The parallel rally in both gold prices and U.S. stocks is somewhat unusual, as traditionally, gold is considered a "safe-haven" asset that tends to perform well during periods of economic uncertainty, while stocks are more linked to economic growth and risk appetite. Several factors are driving both markets higher simultaneously, according to analysts.

Traders see a 63% chance of a 25-basis-point cut in December, according to CME’s FedWatch tool. That single narrative - cheaper money - is lifting assets that usually move in opposite directions: gold, the classic safe haven, and stocks, the traditional risk play.

Both markets are feeding off policy-driven optimism rather than economic strength. Weak jobs data, soft consumer sentiment, and signs of fiscal strain are prompting traders to position for a gentler monetary path, fuelling a liquidity rally that blurs the line between safety and speculation.

Key takeaways

• Gold holds above $4,100 per ounce, its highest level in two weeks, as traders anticipate the Fed's easing.
  
• US equities are also climbing as lower rate expectations boost future earnings valuations.
  
• The rally reflects liquidity confidence, not growth - a market driven by central banks, not fundamentals.
  
• Fiscal anxiety and rising US Treasury yields add a second layer of support for gold.
  
• Strong physical demand from India and central banks underpins prices beneath the speculative wave.
  

Fed rate cut calls drive gold and US stocks

The joint rally stems from a clear macro shift. Recent US economic data has pointed to a loss of momentum - private employment weakened in October, government and retail jobs fell, and consumer sentiment dropped to its lowest in months. Markets interpreted this as confirmation that the Fed will pivot to rate cuts in December.

Lower interest rates affect both sides of the market simultaneously:

• For equities, they make borrowing cheaper and lift the present value of corporate earnings.
  
• For gold, they reduce the opportunity cost of holding a non-yielding asset.
  

The result is a synchronised upswing. Investors aren’t choosing between safety and risk; they’re buying both, united by one expectation - the return of easier money.

For traders on Deriv MT5, these cross-asset dynamics have created new opportunities for diversification, as volatility in indices, commodities, and metals all respond to the same policy pulse.

US fiscal policy re-emerges as a hidden driver

The US government shutdown and its tentative resolution have sharpened focus on fiscal stability. The Senate’s bipartisan compromise to reopen the government - backed by President Donald Trump - eased short-term market stress but reminded investors of America’s long-term debt problem.

As Saxo Bank’s Ole Hansen noted, “Rising yields driven by fiscal anxiety, rather than economic strength, have historically been supportive for investment metals.” Higher bond yields, in this context, reflect concern about debt sustainability, not a stronger economy - reinforcing the case for holding gold as a hedge against fiscal uncertainty.

The reopening of government agencies will also restore access to official economic data, providing markets with greater clarity. Yet, with that data likely to confirm slowing activity, traders see even more justification for the Fed to act.

Gold and stocks: A rare tandem surge in the markets 

Gold and equities traditionally move in opposite directions. One represents fear, the other confidence. However, 2025’s market behaviour suggests that both are now expressions of liquidity expectations.

When investors expect monetary easing, everything that benefits from cheap money rallies - from gold to growth tech stocks. This correlation shift highlights a structural change in how markets operate: policy anticipation has overtaken fundamentals as the key price driver.

Gold’s ability to rise even as the US dollar strengthens reinforces that shift. Currency dynamics are being eclipsed by the dominance of central bank policy in global asset pricing.

Gold demand adds depth to the rally

Beyond the speculative narrative, gold’s rise has strong real-world backing. Physical demand remains robust, particularly in India and among central banks:

• India’s gold ETF inflows reached $2.9 billion in the first 10 months of 2025 - equivalent to 26 tonnes of gold, almost matching the total from 2020 to 2024 combined.

• October alone saw $850 million in new inflows, following a record $942 million in September.
  
• India’s total ETF holdings now stand at 83.5 tonnes, worth over $11 billion.
  

This demand suggests the rally is not purely speculative. It reflects a genuine global appetite for gold as a long-term store of value - a counterbalance to monetary and fiscal uncertainty.

