Bitcoin is trading around $85,775, above the 21-day moving average and within the uptrend channel that has formed since September 27. Bitcoin could continue to rise in the coming hours and reach the key level of $87,500.

Given that Bitcoin has been rising over the weekend, technically we could expect consolidation around the 21 S level at $85,337; or, if the price reaches the lower band of the uptrend channel around $85,000, this could be seen as a signal to take long positions.

If Bitcoin falls below the uptrend channel and consolidates above $85,000, the outlook could turn negative, and in the short term, we could expect it to reach the 6/8 Murray level around $81,205.

Conversely, if Bitcoin remains above the uptrend channel and above $85,337—where the 21-day SMA is located—this could be seen as a signal to continue buying, with targets at $87,500, and it could ultimately reach the upper band of the uptrend channel around $88,400.

The Eagle indicator is showing a negative signal; however, we believe that Bitcoin will continue to trade within the uptrend channel in the coming days, so we should consider these levels as a zone for opening long or short positions.

XAU/USD is trading around $4,149, below the 21 SMA, and pulling back slightly after encountering strong resistance around this moving average.

Lately, gold has consolidated around $4,150 on the H4 chart. Technically, we could expect it to find strong support around $4,140; or, if it reaches a low of $4,125, this could be seen as an opportunity to open long positions in case of a technical rebound at this level, where the daily S_2 is located.

Given that gold is oversold and has been rebounding above the 1/8 Murray line since last week, this suggests that if the price consolidates above $4,162 in the coming hours, the outlook could be positive, and gold could reach $4,175. This would signify a decisive breakout from the downtrend channel; in turn, we could expect resistance around the $4,218 level, where the instrument has encountered strong resistance on two previous occasions.

A consolidation above $4,218 could lead to a recovery in gold prices, potentially closing the gap left on September 23 around $4,278; ultimately, we could expect it to reach the 200-day moving average around $4,292 and, in turn, the 5/8 Murray level around $4,296.

As long as the metal trades above 1/8 Murray, the outlook could be positive and will be seen as a signal to continue buying in the coming days.

The strong support level of $4,125 could be a key area to watch; if gold reaches this level again in the coming hours, it could form a triple bottom pattern, which in turn could be seen as a positive signal to buy in the coming days.

The euro is trading around 1.1192, rebounding after reaching the +1/8 Murray level, which also represents a strong support level in an oversold condition.

The euro hit a low of 1.1165 and has been rebounding since then. We could expect EUR/USD to recover in the coming days, as the daily chart shows that a downtrend began on August 16 from its high of 1.1713, and so far we have not seen a significant technical correction.

If the euro consolidates above 1.1170 in the coming days, this could be considered a buy signal with targets at the 0/8 Murray level around 1.1230, and ultimately, we could expect EUR/USD to reach the 2/8 Murray level around 1.1352.

In the coming days, we could expect the euro to consolidate around 1.1170 above the +1/8 Murray level; alternatively, if the price rebounds and consolidates above the 0/8 Murray level, this could be viewed as a positive signal only if the currency pair consolidates above 1.1230.

Given that the euro is under downward pressure, we should expect a technical rebound before resuming short positions, as there could be a technical rebound in the coming days. So, it is better to wait for consolidation before taking long positions.

Crude oil is trading around $88.82, below the 21-day SMA and above the strong Murray 6/8 support level, after several attempts to consolidate above this zone.

The daily chart shows a strong uptrend in crude oil that began on June 30, reaching a high of around $102.90. However, crude oil was unable to consolidate above the 8/8 Murray line, and since early September, we have seen a strong technical correction. It is likely that CL will continue to fall in the coming days, but to confirm this, we must monitor the 6/8 Murray line.

On the daily chart, we can see that crude oil left a gap in the $84 area on August 23. Technically, if crude oil falls below $87.50, we could expect it to reach the 200 EMA around $83.17, which could close this gap.

If crude oil remains above $87.50—where the 6/8 Murray level is located—we could expect a technical rebound, which could reach the 21 SMA around $93.50.

A decisive break above the secondary downtrend channel formed from its high of $102.90 could lead to a break of this zone around the psychological level of $90, which could then be seen as a buy signal with targets at $95 and finally at the 8/8 Murray level around $100.

Our trading plan for the next few hours is to buy crude oil above $87.50. Conversely, a break below this level could be seen as a signal to sell, with a target at $83.17, around the 200-period EMA.

Spanish Prime Minister Pedro Sanchez called early elections for November 29 after parliament rejected a housing plan aimed at curbing the rise in social protests. The yield on Spanish 10-year bonds changed little, but the spread against more stable German government debt widened to 65 basis points. EUR/USD responded by falling to its lowest level since May 2025.

Euro Reversal Risk Dynamics

The escalation of political risks in two eurozone countries at the same time remains a negative factor for the euro. Credit Agricole believes that the news from Spain has had a limited impact on the currency, but it certainly does not support it. ING adds that the decline reflects a higher risk premium amid financial instability in the region, and that the EUR/USD decline could continue toward 1.10. Investors are recalling the debt crisis of 15 years ago, as the high debt burdens of France, Italy, and Belgium could become a vulnerability if borrowing costs rise.

Pressure on EUR/USD is also increasing as the US dollar strengthens. The futures market is pricing in the possibility of three federal funds rate hikes by July in an effort to contain inflation.

Euro weakness is evident not only against the US dollar. The currency has declined against the Swiss franc for a third consecutive session, has weakened against the pound, and has fallen to its lowest level against the yen since 2025. JP Morgan believes that the market has not yet fully priced in a widening of French bond spreads and expects EUR/CHF to decline.

However, the situation is not entirely straightforward. Commerzbank notes that German bonds remain stable for now, meaning that the euro's downward potential should remain limited. French bond yields are rising, while German yields are declining, reinforcing the status of German government bonds as a safe-haven asset.

Lazard believes that the ECB should suspend quantitative tightening, describing balance-sheet reduction as a secondary tool. ECB Chief Economist Philip Lane warned that a second wave of the energy shock poses risks to both inflation and economic growth.

European Inflation Dynamics

Meanwhile, eurozone inflation accelerated to 3.8% in September, its highest level in three years, compared with 3.2% in August. Rising energy prices could force the ECB to resume raising the deposit rate rather than maintain a pause. Under normal market conditions, this would be a positive factor for EUR/USD. In the current environment, however, such expectations could push bond yields higher and increase instability in the debt market.

Will the single currency withstand the combined pressure from political risks and rising inflation?

Technically, an inside bar was formed on the daily EUR/USD chart, allowing short positions to be increased. The targets are 1.110 and 1.087.

The wave count has now developed into a more complex structure. Wave C has taken a three-wave form, while the next wave is identified as wave D. The entire trend section that began on January 27 could take the form of a five-wave corrective structure A-B-C-D-E. If this assumption is correct, wave D has been completed, and on August 21, EUR/USD entered the phase of forming wave E, whose low should be below the low of wave C at 1.1325. The pair is only a short distance away from this level, and below it, the presumed wave E could complete its formation at any time.

The War in Yemen Is a New Factor Supporting the Dollar

The EUR/USD pair declined by another 90 points during Monday's trading session but managed to recover by 60 points during the day. However, these 60 corrective points do not even appear to represent the beginning of a corrective wave. The current wave count has long suggested the formation of a corrective upward wave or a new upward wave sequence, but selling of the euro and buying of the dollar continue, so the instrument continues to decline.

Monday can reasonably be described as another difficult day for the European currency. Over the weekend, the official government of Yemen declared war on the Houthi militant group, which controls a significant part of the country, including its capital. As a result, another war has begun in the region. This raises questions about the effectiveness of diplomatic efforts to resolve international disagreements, given the frequency with which armed conflicts have emerged in recent years.

The fact remains that a new war has begun in the Middle East, and it could become linked to the existing conflict or develop into a broader conflict. The Bab el-Mandeb Strait has been under the risk of disruptions similar to those affecting the Strait of Hormuz for several months, so conditions in the energy market are not improving, while investor sentiment is also not improving. Investors have once again reduced exposure to risks associated with the fiscal problems of many major economies, extremely high levels of public debt, and armed conflicts, so demand for the US currency remains consistently high. This suggests that the US currency may continue to appreciate, even though such a scenario would have been difficult to anticipate only a month ago. However, significant market-moving events have remained frequent in recent years, and the market is therefore required to respond to them.

Overall Conclusions

Based on the EUR/USD analysis, I conclude that the pair remains within a global corrective trend section A-B-C-D-E. If this assumption is correct, the decline in quotes will continue toward targets below the low of wave C at 1.1325. I previously considered this scenario to be an alternative scenario, and without the Fed meeting, it would have remained a secondary scenario. However, the Fed delivered an unexpected outcome, leaving the market with few alternatives other than another wave of US dollar buying. Nevertheless, these purchases have already continued for several weeks, even though there are no new fundamental factors supporting the dollar. I would not open short positions against such a fundamental backdrop and would instead prepare for a potential reversal.

