term support at $3,350, even though the crypto market has faced recent setbacks. Market sentiment has not fully benefited from a Federal Reserve rate cut or trade discussions, and challenges could still affect the US Dollar’s position. Stellar (XLM) is dropping further, showing signs of more decline due to waning retail demand. A Death Cross pattern on its daily chart raises concerns about a potential bearish breakout. The strength of the US Dollar seems temporary, especially as the government shutdown stretches into a record 40th day, creating significant political and economic uncertainty. October’s lower-than-expected CPI number of 3.1% and downward revisions of Q3 GDP suggest the Fed will likely remain cautious after its recent rate cut. Derivative traders might think about buying puts on the Dollar Index or using call spreads on EUR/USD, aiming for a move above 1.1500 resistance.

Market Impact Observations

We are closely monitoring the bounce in GBP/USD from the 1.3000 level, which may act as more than just a temporary support, especially with the Bank of England meeting next week. UK inflation remains stubbornly high at 4.5%, leading futures markets to predict a strong chance of another rate hike before the year ends. This difference in approach from the Federal Reserve reminds us of the policy split we saw in early 2022, suggesting that long positions in GBP against EUR or USD could be profitable. Gold’s consolidation below the critical $4,000 level seems to be building up for a potential breakout, driven by ongoing safe-haven demand due to US political instability. We’ve seen over $2 billion in net inflows into major gold ETFs in the past month. This indicates that institutional investors are preparing for more volatility. This market condition is perfect for traders to buy straddles, allowing them to profit from significant price moves in either direction, though the overall bias appears to lean upwards. Ethereum’s bounce from the $3,350 support level looks strong, supported by more than just a general market rebound. Open interest in Ethereum futures has risen 15% across major exchanges this past week, coinciding with renewed progress on institutional tokenization platforms. This trend suggests that traders may want to consider selling cash-secured puts below current support or buying call options targeting the next resistance level near $3,800. The technical downturn in Stellar (XLM), highlighted by the worrying Death Cross pattern, suggests a high chance of more losses. Our data indicates a 20% drop in active daily addresses for XLM over the last quarter, underscoring the decline in retail demand. Traders should view any small rallies as opportunities to enter short positions or purchase protective puts, as momentum clearly favors rival protocols. Create your live VT Markets account and start trading now.

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