Gold miners mirror investor confidence

The corporate side of the gold market echoes this sentiment. Barrick Gold (ABX.TO), one of the world’s largest producers, raised its quarterly dividend by 25% and expanded its $500 million share buyback programme after reporting an adjusted profit beat.

• Average realised gold price: $3,457 per ounce, up from $2,494 a year earlier.
  
• Output fell from 943,000 to 829,000 ounces, while all-in sustaining costs rose slightly to $1,538 per ounce.
  

Despite operational challenges and a $1 billion write-off linked to the loss of its Mali mine, Barrick’s strategic pivot toward North American production signals confidence in sustained high gold prices.

However, the Mali dispute - which includes the detention of employees and export restrictions - underscores the geopolitical fragility of global gold supply, a factor that could tighten markets further if unresolved.

Market backdrop: debt, yields, and the policy paradox

Gold’s more than 50% rise this year is not simply a reflection of inflation fears. It’s a response to fiscal fragility and market dependence on liquidity.

Rising Treasury yields are less a sign of economic health and more a warning about debt sustainability. Investors are buying gold as a hedge against these structural risks while simultaneously bidding up equities on the assumption that liquidity will continue to flow.

This dual behaviour - seeking safety and risk simultaneously - is the defining paradox of 2025’s market psychology.

Gold and US stock Scenarios for the months ahead

1. Bullish breakout

If the Fed cuts rates in December and hints at further easing, gold could breach $4,200 quickly, supported by fiscal concerns and steady central bank demand.

2. Short-term consolidation

A cautious or delayed Fed stance could see gold hover between $4,050 and $4,150, with equities likely maintaining gains until liquidity expectations fade.

Either way, the key takeaway is that gold and stocks are now responding to the same macroeconomic driver - the price of money - rather than opposing emotional forces.

Gold technical insights

Gold (XAU/USD) is trading around $4,134, consolidating between key levels - resistance at $4,375 and support at $3,930. A breakout above $4,375 could extend the rally, while a drop below $3,930 risks renewed selling toward $3,630.

The RSI (81) indicates strong bullish momentum but signals overbought conditions, suggesting a possible short-term consolidation or pullback. Meanwhile, the MACD remains in a bullish crossover, confirming ongoing buying pressure. 

Overall, gold’s bias stays positive above $3,930, but traders should watch for momentum cooling near overbought zones. You can monitor these levels directly on Deriv MT5 or experiment with margin and risk setups using the Deriv Trading Calculator to plan positions across metals and indices.

Gold investment outlook

• Short-term traders: The $4,100–$4,200 zone is the key range to watch ahead of the Fed’s December decision.
  
• Medium-term investors: Fiscal stress, real yield volatility, and Indian demand form the core drivers for continued strength.
  

Portfolio managers: Gold’s evolving correlation with equities means it now behaves as a policy-sensitive parallel asset, not a pure hedge. Diversification strategies should take into account this structural shift.

Yes - but only in sentiment, not in substance. Analysts suggest that President Donald Trump’s proposed $2,000 “tariff dividend” has fuelled a wave of market optimism rather than a genuine injection of liquidity.

The announcement triggered a short-lived crypto rebound, lifting Bitcoin back above $104,000, as traders drew parallels with the 2020 pandemic payments that helped fuel the last major bull run. Yet with limited fiscal backing and political obstacles, many believe this rally may be driven more by sentiment than by substance.

Key takeaways

• Trump’s $2,000 “tariff dividend” prompted a brief rally in Bitcoin and Ethereum, despite serious doubts over its feasibility.
  
• Funding gap: The proposed payout would cost around $300 billion, but tariff revenues generate only about $90 billion net.
  
• Institutional demand remains strong, with $2.7 billion in ETF inflows and BlackRock’s IBIT managing close to $100 billion in BTC.
  
• The Federal Reserve’s 25-basis-point rate cut and improved risk appetite continue to support Bitcoin above the $100K mark.
  
• Analysts see two paths: A climb towards $120K–$125K if optimism holds, or a slide below $100K once political enthusiasm fades.
  