On the higher timeframe, a downward trend section can be seen taking the form of A-B-C-D-E. Therefore, EUR/USD may continue declining below the low of wave C, while the internal wave structure of wave E may take the form of a five-wave impulse.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often involve changes in structure.
2. If there is no confidence about what is happening in the market, it is better not to enter the market.
3. There can never be 100% certainty about the direction of a price move. Do not forget to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

The EUR/USD pair has been declining for 18 consecutive days, apart from several brief pauses. During this period, the euro has lost 470 points. The decline in the European currency began a month ago as the market started pricing in an FOMC interest-rate hike. Since then, the market has continued to buy the US dollar, using virtually any short-term factor as justification. In market terminology, such movements are referred to as "order flow," meaning the flow of orders. Typically, large market participants build up an order flow over a certain period, after which those orders begin to be executed. At that point, the accompanying fundamental backdrop becomes much less important. The orders have already been placed and are being executed. As a result, the charts show an uninterrupted move in one direction without any indication of a corrective retracement. Last week, protests broke out in France over cuts in government spending on education. Hundreds of schools have been closed, while clashes with police, vehicle fires, and damage to stores have been reported on an ongoing basis. On Monday, it became known that France faces a budget shortfall of several tens of billions of euros that needs to be covered. This would clearly require higher taxes and spending cuts. In addition, French government bond yields are rising, as are yields in many other EU countries and in the United States. This is placing additional pressure on an already strained budget.

Nothing is currently able to stop the euro's decline. Neither tighter ECB policy, nor favorable economic data from the European Union, nor weak US labor-market data, nor the technical picture and bullish patterns have been sufficient to reverse the move. Since imbalance 19 has been invalidated, the European currency now has a strong possibility of falling below the psychological level of $1.10. Bullish imbalance 19 has turned into a bearish inverted imbalance and generated a sell signal. Bullish traders were unable to capitalize on bullish imbalance 19, the two bullish swings, or the weak US labor-market data. Nothing is likely to support the euro if traders simply continue to refrain from selling the US dollar.

Last week, the FOMC indicated its readiness to continue tightening monetary policy, which was sufficient for the broader bearish move to continue. Even after the Fed tightened monetary policy in September and potentially tightens it again in October or December, I do not believe that the euro has lacked reasons to rise during this period.

Overall, in my view, the fundamental backdrop continues to favor bullish traders. Despite the Fed's more restrictive monetary policy stance, this is not the only factor determining exchange rates. I would remind you that US Treasury yields are reaching record levels, placing significant pressure on the federal budget; the US economy has slowed in recent quarters; the US labor market has produced disappointing data more often than positive surprises; Donald Trump resumed trade and non-trade disputes with numerous countries in 2026; and the US stock market continues to raise significant concerns because of uncontrolled credit-financed investment in technology companies involved in AI development.

The current technical picture indicates that bearish momentum remains intact. Last week ended with the formation of a new bearish imbalance 24, which could provide traders with a new sell signal as early as this week. Bullish traders can now rely only on the next nearest swing at 1.1066 and a liquidity sweep of that level.

The economic backdrop was not needed on Monday. The US ISM services business activity index was released only in the evening, by which time the European currency had already declined by 90 points. The start of the conflict in Yemen and the budget crisis in France were sufficient to drive the move.

There are still numerous reasons for bullish traders to act in 2026. Structurally and globally, Trump's policies, which led to a significant decline in the dollar last year, have not changed. At present, I do not see significant fundamental support for the US currency despite the FOMC's hawkish stance. Geopolitical factors, which supported demand for the US currency during most of the first half of 2026, are no longer having the same effect.

US and EU Economic Calendar:

• European Union – Change in retail sales volumes (09:00 UTC).
• United States – ADP Weekly Employment Change (12:15 UTC).

The October 6 economic calendar contains two releases, neither of which I would consider important. The economic backdrop is unlikely to have a significant impact on market sentiment on Tuesday.

EUR/USD Forecast and Trading Advice:

In my view, the pair remains in the process of forming a bullish trend that has taken a year-long corrective pause. The fundamental backdrop shifted sharply in favor of bearish traders seven months ago, but the four-year trend itself cannot be considered canceled or complete. In the long term, I would describe the pair as trading within a range. A range does not invalidate the broader bullish trend. Therefore, bullish traders may resume the upward move in 2026, but at present their only meaningful opportunity is the 1.1066 low established in June last year, where a liquidity sweep could occur. Bearish traders received a new sell signal at imbalance 19 and could receive another signal at imbalance 24 this week. Even weak Nonfarm Payrolls data and the sharp increase in inflation in the European Union have failed to support the euro.

The GBP/USD pair was in an almost continuous decline for eleven days, but for more than a week it has been making attempts to start a corrective move. At present, any correction is being limited by bearish imbalance 30, which acts as a resistance zone for the price. There are currently few reasons for bullish traders to be optimistic. Over the weekend, an armed conflict began in Yemen, while the market reacted only to a limited extent to Friday's Nonfarm Payrolls report and unemployment rate. The pound had opportunities last week following a series of hawkish statements from Bank of England officials and a strong second-quarter GDP report, but, as we can see, these factors have so far failed to produce a sustained recovery. In my view, bullish traders are showing weakness that is difficult to explain. The current fundamental backdrop for the euro and the pound is not sufficiently negative to prevent both currencies from showing even a modest increase.

I would also note that traders expect the Bank of England to deliver the same two monetary policy tightenings as the Fed. Moreover, as I have already mentioned, the dot plot points to only one policy tightening. Therefore, the Bank of England could ultimately tighten policy even more than the Fed, which clearly should not support further gains in the US dollar. However, the dollar is rising in most cases.

Despite the unfavorable situation that has developed for the British pound in recent weeks, the US dollar has also faced a number of negative factors in recent months. If the Fed had not decided to raise the interest rate in September and signaled its readiness to tighten policy at least once more before the end of the year, I would still expect the US dollar to decline. I continue to expect this, but from lower levels. However, bullish traders' opportunities now depend only on a liquidity sweep of the low from July 28 or June 24, as well as the formation of new bullish patterns, which would require a sustained upward move. The chart clearly shows that most reversals over the past year occurred after liquidity sweeps, so in my view, this represents a potential opportunity. Yesterday, the price reacted to bearish imbalance 30, but the reaction was relatively limited, which could indicate that bearish momentum is weakening. This could provide an opportunity for the pound. A limited one, but still an opportunity.

Do bearish traders have further prospects? In my view, they are limited, but it should be acknowledged that the dollar remains in a favorable phase and, until imbalance 30 is invalidated, retains strong prospects for further gains. The Fed not only decided to raise interest rates but also communicated its willingness to continue tightening policy. I do not believe that a prolonged decline in GBP/USD can be driven by this factor alone, but in recent weeks the market has focused primarily on the FOMC rate hike. What could prevent the market from continuing to buy the dollar for several more weeks amid the Fed's monetary policy tightening?

Technical analysis shows that the overall picture remains fully bearish following the liquidity sweep of the May highs. The pound reacted to bearish imbalance 27, which resulted in a 320-point decline in the exchange rate. The target of the decline was imbalance 25, and this pattern was both reached and broken. Bearish imbalance 30 represents a strong resistance zone for bullish traders.

The economic backdrop on Monday was of limited importance to traders, as has been the case in recent weeks. The US ISM services business activity index attracted some attention from traders but did not change the overall picture. Bearish traders continue to maintain full control of the market, and nothing has yet been able to reverse this situation.

The overall fundamental backdrop remains such that, in the long term, I can expect and continue to expect nothing other than a decline in the US dollar. The conflict between Iran and the United States has not changed my expectations. Geopolitical developments led the market to focus on the dollar's safe-haven status for several months, but the conflict has already passed its most acute phase. The future path of FOMC monetary policy remains uncertain, while the market continues to price in further tightening, which is the main reason for the current favorable conditions for bearish traders. In my view, any rise in the dollar is temporary and driven by short-term factors. I would also note that GBP/USD has been trading within a range for an entire year. A range allows for a wide variety of price movements within its boundaries.

US and UK Economic Calendar:

• United Kingdom – Construction PMI (08:30 UTC).
• United States – ADP Weekly Employment Change (12:15 UTC).

The October 6 economic calendar contains two releases, both of which can be considered secondary. The economic backdrop is unlikely to have a significant impact on market sentiment on Tuesday.

GBP/USD Forecast and Trading Advice:

The long-term outlook for the pound remains bullish. Bearish traders have controlled the market in recent weeks, but overall, the range is visible even on the daily chart. The liquidity sweep of the swing low from May 1 triggered a new decline, while a sell signal within inverted imbalance 27 allowed the decline to continue. Therefore, the pound remains in a prolonged decline, which could continue toward the June lows, where another liquidity sweep could occur, followed by a reversal in favor of the pound. However, in the near term, the price could react once again to bearish imbalance 30, potentially generating a sell signal. In that case, the decline would continue.

That is confirmed by spot ETF flows. According to SoSoValue, Bitcoin funds attracted $241 million last week—the third consecutive week of inflows—and cumulative inflows since launch have risen to $57.8 billion. Recall that a week earlier funds gathered $2.4 billion, so the pace has clearly slowed, but the direction remains intact. Ether funds, by contrast, lost $138 million after a $690 million inflow the week before. Outflows continued yesterday: about $118 million left in Ether ETFs over three trading days. The beneficiary here is Bitcoin, which remains the main institutional on-ramp, while Ethereum loses as its price rises but funds shrink.

The altcoin picture is mixed. The largest inflow after Bitcoin was BNB with $97.46 million. Next came NEAR with $35.99 million, LINK with $8.3 million, XRP with $4.74 million, LTC with $2.63 million, HBAR with $2.53 million, and SOL with $2.43 million. Small gains were recorded for DOGE ($327,000) and AVAX ($268,000), while TRX and DOT saw no flows. HYPE also recorded inflows. The week's biggest outsider was Zcash with $93.56 million of outflows—reportedly its first weekly outflow ever. In total, Ether and Zcash lost about $231.6 million, more than the entire inflow into altcoins excluding Bitcoin.

I read this as a shift in institutional demand. Money goes into Bitcoin and into select stories such as BNB and NEAR, while Ether and privacy coins lose fund support. The causal chain is simple: weak US employment on October 2 reduced the odds of a Fed hike, the dollar weakened on the print, and Bitcoin rose, bringing ETF inflows back. The greed index reduces the margin for error: when it sits near 70, good news is already priced in, and the market becomes more sensitive to disappointments.

My base case remains bullish. While Bitcoin holds above $85,000, I expect another push at $87,600, the level that stopped the two previous impulses. A close above there would open the way to $90,000, while a return below $85,000 would put the price back into the September range. I think Ether will find it harder to catch Bitcoin while fund outflows continue.

Bitcoin is trading inside a narrow corridor between support at $85,800 and resistance at $86,400, with outer boundaries at $85,000 and $87,600. The plan is built around two mirror scenarios with a full set of breakout and rejection cases. There are two entries for longs. First, a break above $86,400 with a close: buy targeting $87,600, where I would take profit and consider a short on the pullback, provided the price remains above the 50-day moving average and the Awesome indicator is above zero. Second, a bounce from $85,800 if a downside break fails and the drop proves false: buy with an initial return to $86,400 and then $87,600.

Sells are symmetric. A confirmed break below $85,800 gives a short target of $85,000, provided the 50-day average lies above price and Awesome is below zero. If the break above $86,400 fails and the price returns below that level, a short from resistance targets a return to $85,800 and then $85,000. For reference, the 50-day moving average sits near $79,495, so with the current price level, shorts remain counter-trend.

As for Ether, the logic mirrors Bitcoin on its own price scale: an inner corridor between support at $2,712 and resistance at $2,727, with outer boundaries at $2,682 and $2,748. Buy on a break above $2,727 targeting $2,748, where profits are taken and a short on the pullback may be considered; the condition is the same—price above the 50-day average and Awesome above zero. Buy on a bounce from $2,712 if a downside break fails, with initial targets of $2,727 and then $2,748.

For sells, a confirmed break below $2,712 opens a short toward $2,682 provided the 50-day average is above price and Awesome is below zero. A rejection from $2,727 after a failed upside breakout gives a short back to $2,712 and then $2,682. Both indicators remain filters to cut false moves, not standalone entry signals, so trades are taken only after real price confirmation of the specified levels.

Also in focus today — the unusual resilience of long-term Bitcoin holders amid a crypto pullback and the rapid, albeit not yet deeply adopted, launch of Meta's Muse AI app. These events show capital reprioritizing across sovereign bonds, digital assets, and new AI platforms.

Gold under pressure: why US Treasuries trump geopolitics

Last week was a severe test for precious metal traders. Gold and silver finished the week deeply in the red, and the primary triggers were not the Middle East conflict but hard data from US government reports.

Spot gold began the week on an optimistic note, briefly touching $4,280.56 on Monday after starting near $4,278. However, the euphoria gave way to a sell-off.

Under pressure from rising oil prices (driven by worsening US–Iran tensions), a stronger dollar, and a surge in yields, gold plunged to a weekly low of $4,110.95 on Thursday. That was the lowest level since August 5.

By the close on Friday, October 2, the spot price of gold settled at $4,140.52/oz (bid $4,138). The weekly decline was a hefty 3.09%. Silver followed, finishing the week around $60.18/oz.

The current picture illustrates a new reality: the bond market now sets the terms for precious metals. On Thursday, October 1, the 10-year US Treasury yield jumped to 5.342%, the highest since early 2002.

Over Q3, the 10-year yield surged by 87.1 basis points, marking the most powerful quarterly rise since 1994. The US dollar index also hit fresh highs, not seen since late June.

Why does this kill a gold rally? It's simple: when risk-free US Treasuries offer yields near historic highs, holding non-yielding bullion becomes an expensive proposition. Investors rotate into dollars and bonds en masse.

The only bright spot for bulls was Friday's weak labor report: the US added just 29k jobs in September, and unemployment rose to 4.2% (with July and August revised down). Gold spiked briefly above $4,200 as markets priced in a lower likelihood of an October Fed hike. The respite was short — yields moved back up, and metals resumed their decline.

Two factors have so far prevented gold from collapsing through historic support. First, ongoing central bank purchases of physical bullion as a reserve diversification strategy. Second, persistent geopolitical risk in the Middle East. Demand for safe-haven assets tied to geopolitics provides a cushion under prices.

Volatility is a trader's friend, and the dramatic events described here are unfolding now. The instruments discussed, including spot gold and silver, are available on the InstaForex platform.

Don't miss opportunities to profit from global macro trends: open an InstaForex trading account and download the mobile app to analyze markets in real time and execute trades with a single click from anywhere.

French syndrome: Paris budget crisis crushes EUR, poses ECB headache

Monday, October 5, began with a severe financial hangover for the euro. The currency plunged to levels not seen in 17 months. The culprit is France, whose budget troubles have panicked investors into selling assets on fears that a French "contagion" could spread across the euro area.

Already in the Asian session, EUR/USD dropped about 0.8% to $1.1161. By the London open, the euro was barely holding the psychological $1.12 mark (down ~0.6%). OCBC analysts note this is the steepest decline since May 2025. Overall, the euro has weakened for a fourth consecutive week, losing roughly 5% year?to?date.

The epicenter of the market quake is Paris. With presidential elections due next year, the state of French public finances has become a source of alarm for the market.

The 10-year French yield jumped to 4.9% last week. On October 2, the spread between French and German paper widened to 1.5 percentage points, marking the largest gap since 2011.

However, France may be only the beginning. Bloomberg reports that by Thursday, October 1, bonds from Italy, Belgium, and Greece had also suffered sharp losses following the stress in French debt. Spooked investors are piling into German bunds as a safe haven.

The situation is compounded by hedge funds: in efforts to hedge risk, they are rapidly closing positions in popular carry-trade credit strategies, which only adds fuel to market volatility.

The European Central Bank now faces a deeply unpleasant dilemma. The ECB already has to tighten policy to rein in inflation stoked by the energy shock. Now it must also consider measures to prevent fragmentation in the sovereign bond market.

Market sentiment, Robertson argued, was summed up bluntly when he said it appeared France lacked both the will and the capacity to get its finances in order.

"Diamond-hands" paradox: why bearish market favors Bitcoin holders

The current bearish cycle in the crypto market has produced a real surprise for investors. The most patient market participants, long-term Bitcoin holders, managed to keep their portfolios in the green throughout the sell-off in the flagship digital asset. On-chain analytics firm Glassnode reports that this phenomenon has not been observed at least since 2015.

The principal sentiment gauge for the market's "old hands" is the LTH?MVRV ratio. Simply put, it measures the current market price of Bitcoin versus the average price at which long-term holders last moved their coins on-chain.

The magic level 1.0 marks the breakeven point. If the index falls below that (for example, to 0.85), it signals that the group is sitting on unrealized losses (about 15% in that case).

According to Glassnode, readings below one are extremely rare and only occur in the deepest, most brutal bearish markets, when even the most committed crypto believers are forced to realize losses. The band from 1.0 to 1.5 is traditionally seen as a "low-risk" zone.

Historically, each bearish cycle ended with LTH-MVRV breaking below 1.0, leaving long-term investors underwater. This cycle, however, broke the pattern.

"No bear market since at least 2015 has done that," Glassnode analysts concluded in their recent study.

This time, the market bottom occurred above the long-term holders' average purchase price. The index not only avoided negative territory but has begun a confident recovery, rebounding from its lows.

For market analysts, that is a powerful signal: Bitcoin's fundamental resilience has increased, and sentiment among the largest, most patient whales remains steadfastly optimistic. They don't just believe in the asset — they have mathematically demonstrated their stress resilience.

Revolution or hype? Meta's Muse AI storms market, Wall Street weighs in

The launch of Meta Platforms' personal AI agent Muse on September 8 was a major tech event. In just one month, the app didn't merely enter the market — it stormed it, recording more than 5.6 million downloads and topping the Apple App Store charts. Data cited by BNP Paribas and third-party analytics confirms that the audience is hungry for new AI solutions.

The secret of the explosive growth, BNP Paribas analyst Nick Jones argues, lies in Meta's "heavy artillery." Unlike isolated launches such as Sora or the early days of ChatGPT, Muse received powerful Internal support. Integration with Meta's social giants, Instagram, WhatsApp, and Facebook, delivered a user influx that rivals could only envy.

Sensor Tower statistics tell the story of a lightning-fast success: 730k downloads in the first five days and passing 2.5 million by September 21. On September 19, Muse displaced ChatGPT as the most popular free app in the US store.

However, behind the triumph lies an important nuance. The download curve, after a sharp ascent, flattened by day 12 and remained on a plateau through day 23. More telling is the retention picture: after the initial surge of interest, Muse's active user share is below comparable products from Google, ChatGPT, and even some of Meta's own apps.