• Crypto’s sensitivity to liquidity narratives underscores how sentiment - not policy - often leads market direction.

Trump’s tariff dividend promise and the market reaction

In a Truth Social post, President Trump claimed that the United States was generating “trillions of dollars” from tariffs and could use those funds to both reduce its $38 trillion national debt and finance a “dividend” for most Americans, excluding high earners.

The statement triggered a modest crypto rally as traders priced in the possibility of more household liquidity.

Markets quickly drew comparisons to the pandemic-era stimulus cheques that helped spark a historic bull market. Traders, long conditioned to respond to any hint of fresh money supply, reacted instinctively - even though the policy remains more political talking point than fiscal plan.

Why the maths don’t add up

Despite the excitement, the numbers simply do not work. Fiscal experts note that Trump cannot unilaterally authorise such payments; they require Congressional approval and a new funding bill.

The funding shortfall is also substantial:

• A $2,000 payment for 150 million adults would cost around $300 billion.
  
• Tariff collections to date total $120 billion, and after factoring in slower economic growth and lower tax receipts, net revenue sits closer to $90 billion.
  

As Erica York, Vice President of Federal Tax Policy, explained: “Each dollar raised through tariffs offsets about 24 cents in income and payroll tax revenue.” In short, the government lacks both the legal authority and the financial headroom to execute this plan, making any near-term payout highly unlikely.

Stimulus Déjà Vu: Why markets still care

The crypto rally reflects not fiscal reality but liquidity psychology. Even without concrete policy action, the mere suggestion of a “dividend” rekindles traders’ belief in free-flowing money and renewed risk-taking.

This mirrors 2020, when stimulus payments coincided with a surge in Bitcoin and altcoins as retail investors redirected government cheques into digital assets. 

Although the scale is smaller this time, the pattern remains: crypto markets respond instantly to liquidity cues - whether real or imagined.

Bitcoin ETF inflows and structural strength

Beyond political headlines, Bitcoin’s structural outlook remains solid. Institutional inflows into U.S. spot Bitcoin ETFs exceeded $2.7 billion in early November, led by BlackRock’s IBIT and Fidelity’s FBTC. IBIT alone now holds $80.47 billion, cementing its position as the fastest-growing ETF in U.S. history.

Macroeconomic conditions are also supportive:

• The Federal Reserve’s 25-basis-point rate cut has lifted risk appetite.
  
• Trump’s pardon of Binance founder Changpeng Zhao signalled a more conciliatory stance towards crypto.
  
• Thailand and Malaysia are exploring the inclusion of Bitcoin in national reserves, marking a step towards mainstream adoption.
  

These developments indicate that even if Trump’s “dividend” proves politically untenable, the underlying liquidity narrative remains alive.

Market impact and price scenarios

If bullish sentiment and ETF inflows persist, Bitcoin could extend towards $120,000, driven by institutional accumulation and looser policy. However, should enthusiasm fade, a pullback below $100,000 remains a possibility as traders reassess the fundamentals.

So far, Bitcoin’s stability above $100,000 reflects confidence from institutional investors - although analysts warn that the rally is driven more by belief than by financial logic.

Bitcoin technical insights

Bitcoin’s price action shows early signs of recovery after holding above the key $101,500 support level, where sellers appear to have exhausted their momentum. This level remains crucial - a decisive break below could trigger further liquidations. On the upside, $110,500 serves as the first major resistance, followed by $116,000 and $125,000, where profit-taking is likely to intensify.

The Bollinger Bands are beginning to narrow after a period of strong volatility, suggesting potential consolidation before the next breakout. The price is also attempting to climb back toward the middle band (the 10-day moving average), signalling an improving short-term outlook.

Meanwhile, the RSI (14) has risen sharply to around 60, pointing to strengthening bullish momentum without yet entering overbought territory. If RSI continues upward past 60–70, it would confirm a shift in market sentiment toward renewed buying pressure.

Investment implications

For traders, sentiment remains the main short-term driver. Bitcoin’s $100K level represents the critical dividing line between bullish conviction and renewed caution.