As Nick Jones summarizes, the product enjoys "serious initial interest," but it still must travel the path from "download and try" to "open and use." Whether the newcomer becomes a daily habit or remains a forgotten icon on home screens is the central question for the months ahead.

Wall Street so far is suitably skeptical about how quickly this hype can be monetized. The revenue model is classic Silicon Valley: a free base to attract the masses and subscription tiers at $20 or $100 per month for power users. Partner commissions and future ad integration are also possible if user engagement can be raised.

Despite retention concerns, the fundamental outlook remains optimistic. BNP Paribas maintained a $885 price target on Meta shares, expressing confidence in the long-term potential of the tech giant.

While analysts model scenarios, traders are profiting from volatility and tech stock strength. Meta stock — with an analyst target of $885 — and other global trading instruments are available on the InstaForex platform.

Don't miss the chance to profit from the year's top news drivers. Open an InstaForex trading account and download the mobile app to stay on top of markets and trade with a single click from anywhere.

The test of 157.93 occurred when the MACD indicator had just started moving downward from the zero line, confirming the validity of the entry point for selling the dollar. As a result, the pair declined by 15 points.

For the yen, this evening is important because of the impact of Treasury yields. US services data, namely the September PMI, the composite index, and the ISM index, are unlikely to prompt the Bank of Japan to change its plans, but they could easily affect the USD/JPY pair. This is precisely why the market is monitoring each release so closely. If the data are strong, pressure on the pair will return quickly. Strong services data will push Treasury yields higher, and the interest-rate differential will again support the dollar. In that case, the yen will lose some of the support it received during the first half of the day. Let me remind you that the Japanese data released in the morning were neutral anyway. The services business activity index fell to 51.3, while the composite PMI came in at 52.3. They were not enough to provide additional support for the yen, and much will now depend on external factors. Weak US data, on the other hand, will help the yen maintain its upward correction.

As for the intraday strategy, I will focus more on implementing Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: I plan to buy USD/JPY today when the price reaches the entry point around 158.04 (the thin green line on the chart), targeting a rise toward 158.56 (the thicker green line on the chart). Around 158.56, I will close long positions and open short positions, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pair today is possible, but the upward potential is relatively limited. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started rising from it.

Scenario No. 2: I also plan to buy USD/JPY today if the price tests 157.81 twice consecutively while the MACD indicator is in the oversold area. This will limit the pair's downward potential and may result in an upward reversal. A rise toward the opposite levels of 158.04 and 158.56 can be expected.

Sell Signal

Scenario No. 1: I plan to sell USD/JPY today after the 157.81 level is updated (the thin red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 157.50, where I will close short positions and immediately open long positions, targeting a move of 20–25 points in the opposite direction from the level. Pressure on the pair will return today if the central bank intervenes. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started falling from it.

Scenario No. 2: I also plan to sell USD/JPY today if the price tests 158.04 twice consecutively while the MACD indicator is in the overbought area. This will limit the pair's upward potential and may result in a downward reversal. A decline toward the opposite levels of 157.81 and 157.50 can be expected.

What the Chart Shows:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be closed manually, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be closed manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to take overbought and oversold zones into account.

Important. Beginner Forex traders should make entry decisions very carefully. Before the release of important fundamental reports, it is generally best to remain out of the market to avoid exposure to sharp exchange-rate fluctuations. If you decide to trade during news releases, always use stop orders to minimize losses. Without stop orders, you can lose your entire account balance very quickly, especially if you do not use proper money management and trade with large position sizes.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently an unsuccessful strategy for an intraday trader.

The test of 1.3210 occurred when the MACD indicator had just started moving upward from the zero line, confirming the validity of the entry point for buying the pound. As a result, the pair rose toward the target level of 1.3232.

For the Bank of England, today's services PMI served as a reminder of an issue that many had hoped was no longer a major concern. The final business activity index came in at 52.1 points versus 51.7 points in the preliminary estimate, and the pound, which had been declining since the morning, used this result to recover. The figure was higher a month earlier, at 52.5, but more importantly, the indicator remains above the second-quarter average, and there are no signs of a sudden decline in the services sector.

However, the most important aspect is the structure of this growth. New orders increased only slightly, while overseas orders declined, as did employment. In other words, domestic demand remains weak, external demand is deteriorating, and companies continue to reduce staff. This is an unfavorable balance for the economy, and by itself it would not explain why the pound should attract buying interest. The explanation comes from prices. Input costs increased at their fastest pace since June, while output prices rose at their fastest pace since May, with higher fuel prices caused by the conflict in the Middle East being the main reason. This means that even with weak demand, companies are being forced to raise prices, which is the most difficult situation for the central bank. Bailey and his colleagues cannot rely on a weak labor market to bring inflation down on its own, and the arguments in favor of a restrictive monetary policy are becoming stronger. The market is pricing in a higher interest rate, which is providing support for the pound.

The second half of the day will bring the US services PMI for September, the composite PMI, and the ISM services business activity index. If the data are strong, pressure on the pair will return fairly quickly, and pound buyers will face significant difficulties in maintaining upward pressure. Weak data, on the other hand, would create conditions for the pound to continue recovering after Friday's labor market report.

As for the intraday strategy, I will focus more on implementing Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: I plan to buy the pound today when the price reaches the entry point around 1.3229 (the thin green line on the chart), targeting a rise toward 1.3246 (the thicker green line on the chart). Around 1.3246, I will close long positions and open short positions, targeting a move of 30–35 points in the opposite direction from the level. A rise in the pound today can be expected only if the US data are significantly weaker than expected. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started rising from it.

Scenario No. 2: I also plan to buy the pound today if the price tests 1.3218 twice consecutively while the MACD indicator is in the oversold area. This will limit the pair's downward potential and may result in an upward reversal. A rise toward the opposite levels of 1.3229 and 1.3246 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after the 1.3218 level is updated (the thin red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3207, where I will close short positions and immediately open long positions, targeting a move of 20–25 points in the opposite direction from the level. Strong selling pressure on the pound will return if the economic data are strong. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started falling from it.

Scenario No. 2: I also plan to sell the pound today if the price tests 1.3229 twice consecutively while the MACD indicator is in the overbought area. This will limit the pair's upward potential and may result in a downward reversal. A decline toward the opposite levels of 1.3218 and 1.3207 can be expected.

What the Chart Shows:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be closed manually, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be closed manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to take overbought and oversold zones into account.

Important. Beginner Forex traders should make entry decisions very carefully. Before the release of important fundamental reports, it is generally best to remain out of the market to avoid exposure to sharp exchange-rate fluctuations. If you decide to trade during news releases, always use stop orders to minimize losses. Without stop orders, you can lose your entire account balance very quickly, especially if you do not use proper money management and trade with large position sizes.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently an unsuccessful strategy for an intraday trader.

The test of the 1.1196 price level occurred when the MACD indicator had just started moving upward from the zero line, confirming the validity of the entry point for buying the euro. As a result, the pair rose toward the target level of 1.1221.

The September Eurozone PMI matched the preliminary reading and provided some support for the euro. A more detailed analysis shows that output and new orders in the Eurozone continued to increase across sectors, which is a positive development for the economy. At the same time, costs also increased, and they rose faster than the average, which is a concern for the ECB. The regulator, which has already raised the deposit rate to 2.50% and has left the possibility of further increases open, has received additional evidence that inflationary pressure has not yet weakened.

For EUR/USD, the second half of the day is likely to provide an important test of current market conditions. The morning rebound after the decline to the lowest level since May 2025 was limited, and euro buyers attempted to maintain their positions, but political risks in France and Spain remain an important factor. The only significant economic data remaining today are from the United States, including the September Services PMI, the Composite PMI, and the ISM Services PMI. There are no other scheduled releases likely to significantly change the market outlook. The logic is straightforward. If the data are strong, pressure on the pair will quickly return. Strong services activity, which accounts for the largest part of the US economy, will push Treasury yields higher, while 10-year yields are already trading near 5.26%. This is an unfavorable combination for the euro, as it provides an additional reason for capital to move into the US dollar. Weak data would have the opposite effect. If the US services sector shows a significant slowdown and the ISM falls below August's 55.4, expectations regarding the Fed could shift toward a pause, giving the euro an opportunity to extend its rebound. I would remind you that the market currently estimates the probability of an October rate hike at only 20%.

As for the intraday strategy, I will focus primarily on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: The euro can be bought today if the price reaches the level around 1.1217 (the green line on the chart), with the target at 1.1244. At 1.1244, I plan to exit the market and also open a short position on the euro, targeting a move of 30–35 points from the entry point. A rise in the euro can be expected today if the US data are weak. Important! Before buying, make sure that the MACD indicator is above the zero line and has just started moving upward from it.

Scenario No. 2: I also plan to buy the euro today if the price tests 1.1198 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and lead to an upward reversal. A rise toward the opposite levels of 1.1217 and 1.1244 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the euro after the price reaches 1.1198 (the red line on the chart). The target will be 1.1176, where I plan to exit the market and immediately open a long position, targeting a move of 20–25 points in the opposite direction from the level. Downward pressure on the pair could return at any time. Important! Before selling, make sure that the MACD indicator is below the zero line and has just started moving downward from it.

Scenario No. 2: I also plan to sell the euro today if the price tests 1.1217 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.1198 and 1.1176 can be expected.

What the Chart Shows:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the projected price at which Take Profit orders can be placed or profits can be taken manually, as further growth above this level is considered unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the projected price at which Take Profit orders can be placed or profits can be taken manually, as further decline below this level is considered unlikely;
• MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important. Beginner Forex traders should make entry decisions with great caution. Before the release of important fundamental reports, it is generally preferable to remain out of the market to avoid exposure to sharp price fluctuations. If you decide to trade during news releases, always use stop orders to minimize potential losses. Without stop orders, you can lose your entire trading account very quickly, especially if you do not use proper money management and trade with large position sizes.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on the current market situation is inherently an ineffective strategy for an intraday trader.

See also: InstaForex trading indicators for USDX

The US dollar index USDX trades around 102.10 on Monday, and at the time of this report, holding near the April 2025 high of 102.50 reached during the Asian session. The dollar shows remarkable resilience: a weak jobs report, which would normally weaken the currency, has not broken the uptrend. The reason lies in two factors—euro weakness and persistent expectations of a Fed rate hike in December.

What results NFP data shows

- Nonfarm payrolls plunged to 29,000, well below the 90,000 consensus and the revised August print of 133,000. July was revised from +21,000 to -10,000. The two-month net revision totaled -60,000.

- The unemployment rate rose to 4.2% versus a 4.1% expectation. Average hourly earnings rose 3.0% year-on-year—the weakest pace since May 2021.

- Markets immediately repriced rate odds. According to CME FedWatch, the probability of an October hike fell to about 17–20%, while a December move is still priced at roughly 80–85%. The market is not abandoning the idea of further tightening, only pushing it later.

Why USD resist falling

The euro weakness is the main driver. The euro makes up 57.6% of the USDX basket. EUR/USD fell today to 1.1160—a May 2025 low—against the backdrop of France's debt crisis. The 10-year French yields reached 4.99%, surpassing their 2008 peak, and the spread to German bunds widened to 159 basis points. That automatically pulls USDX higher, even when the dollar weakens versus other currencies.

German bunds serve as the benchmark for the entire European region, help manage risk, and are, in a sense, a reference indicator. Their yields act as the benchmark for the rest of the eurozone. Mortgage rates, corporate lending, and equity valuations are tied to them. The European Central Bank accepts bunds as collateral in its credit operations, and changes in their yields are an important signal for the whole financial market.

Real yields remain at historic highs. The 10-year TIPS yield hit 2.91%—a record level. When an investor can earn nearly 3% above actual inflation in US sovereign debt, the attractiveness of European and Asian assets falls sharply.

The long end of the curve remains high. The 10-year Treasury yields hold near 5.27% and 30-year yields near 5.57%. That supports the dollar via the interest rate differential.

Brief technical analysis

The technical picture remains bullish, but indicators point to overheating. Instaforex's aggregated technical analysis (on the daily chart) shows a "strong buy" signal: 20 of 22 technical indicators point to buy.

Indicators and moving averages:

- RSI (14) on D1 at 74–78—deep overbought territory. Historically such levels have preceded either consolidation or correction.

- Stochastic—in overbought territory, indicating the risk of a short-term pullback, but also confirming a strong bullish impulse.

- OsMA—positive histogram, though the pace of growth is slowing.

- 50-period EMA—around 100.28.

- 144-period EMA—around 99.82.

- 200-period EMA—99.74, key medium-term support.

Key levels:

Resistance: 102.50 (Monday high), 102.85 (next target), 103.30 (some economists' projection)

Support: 101.50 (near-term), 101.33 (H1 200-EMA), 101.00 (psychological), 100.75 (W1 200-EMA), 100.37 (H4 200-EMA), 100.28 (50-day EMA), 100.00 (psychological), 99.82, 99.74

The index is in the overbought territory but remains structurally bullish while it holds above the moving average cluster around 99.70–100.30. A break below that cluster would open the path to 99.00–98.50.

For more details, look through: USDX—possible dynamic on 05.10.2026.

Events to watch

The main question of the week is, can the dollar hold gains after the weak NFP? If the index closes above 102.00, this would open the way to 102.85 and then 103.00. If the pullback continues, key support will be the 101.50–100.75 zone.

Today, October 5, at 14:00 GMT, the ISM services index for the US will be released. The consensus forecast calls for a rise to 55.7 from 55.4 in August. Pay special attention to the employment and prices paid components—they will indicate whether inflationary pressure persists in the largest sector of the US economy.

On Wednesday, October 7, at 18:00 GMT, the FOMC minutes will be published. After a weak NFP, the market will look to them for confirmation that the Fed is ready to pause in October.

On Wednesday, October 14, at 12:30 GMT, the consumer price index (CPI) for September will be released. This is the next key release that will determine whether the probability of a December hike remains at current levels.

Separate attention should be paid to the situation in France. French bond yields and the spread to bunds remain a key driver of euro weakness and, consequently, USD strength. Any further deterioration in France's fiscal picture will increase pressure on EUR/USD and support USDX.

Conclusion and recommendations

USDX holds near its annual high, supported by euro weakness and high real yields despite weak NFP. The key level for bulls remains 102.50; for bears it is 101.60.

For short-term traders:

- Consider entering long positions on a sustained break above 102.60 with targets of 102.85–103.30 and a stop-loss below 101.60.

- Consider short positions on a break below 101.60 with targets of 101.50–100.75 and a stop-loss above 102.10.

- Monitor ISM Services (October 5) and CPI (October 14) closely—these are key triggers for movement.

For medium-term investors:

- A potential correction to the 101.00–100.75 zone (weekly 200-EMA) could be used to cautiously add long exposure while maintaining a constructive dollar view.

- Some economists expect part of the dollar's recent gains to be offset by year-end if energy markets stabilize.

Risk management:

- Account for elevated volatility around inflation releases.

- Observe strict stop-loss discipline, especially when trading breakouts of key levels.

- Monitor French bond dynamics and Fed commentary closely.

This overview is based on open sources and media reports and represents an analysis of price dynamics that depend on many factors. Therefore, risk management and position control are especially important.

The largest cryptocurrency added roughly 1% for the week as strong institutional flows into ETFs kept demand intact. The cycle bottom formed back in June–August, when the token lost more than half from the record above $126,000. The current rally is aimed at restoring the trend.

Capital flows into Bitcoin ETFs

A bullish factor for Bitcoin is its resilience to bad news. Apollo Crypto argues that record?low sentiment two months earlier has turned the recent price drop into a buying opportunity.

A weak US jobs report also helped Bitcoin by shifting expectations toward a pause in the Fed's tightening cycle. The rally coincided with a seasonal effect: BTC/USD has risen in October in 10 of the last 15 years, although last year's 7% drop after the record price was particularly painful.

Regulatory delays in the US remain an adverse factor. Congress' slow progress on crypto rules is holding back ETF inflows.

Derivatives market caution is another headwind for BTC/USD. Traders have stayed on the sidelines after several waves of large liquidations in recent months. K33 notes that a rare orderly unwind of positions typically precedes low forward volatility, but it does not provide a clear directional signal.

Recent sharp price moves were driven by the rapid collapse of leverage in the perpetual?futures market. A record wave of short liquidations at the end of August triggered an unexpected squeeze when short sellers were forced to buy back the token. Tagus Capital highlights that speculative leverage has been almost entirely flushed out and open interest has fallen to its lowest level since March.

Deribit data point to a bullish short?term outlook for Bitcoin. At the same time, traders are building hedges around $70,000 to protect against a retracement rather than betting against the rally. Bitget Wallet reminds investors that strong October macroeconomic prints alone are not sufficient reason to buy.

In summary, Bitcoin is supported by resilience to negative news, the October seasonal effect and expectations of a Fed pause. Pressures on the largest crypto come from derivative market caution and US regulatory delays.

Technically, on the daily chart, BTC/USD shows bulls attempting to restore the uptrend. A bounce off fair value near $83,900 would be a reason to add long positions.

The market reaction was predictable: equity futures rallied, and Treasury yields fell. Markets interpreted the weak prints as meaning the Fed will refrain from hiking in October.

Fed officials were active last week, but unanimity is lacking. On September 29, Vice Chair John Williams said at the University at Buffalo there is "no need to rush" further rate increases. He implied that the Fed has time to assess incoming data and that an additional hike "later this year" could be appropriate. Michael Barr said policy adjustment is still required, and New York Fed President Austan Goolsbee wants evidence of cooling inflation, while Lisa Cook sees no signs of deceleration in price pressures.

As a result, the base case shifted to a December hike, though October is not fully ruled out. For the dollar, that is clearly a bearish signal — but not a very strong one, since market participants had already suspected that some of Warsh's hawkish bravado was not fully supported by incoming data.

Other data is mixed and does not provide a clear picture. ISM manufacturing for September printed 54.5, just under August's 54.6, but new orders and employment showed gains. Crucially, the ISM prices-paid component jumped to 77.9 from 71.1 in August, a high not seen since May.

The Fed's preferred inflation gauge, core PCE for August, came in slightly below forecasts: +0.2% m/m (vs. +0.3% expected), with a 3.0% y/y rate. That is still far from the 2% target, but the absence of an acceleration again gives arguments in favor of an October pause.

Overall, the setup for the US dollar looks less bullish, and one might expect some short-term softening. However, recent CFTC data argues otherwise. Net long dollar positioning versus major currencies rose by $5.7bn to $24.1bn, a confident increase that shows speculators are still betting on USD strength.