Those trading crypto through Deriv MT5 can access advanced charting tools and cross-market analysis, making it easier to track correlations between Bitcoin, gold, and the U.S. dollar - especially during policy-driven volatility.

Meanwhile, traders can use the Deriv Trading Calculator to estimate potential profits, required margin, and swap rates before entering a position, ensuring tighter risk control in fast-moving conditions.

• Short term: Tactical buying opportunities exist above $102K–$104K if ETF inflows remain robust.
  
• Medium-term: Expect volatility tied to political announcements and monetary policy signals.
  

Long-term: Institutional accumulation and steady global adoption continue to underpin a structurally bullish outlook, even if near-term hype cools.

Ethereum’s sharp fall below $3,500 looks less like the beginning of a crypto winter and more like a large-scale profit-taking reset. Data across on-chain, derivatives, and institutional flows suggest the market is undergoing a correction after months of aggressive gains, rather than entering a prolonged bearish cycle.

While retail traders and exchange-traded funds (ETFs) are showing fear, whales and institutional treasuries are using the pullback to accumulate - hinting that the current phase could set the foundation for a late-year recovery.

Key takeaways

• Ethereum trades at around $3,312, down 8.92% over the past month.
  
• Over $1.1 billion in leveraged positions were liquidated within 24 hours, as 303,000 traders were forced out.
  
• The Crypto Fear & Greed Index dropped to 20 (“Fear”), down from 59 (“Greed”) a month ago.
  
• Whale wallets added 1.64 million ETH (~$6.4 billion) in October, despite declining prices.
  
• The Fusaka hard fork upgrade scheduled for 3 December 2025 introduces PeerDAS, expected to cut Layer-2 fees by up to 95%.
  
• November has historically been Ethereum’s best-performing month, with an average return of +6.9% over the past eight years.
  

Crypto Market sentiment turns fearful

The Crypto Fear and Greed Index has plunged to 20, signaling widespread unease among investors. 

Just a month ago, readings above 50 showed moderate greed. The shift underscores a dramatic shift in sentiment as traders move from optimism to caution.

Across the broader market, nearly every major asset has turned red. Bitcoin fell 2.8% to $104,577, Solana dropped 11%, BNB lost 8.3%, XRP fell 6.7%, and Cardano slid 7.4% in the past 24 hours. The total cryptocurrency market cap has slipped 4% daily, erasing over $140 billion in value.

The macro backdrop compounds the pressure. The Federal Reserve’s uncertain rate outlook and a strengthening U.S. dollar are draining liquidity from risk assets - a dynamic often associated with crypto drawdowns.

ETH Whale accumulation intensifies while retail retreats

While fear dominates headlines, blockchain data reveals that the largest holders are quietly accumulating Ethereum. According to analytics firm Santiment, wallets holding between 1,000 and 100,000 ETH increased their balance from 99.28 million to 100.92 million ETH during the month of October.

This buying occurred even as Ethereum fell around 7% that month - a strong sign that institutional and high-net-worth investors view current prices as attractive entry points.

In contrast, long-term retail accumulation has slowed. Glassnode data show that the Holder Accumulation Ratio has declined from 31.27% to 30.45% since late October. 

Retail investors are reducing exposure, waiting for clearer signals before re-entering. This divergence between whale buying and retail caution has become the defining feature of the current correction.

Institutional positioning: ETFs and treasuries diverge

Institutional flows paint a mixed picture. On the one hand, U.S. spot Ethereum ETFs experienced $135.76 million in outflows on 3 November.

• BlackRock’s ETHA: −$81.7 million
  
• Fidelity’s FETH: −$25.1 million
  
• Grayscale’s ETHE: −$15 million
  

These redemptions came alongside $186.5 million in Bitcoin ETF outflows, as institutional desks reduced exposure amid heightened volatility. 

On the other hand, corporate treasuries are accumulating. Publicly traded BitMine Immersion Technologies (BMNR) added 82,353 ETH last week - worth roughly $294 million - bringing its total holdings to 3.39 million ETH, or 2.8% of Ethereum’s circulating supply. The company’s average purchase price stands around $3,909, suggesting confidence in long-term upside.