This view makes sense if one assumes the US has little incentive to resolve the Iran conflict quickly: nearly everyone suffers from the situation except the US, which benefits as a reliable LNG supplier to Europe amid constrained and irregular deliveries. In absolute terms, the gain is limited, but the inflation threat and growth slowdown across major economies (excluding the US) persist and intensify. In that scenario, demand for dollars is unlikely to fall substantially.

We therefore assume that the dollar may modestly correct against commodity currencies in the short term, but European currencies face greater downside risk, and in the medium term, the dollar should remain well supported regardless of the Fed's October decision.

Useful links:

My other articles are available in this section

InstaForex course for beginners

Popular Analytics

Open trading account

Important:

The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.

Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.

#instaforex #analysis #sebastianseliga

During the early European session on Monday, gold (XAU/USD) is showing a moderate increase but remains within last week's range amid conflicting market signals. Lower expectations for a Federal Reserve interest rate hike in October have led to a decline in US Treasury yields from multi-year highs, providing some support for gold. Nevertheless, the US dollar has strengthened sharply, reaching a new high since April 2025, which limits gold's upward potential.The latest US nonfarm payrolls (NFP) report showed that the economy added only 29,000 jobs in September, while the previous month's figure was revised downward to 133,000, compared with a consensus forecast of 90,000. In addition, the unemployment rate unexpectedly increased to 4.2% from 4.1%, while annual wage growth slowed to 3.0%, reaching the lowest level recorded since May 2021. These data, together with weak inflation figures, have significantly reduced pressure on the Fed, keeping Treasury yields relatively low and providing an important source of support for gold.

ABN Amro analysts consider the latest US labor market report to be "consistent with the baseline scenario," noting that "the previous improvement in the labor market observed in the two preceding reports turned out to be something of an illusion." They note that "the three-month average of 51,000 appears fairly stable relative to labor supply, but does not indicate an overheated labor market." Given the slowdown in employment growth, particularly in light of the previously released weak PCE data, the analysts believe that the Fed no longer needs to raise interest rates in October.

Nevertheless, ABN Amro analysts continue to expect further monetary policy tightening by the end of the year, suggesting that "inflationary pressure caused by the energy shock will likely force the Fed to raise rates in December, similarly to what it did in September, in order to prevent higher costs from being passed on to consumer prices and wages."

The CME Group FedWatch Tool also shows that traders currently assess the probability of a rate hike by the end of the year at around 85%. In addition, uncertainty related to conflicts in the Middle East and escalating tensions between Russia and Ukraine continues to support the US dollar as a safe-haven asset. In this context, it is worth noting Iranian Foreign Minister Abbas Araghchi's statement that the conflict with the United States has no military solution, although Tehran is prepared for a possible war. Iranian Parliament Speaker Mohammad Bagher Ghalibaf also stated that the Strait of Hormuz would not be reopened until certain conditions were met.

In addition, Yemen's Presidential Leadership Council Chairman Rashad al-Alimi announced the start of a military operation to retake territories controlled by the Houthis. There were also reports of deadly airstrikes in Ukraine affecting the Kyiv region, Kharkiv, and Dnipro. In response, Ukrainian President Volodymyr Zelenskyy stated on social media that Russia would inevitably face retaliatory measures. These factors maintain a geopolitical risk premium and support the US dollar, requiring a cautious approach from those considering buying gold.

Today, attention should be paid to the release of the US ISM Services PMI. These data, together with speeches by influential members of the Federal Open Market Committee (FOMC), are expected to provide new signals for gold price movements.

From a technical perspective, XAU/USD maintains a bearish bias in the short term, remaining below key moving averages. The pair is supported by a zone slightly above the round level of 4100. The immediate resistance is provided by the round level of 4200. The oscillators are negative, confirming the sellers' advantage.

The wave structure has now transformed into a more complex pattern. Wave C has taken a three-wave form, while the next wave is identified as wave D. The entire section of the trend that began on January 27 may take a five-wave corrective form, A-B-C-D-E. If this assumption is correct, wave D has been completed, and on August 21, EUR/USD entered the phase of forming wave E, whose low should be below the low of wave C at 1.1325. The pair is only a short distance from this level, and below it, the assumed wave E may complete its formation at any time.

Market participants continue to focus on the Federal Reserve.

The EUR/USD pair rose by 10 basis points on Friday. This is another case where it is difficult to determine how to interpret such a movement. The euro failed to strengthen its position despite another opportunity to do so, while the market once again ignored information that could have put pressure on the US dollar. Much has already been said about the Nonfarm Payrolls report and the unemployment rate. Some experts considered the figures "not as bad" as the official data suggested. Others noted that the outlook for the Federal Reserve's monetary policy had not changed following the release of these reports, and therefore demand for the US currency did not decline. In my view, this is another attempt to explain an unexpected market reaction. The September Nonfarm Payrolls report can reasonably be described as very weak, while the August figure, which had led Federal Reserve policymakers to conclude that the labor market was in good condition (and to raise the interest rate), was revised downward. The unemployment rate increased when no such rise was expected. What positive aspects can therefore be found in these data?

However, while focusing on the US labor market reports, traders completely overlooked inflation in the European Union, which was also released on Friday and should likewise have supported the euro. The Consumer Price Index rose from 3.2% year-on-year to 3.8%, while market participants had expected an increase only to 3.6%. Consequently, the ECB has new grounds for tightening monetary policy, as the previous two rounds of tightening failed to stop the acceleration in price growth in the European Union. By the end of the year, the European regulator could carry out a third and even a fourth round of rate hikes, but the market is showing little reaction to this possibility. Monday began with another sharp decline, as geopolitical tensions in the Middle East intensified again.

General Conclusions

Based on the EUR/USD analysis, I conclude that the pair remains within the global corrective section of the trend, A-B-C-D-E. If this assumption is correct, the decline in prices will continue toward targets below the low of wave C at 1.1325. I considered this scenario to be an alternative one, and if not for the Federal Reserve meeting, it would have remained a reserve scenario. However, the Federal Reserve delivered an unexpected outcome, leaving the market with few alternatives other than another wave of US dollar buying. Nevertheless, these purchases have continued for several weeks, even though there are no new fundamental factors supporting the dollar. I would not open short positions against such a news background and would instead prepare for a reversal.

On the higher time frame, a downward section of the trend can be seen, taking the form of A-B-C-D-E. Consequently, EUR/USD may continue declining below the low of wave C, while the internal wave structure of wave E may take a five-wave impulsive form.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often require adjustments.
2. If there is no confidence in what is happening in the market, it is better not to enter the market.
3. There can never be 100% certainty about the direction of price movement. Do not forget to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

Brief Analysis:

On the chart of the GBP/USD major pair, the dominant trend throughout the current year has been moving the pair's price predominantly sideways. The final part (B) has been forming within the wave over the past three months. The lines drawn through the price extremes on the chart form a "flag" along the upper boundary of a strong potential reversal zone.

Forecast for the Week:

At the beginning of the coming week, the price of the British currency is likely to retrace toward the calculated support zone. A reversal may then begin to form. By the end of the week, the upward price movement is expected to resume. The resistance zone represents the expected upper limit of the pair's weekly range.

Potential Reversal Zones

Resistance:

• 1.3370/1.3420

Support:

• 1.3170/1.3120

Recommendations

Buying: May be considered during individual sessions with a reduced position size. The upward potential is limited by resistance.

Selling: May become relevant after appropriate signals from your trading systems appear near the resistance zone.

AUD/USD

Brief Analysis:

In the AUD/USD major pair, a counter-trend correction has been developing throughout the current year within the dominant upward trend. The unfinished segment dates back to the beginning of September. The structure of this wave segment does not indicate completion at the time of analysis. The price is approaching the upper boundary of a strong potential reversal zone.

Forecast for the Week:

Over the coming week, the "Aussie" is expected to continue moving within the range between the nearest zones of opposing directions. After a likely retracement toward the resistance zone at the beginning of the week, a reversal and continued decline in the pair are expected toward the calculated zone. When the direction changes, a brief break above the upper boundary of the zone cannot be ruled out.

Potential Reversal Zones

Resistance:

• 0.6980/0.7030

Support:

• 0.6840/0.6790

Recommendations

Selling: May become possible after confirmed signals appear near the calculated zone.

Buying: Has limited potential and is risky for the trading account.

USD/CHF

Brief Analysis:

On the chart of the USD/CHF major pair, the upward wave that started at the beginning of the year continues to dominate. Its structure is developing as a classic zigzag. The final part (C) has been developing within the wave since August 20. Last week, the price broke through a cluster of resistance levels of different timeframes, turning them into support.

Forecast for the Week:

Over the coming days, the pair is expected to move predominantly sideways. A retracement toward the support level is possible. A reversal and renewed price growth are then highly likely. A move beyond the projected support/resistance boundaries is unlikely.

Potential Reversal Zones

Resistance:

• 0.8470/0.8520

Support:

• 0.8210/0.8160

Recommendations

Selling: Due to the limited potential, there is a high risk of losses to the trading account.

Buying: May be considered with a reduced position size after appropriate signals from your trading systems appear near support.

EUR/JPY

Brief Analysis:

The current short-term upward wave structure on the EUR/JPY chart began at the beginning of August. It is formed as a running/expanded flat with a very extended middle part (B). The wave remains incomplete at the time of analysis. The price is approaching the upper boundary of a potential reversal zone on the weekly timeframe.

Forecast for the Week:

At the beginning of the coming week, the pair is expected to move sideways with an upward bias. The rise is unlikely to extend beyond the resistance zone. By the end of the week, a reversal and renewed price decline are likely.

Potential Reversal Zones

Resistance:

• 178.50/179.00

Support:

• 175.70/175.20

Recommendations

Buying: May be considered intraday with a reduced position size. The potential of such trades is limited by resistance.

Selling: May be considered after confirmed reversal signals appear near the resistance zone.

EUR/GBP

Analysis:

An analysis of the weekly chart of the EUR/GBP pair shows the formation of a downward wave since November last year. Over the past two months, the price has been moving sideways. At the end of September, a new period of activity pushed the price below a cluster of support zones at different levels.

Forecast:

Sideways movement is also likely over the coming days. The price may rise toward the upper zone, and brief pressure on the resistance zone cannot be ruled out. A reversal and renewed downward movement may then develop from this zone, extending toward the boundaries of the calculated support.

Potential Reversal Zones

Resistance:

• 0.8530/0.8580

Support:

• 0.8390/0.8340

Recommendations:

Buying: Has limited potential. For greater safety, it is advisable to reduce the position size.

Selling: After appropriate signals from your trading systems appear near resistance, selling may become the primary trading direction.

Bitcoin

Brief Analysis:

The short-term bullish wave that started at the beginning of May is approaching completion. The price is within a cluster of resistance/support levels of different timeframes. The wave level of the counter-trend structure that started on August 21 is gradually rising closer to the reversal level.

Forecast for the Week:

During the first half of the coming week, predominantly sideways movement is most likely. An upward bias is more likely, with the price rising no higher than the resistance level. A renewed decline in the coin's price may then begin.

Potential Reversal Zones

Resistance:

• 87500/88500

Support:

• 80800/79500

Recommendations

Buying: Has limited potential and is risky.

Selling: May be considered after reversal signals from your trading systems appear near the resistance zone.

Ethereum

Analysis:

On the Ethereum market, a downward wave has been developing since the end of August this year in the form of a running/expanded flat. Its potential exceeds the retracement level of the previous trend segment. The unfinished downward wave segment dates back to September 21. The price is within a narrow price corridor between two opposing zones.

Forecast:

At the beginning of the coming week, an upward movement is expected. Near the calculated resistance, the price may stall and conditions for a reversal may begin to form. By the end of the week, volatility is likely to increase, with the price of Ether moving lower.

Potential Reversal Zones

Resistance:

• 4730.0/4830.0

Support:

• 4270.0/4170.0

Recommendations:

Buying: Is fairly risky and may result in losses to the trading account.

Selling: May be considered with a reduced position size after signals from your trading systems appear near the resistance zone.

Notes: In simplified wave analysis (SWA), all waves consist of three parts (A-B-C). On each timeframe, the latest unfinished wave is analyzed. Expected movements are shown with dashed lines.

Attention: The wave algorithm does not take into account the duration of instrument movements over time.

Analysis:

The euro continues to move in a downward trend that started at the end of January this year. The latest unfinished segment of the main trend began on August 20. The price has reached the upper boundary of a broad potential reversal zone on the daily timeframe. No clear signals of an imminent change in direction are currently visible on the chart.

Forecast:

Over the coming week, the current decline in the euro, which has been developing in recent days, is expected to end near the calculated support level. A reversal may then begin to form. In the second half of the week, the price is expected to resume its upward movement, with the pair rising toward the calculated resistance zone.

Potential Reversal Zones

Resistance:

• 1.1400/1.1450

Support:

• 1.1220/1.1170

Recommendations:

Selling: Has limited potential; reduces the trading volume size.

Buying: May become possible with a reduced position size after reversal signals appear near the support zone.

USD/JPY

Analysis:

An upward reversal pattern has been developing in the USD/JPY pair since the beginning of August. It is expected to ultimately result in a change in the trend of the Japanese currency against the US dollar. The wave takes the form of an expanded flat, with its final part (C) currently developing. The structure does not yet indicate completion. The lower boundary of a strong potential reversal zone on a higher timeframe passes through the calculated resistance area.

Forecast:

At the beginning of the coming week, the downward movement is expected to continue, with the price declining toward the support boundaries. A reversal and renewed price growth are then expected. The highest volatility is likely to occur following the release of economic data.

Potential Reversal Zones

Resistance:

• 159.40/159.90

Support:

• 156.70/156.20

Recommendations:

Buying: Conditions for such trades will emerge after reversal signals appear near support on your trading systems.

Selling: Has limited potential and carries some risk.

GBP/JPY

Analysis:

The trend direction of the GBP/JPY pair has been determined by an upward wave over the past two years. In the short term, the latest unfinished segment of the main trend dates back to the beginning of August. Its structure is forming the final part (C), which is not yet complete at the time of analysis.

Forecast:

Over the coming few days, the upward movement is expected to continue, with the price moving toward the calculated resistance area. In the second half of the week, conditions for a trend reversal and renewed price decline are likely to develop. The support zone represents the lower boundary of the pair's probable weekly range.

Potential Reversal Zones

Resistance:

• 210.00/210.50

Support:

• 207.40/206.90

Recommendations:

Buying: May be possible with a reduced position size during individual sessions of decline. The limited upward potential should be taken into account.

Selling: Such trades are not advisable until confirmed reversal signals appear on your trading systems.

USD/CAD

Analysis:

An analysis of the weekly chart of the Canadian dollar shows the formation of an upward wave zigzag since the end of January this year. The wave structure forms a running flat. The final part (C) has been developing over the past month. The price is within a broad potential reversal zone on the daily timeframe.

Forecast:

During the first days of the coming week, sideways price movement along the boundaries of the calculated resistance is likely. The second half of the week is expected to be more volatile. Increased activity, a reversal, and the beginning of a decline in the pair are expected.

Potential Reversal Zones

Resistance:

• 1.4260/1.4310

Support:

• 1.4150/1.4100

Recommendations:

Buying: No conditions for such trades are expected in the pair over the coming days.

Selling: May be considered after appropriate signals appear near the resistance zone.

EUR/CHF

Analysis:

The direction of the short-term trend in the EUR/CHF pair has been determined by an upward wave pattern since March this year. Over the past three weeks, the middle part (B) has been forming within the wave and remains incomplete at the time of analysis. The price has reached the upper boundary of a potential reversal zone on the 4-hour timeframe.

Forecast:

At the beginning of the week, the pair is likely to continue moving sideways, with a downward bias. The price is expected to decline toward the boundaries of the support level. A reversal may then form in this area, followed by renewed growth in the pair.

Potential Reversal Zones

Resistance:

• 0.9400/0.9450

Support:

• 0.9280/0.9230

Recommendations:

Buying: May become relevant after appropriate signals from your trading systems appear near support.

Selling: Has limited potential; reduces the volume size.

Gold

Analysis:

On the gold chart, the short-term price trend since January this year has been determined by a downward wave pattern. On a higher timeframe, this segment of the chart forms a correction of the upward impulse in the form of a downward pennant. Since the end of September, the price has been correcting within a sideways pattern. The structure analysis indicates that it remains incomplete at the time of analysis.

Forecast:

At the beginning of the coming week, the downward price movement is expected to end. A reversal may then form near the support zone, followed by an upward move toward the boundaries of the calculated resistance zone.

Potential Reversal Zones

Resistance:

• 4190.0/4210.0

Support:

• 4080.0/4060.0

Recommendations:

Buying: Premature until the correction is fully complete.

Selling: May be considered with a reduced position size after confirmed signals appear near the resistance zone on your trading systems.

Notes: In simplified wave analysis (SWA), all waves consist of three parts (A-B-C). On each timeframe, the latest unfinished wave is analyzed. Expected movements are shown with dashed lines.

Attention: The wave algorithm does not take into account the duration of instrument movements over time.

The wave structure on the hourly chart remains bearish. The latest completed upward wave failed to break the previous peak, while the latest downward wave broke the previous low and has continued forming for the fourth consecutive week. Following the September FOMC meeting, traders expect at least one more monetary policy tightening before the end of the year and another one next year. This factor continues to provide strong support for the US currency.

The fundamental background on Friday was entirely favorable for buyers, but buyers did not respond to it. More precisely, this has been the case for a month already. The Nonfarm Payrolls report and the unemployment rate could not reasonably be interpreted in a way that would provide the dollar with any meaningful basis for growth given these figures. Nevertheless, traders found a way to respond to the situation by simply ignoring the weakness in the labor market and the increase in unemployment. Most likely, the market concluded that the labor market reports would not change anything and that the FOMC would continue tightening monetary policy regardless. Whether this happens in October or December was considered irrelevant. As a result, the dollar strengthened again, while the latest geopolitical developments could continue to support selling pressure for some time. I would also note that several FOMC policymakers confirmed the regulator's hawkish stance last week, although, of course, they were not yet aware of the latest labor market and unemployment data at that time. Therefore, the overall stance of the Fed could become more accommodative this week. However, the key factor is how the market interpreted the situation. The market has clearly answered that question.