BMNR’s chairman, Tom Lee, told CNBC that the market is “consolidating after a reset,” adding that fundamentals such as stablecoin volume and application revenues are at all-time highs. Lee predicts a possible rally toward $7,000 for Ethereum before the end of the year, framing current conditions as a healthy correction rather than a crisis.

Liquidations reveal a market reset

The most dramatic signal of the correction came from the derivatives market. Data from Coinglass shows that over 303,000 traders were liquidated in just 24 hours, resulting in a total of $1.1 billion in forced positions. Within a single hour, more than $300 million was wiped out - $287 million of which were long positions.

This scale of liquidation reveals how over-leveraged bullish bets unraveled once prices broke below key support levels. Ethereum and Bitcoin accounted for the bulk of the wipeout, while high-beta altcoins like Solana and BNB saw even sharper declines.

The outcome is paradoxically constructive: leverage has been purged, funding rates have normalised, and open interest now reflects disciplined accumulation rather than speculative excess. Ethereum’s open interest remains high at $19.9 billion, but funding rates are flat - an equilibrium that often precedes a more stable recovery phase.

Fusaka upgrade offers long-term optimism

While short-term traders react to price volatility, developers are preparing for one of Ethereum’s most ambitious upgrades yet.

The Fusaka hard fork, confirmed for 3 December 2025, introduces Peer Data Availability Sampling (PeerDAS) - a technology that increases block capacity from 6 to 48 per block. This upgrade could reduce Layer-2 transaction fees by up to 95%, significantly improving scalability for DeFi and rollup networks.

Such infrastructure improvements strengthen Ethereum’s long-term competitiveness against alternative Layer-1 chains. With stablecoin transactions on Ethereum hitting $2.8 trillion in October, network fundamentals remain robust despite price turbulence.

Ethereum’s November historical pattern: a bullish bias

Seasonality may soon lend support. Over the past eight years, Ethereum has averaged a monthly return of +6.9 % in November. In 2024, it recorded a remarkable 47.4% rally, marking one of its strongest months ever.

The Net Unrealised Profit/Loss (NUPL) ratio - which measures the percentage of investors in profit - has fallen from 0.43 to 0.39, near the monthly low of 0.38 that last triggered a 13% rebound from $3,750 to $4,240.

This trend suggests selling pressure may be fading as investor incentives to take profits decline.

Macro context: profit-taking, not panic

Ethereum’s downturn mirrors the broader behavior of risk assets. After months of double-digit gains across cryptocurrencies, profit-taking has accelerated amid global liquidity concerns. The U.S. dollar index strengthened sharply, and Fed officials have hinted at slower rate cuts, encouraging investors to rotate out of speculative assets.

Unlike prior bear-market conditions, however, there is no collapse in network activity or developer engagement. DeFi revenue remains strong, stablecoin velocity is high, and whale inflows indicate rotation rather than retreat. The sell-off, therefore, aligns more with profit-locking behavior than the sustained capital flight that characterised the 2022–2023 crypto winter. 

Traders on Deriv MT5 can track these shifts across multiple assets, from cryptocurrencies to forex, to gauge broader market sentiment in real-time.

Ethereum technical insights: Stabilisation vs. further weakness

Ethereum is currently trading near $3,313, rebounding after a sharp decline that tested the $3,745 support level. This zone has acted as a key area where sell liquidations intensified, but the recent bounce suggests early signs of buyer interest.

The Bollinger Bands have widened significantly, indicating elevated volatility, while price action remains near the lower band - typically a sign of short-term oversold conditions. A sustained close above the middle band could confirm a recovery in momentum.

Meanwhile, the Relative Strength Index (RSI) has risen sharply from 33, signaling improving bullish momentum after near-oversold readings. A further RSI move above 50 would reinforce a potential short-term reversal.