On the 4-hour chart, the pair consolidated below the 127.2% Fibonacci level at 1.1220, allowing for expectations of a continued decline in the euro toward the next retracement level of 161.8% at 1.1088. There are currently no new emerging divergences, but they are not necessary, as traders would likely ignore them anyway.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders opened 17,475 Long positions and 28,397 Short positions. The total number of Long positions held by speculators currently stands at 238,000, while the number of Short positions is 301,000. Sellers remain in control, and the euro continues to be sold more frequently than it is bought. This is explained by the difficult geopolitical situation in the Middle East and Kevin Warsh's strong commitment to achieving lower inflation. The market continues to believe that inflation will be reduced to 2% by any available means.

Overall, over the longer term, major market participants continue to show significant interest in the euro. At the same time, events of various kinds around the world, which have been particularly numerous in recent years, affect investor sentiment and put pressure on risk-sensitive currencies. 2026 could therefore set a record for the number of events that could not have been predicted in advance. As a result, traders have little choice but to adjust their strategies as conditions change.

US and European Union Economic Calendar:

• European Union – Producer Price Index (09:00 UTC).
• US – ISM Services PMI (14:00 UTC).

The economic calendar for October 5 contains two events, of which I would highlight the ISM index. Economic data will influence market sentiment during the second half of Monday's trading session.

EUR/USD Forecast and Trading Recommendations:

Long positions can be considered today if the pair rebounds from the 1.1081–1.1086 level on the hourly chart, with targets at 1.1220 and 1.1325. Short positions were available after consolidation below the 1.1325 level and after consolidation below the 1.1220 level. The target is 1.1081–1.1086.

The Fibonacci grids are drawn from 1.1325–1.1712 on the hourly chart and from 1.1325–1.1712 on the 4-hour chart.

The market situation remains fully bearish. The latest completed upward wave failed to break the previous peak, while the new downward wave, which is still forming, broke the previous low. Therefore, sellers continue to control the market. FOMC monetary policy tightening and the hawkish outlook conveyed by Kevin Warsh significantly strengthened the US dollar. A reversal of the current trend is now possible only above the 1.3567 level or after the formation of two bullish waves.

The news background on Friday provided an opportunity for buyers to strengthen their positions, but they once again failed to take advantage of it. I would like to remind you that the US labor market and unemployment data were significantly weaker than expected, substantially reducing the FOMC's hawkish stance. The market also largely abandoned expectations of Fed monetary policy tightening in October. Nevertheless, this had no significant impact on the US dollar. Last week, Bank of England Governor Andrew Bailey also said that it would be difficult for the central bank to keep the interest rate at its current level because inflationary pressures are increasing, while the conflict in the Middle East remains unresolved. Energy prices remain consistently high, and recent developments in the Middle East could push them even higher. Bailey also said that the central bank would not wait for higher oil and gas prices to fully affect inflation, which suggests that the Bank of England could tighten monetary policy as early as its next meeting. However, this hawkish information also failed to support the pound or buyers.

On the 4-hour chart, GBP/USD returned to the 76.4% retracement level at 1.3277 and rebounded from it once again. Therefore, the pound's decline may continue toward the 100.0% Fibonacci level at 1.3159. A rebound from this level would allow the pound to recover somewhat, but the hourly chart shows a support zone above 1.3159 that could also stop further selling pressure. Another bullish divergence has formed on the CCI indicator.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became even more bearish over the latest reporting week. The number of Long positions held by speculators decreased for the fifth consecutive week, falling by 13,059, while the number of Short positions declined by only 4,552. The current difference between the number of Long and Short positions is approximately 41,000 versus 132,000. The sellers' advantage is increasing again. Previously, the dominance of sellers was not in question, but this is now less clear because the fundamental background has changed over the past few months.

I still do not expect a sustained bearish trend for the pound, but in the near term, everything will depend on Trump's trade policy, the monetary policies of the Fed and the Bank of England, as well as the duration, scale, and consequences of the war in the Middle East. In recent months, the market has adjusted its expectations toward a peaceful resolution, but negotiations between Iran and the United States failed before making meaningful progress. It is also uncertain whether they will resume in the near future.

US and UK Economic Calendar:

• US – ISM Services PMI (14:00 UTC).

The economic calendar for October 5 contains one event that can be considered important. Economic data will influence market sentiment during the second half of Monday's trading session.

GBP/USD Forecast and Trading Recommendations:

Short positions can be considered today if the pair consolidates below the 1.3164–1.3177 level on the hourly chart, with a target of 1.3025. Long positions can be considered today if the pair rebounds from the 1.3164–1.3177 level, with a target of 1.3272.

The Fibonacci grids are drawn from 1.3272–1.3674 on the hourly chart and from 1.3158–1.3655 on the 4-hour chart.

On Monday, GBP/USD edged lower after a moderate rise the previous day and is currently trading near the round level of 1.3200. The currency pair is under pressure from a stronger US dollar ahead of the release of the ISM Services PMI, the results of which will be known during the North American session. However, investors have revised their expectations for Federal Reserve rate hikes due to recent weak US employment data. At present, financial markets price in a roughly 77.9% probability that the Fed will leave its benchmark interest rate unchanged at its October meeting, compared with 74% before the labor-market report was released.

The shift in market sentiment is linked to unexpectedly weak employment figures: US nonfarm payrolls (NFP) increased by just 29,000 jobs in September, well below the consensus forecast of 90,000. This also represented a sharp slowdown from the revised August figure of 133,000. In addition, the US unemployment rate rose to 4.2%, despite a slight increase in the labor-force participation rate to 61.8%.

Fed official Logan's speech received a high score of 9.2 out of 10 on the FXS Speechtracker scale, representing a "hawkish" surprise compared with the historical average of 8.1 out of 10. She repeatedly emphasized that current monetary policy has not yet reached a restrictive stance and should remain "moderately tight." The view that rising yields may reflect an increase in the term premium, thereby reducing the need for further monetary tightening, has been overshadowed by calls for at least another 50 basis points of rate hikes and a reversal of previously implemented rate cuts. This strengthens expectations that interest rates will remain high for an extended period. Overall, the combination of solid economic growth, a balanced labor market, and a firm commitment to maintaining price stability points to a stronger US dollar, as markets price in a scenario involving more aggressive action by the Fed.

As for the United Kingdom, market participants currently price in expectations for approximately 30 basis points of Bank of England rate hikes by the end of the year, as well as around 90 basis points of overall monetary tightening by 2027. Bank of England officials, including Governor Andrew Bailey, have stated that they are prepared to raise interest rates to combat inflation risks caused by high energy prices.

The pound's outlook appears more positive following MUFG's upward revision to its forecast for UK economic growth.

MUFG analysts note an improvement in the UK's economic conditions and point to increased growth expectations for the current quarter. As a result, MUFG/BTMU reported an "upgrade of its third-quarter growth forecast to 0.4% (from 0.1% in July)." This strengthens the view that stable domestic economic activity may support the pound, even though it is trading close to its yearly lows against the US dollar.

From a technical perspective, the GBP/USD pair is approaching the round level of 1.3200 on the daily chart, maintaining a bearish short-term bias as the spot price remains below the 9-period exponential moving average (EMA). The oscillators are negative, confirming the bears' advantage. The nearest resistance is located at the 9-period EMA (around 1.3259), while a more significant level is at the 50-period EMA (around 1.3399), confirming the overall bearish bias. The round level of 1.3200 provides support. Below it lies the yearly low of 1.3136.

Equity indices dynamics

The bullish catalyst for the S&P 500 was a cooling labor market. Nonfarm payrolls increased by only 29k, well below forecasts, and unemployment rose to 4.2%. Investors read the soft print as pushing out the likely timing of a Fed rate increase: fed funds futures now assign under an 18% probability to an October hike.

Markets also got support from a G7 decision to release emergency diesel and crude reserves, which eased fuel prices.

The multi-month Treasury rout remains a negative for the S&P 500. Concerns about sticky inflation, fiscal deficits, and corporate borrowings to build AI data centers pushed the 10-year Treasury yield to 2002 highs. The "bad news is good news" narrative risks becoming a poor compromise — inflation is still a problem even as the labor market softens.

Wall Street's obsession with AI continues to outweigh rising rates. The 30-year yield hit 5.69% last week, and the 10-year topped 5.3%, yet tech stocks are standing firm. The Nasdaq 100 is up about 22% year-to-date, and Microsoft, Nvidia, and Apple remain the main drivers of the S&P 500. Bloomberg Intelligence estimates that tech sector earnings in Q3 could jump by more than 65%, lifting overall S&P 500 earnings growth above 24%.

For now, the market is taking high rates in stride, but how long that lasts is unclear. Historically, it takes about a 100 bp increase in the 10-year over a decade to materially dent valuations and earnings — and that room is nearly exhausted, like a gas tank on fumes. At 6% yields, the conversation around tech stocks will sound very different.

S&P 500 and US dollar dynamics

A strengthening dollar is pressuring risk assets. Bank of America warns that investors will sit on the sidelines until dollar volatility stabilizes. The Bloomberg dollar index has jumped by roughly 3% off September lows as investors rebuild cash buffers. The bank adds that risks would intensify if small-cap stocks join the sell-off.

Will tech giants have enough earnings to justify the rates they must pay to grow?

Technically, the daily S&P 500 chart shows a gap up. As long as the price holds above 7,685, the bias remains to buy.