Resistance levels remain at $4,250 (where profit-taking and more buying may emerge) and $4,700, marking a stronger ceiling for any extended rally. Overall, ETH shows early signs of recovery but still faces strong resistance ahead. 

The near-term outlook depends on whether ETF outflows stabilise and whether the whale accumulation trend continues through November. With fear levels elevated, contrarian traders are closely watching for a potential bottoming process similar to past mid-cycle corrections. The Deriv trading calculator can help traders assess potential profit and margin exposure before taking positions in such volatile environments.

Ethereum investment implications

For short-term traders, Ethereum’s setup suggests a high-volatility environment with tactical entry opportunities near the $3,500–$3,700 support range. Upside targets into December sit between $4,400 and $4,600, assuming sentiment stabilises and ETF outflows slow.

For medium-term investors, current levels represent an accumulation window. Whale buying, the Fusaka upgrade, and seasonal patterns point to improving fundamentals beneath the surface fear. Institutional participation is likely to return once macroeconomic uncertainty eases and on-chain stability confirms a bottom.

In essence, Ethereum’s decline is a market normalisation, not a meltdown. As leverage unwinds and fundamentals strengthen, the groundwork for the next leg higher may already be forming.

Arabica coffee futures remain caught between drought in Brazil and tariffs in Washington. Until either rainfall normalises or a U.S.–Brazil trade deal removes the 50% import duty, prices are likely to stay near multi-month highs. A continued supply squeeze could lift Arabica above $425, while quick diplomatic progress or heavier rains could drag it back toward $380.

Key takeaways

• Brazil’s Minas Gerais drought has cut rainfall to 75 % of normal, the latest in a string of dry years.
  
• Vietnam’s crop risk from Typhoons Kalmaegi and Fengshen threatens robusta output in the Central Highlands.
  
• U.S. tariffs on Brazilian coffee have pushed exchange inventories to their lowest since 2024.
  
• Vietnam logged a record US$8.4 billion in exports, offsetting part of the global shortfall.
  
• La Niña probability of 71 % points to further dryness through early 2026.
  
• Global production ≠ ample supply: Arabica deficits persist despite record total output.
  

Brazil’s drought deepens the arabica deficit

Weather agency Somar Meteorologia reported Minas Gerais - the heart of Brazil’s arabica belt - received just 33 mm of rain in late October, barely three-quarters of the historical average, following a near-dry week earlier. The soil moisture deficit poses a threat to flowering and bean development for the 2026/27 crop.

NOAA’s September update lifted the probability of a La Niña event to 71%, reinforcing expectations of continued dryness across southern Brazil. Conab cut its 2025 arabica estimate by 4.9 % to 35.2 million bags, and total coffee output to 55.2 million bags. Years of sub-par rainfall have already reduced bean size and yields, creating what traders call a “climate premium” in arabica futures.

Trade barriers tighten U.S. supply

In July 2025, Washington imposed a 50 % tariff on Brazilian beans - part of a wider trade confrontation between Presidents Trump and Lula. Brazil supplies roughly a third of America’s unroasted coffee; the duty instantly disrupted shipments.

Importers rerouted cargoes to Canada, paid $20–25 per bag cancellation fees, or warehoused beans under bond in Florida to delay tax payment. ICE-monitored arabica stocks have since plummeted to a 1.75-year low of ≈ approximately 431,481 bags, while robusta holdings have declined to ≈ approximately 6,053 lots. Retail coffee prices in U.S. stores rose 41% year-over-year, adding to food inflation.

Both sides now signal progress: Trump described the latest meeting as “positive,” and Lula hinted at a “definitive solution” soon. Any rollback of tariffs would reopen the world’s largest consumer market and relieve U.S. roasters by mid-2026.

Vietnam’s robusta boom - and its limits

Vietnam has been the outlier in 2025’s volatile market. Exports for 2024–25 reached 1.5 million tonnes worth US$8.4 billion, up 55% in value despite minimal volume growth. Average prices jumped 52% to US$5,610 per tonne, reflecting the global supply squeeze.

Europe absorbed 47% of shipments, led by Germany, Italy, and Spain. Farm-gate prices around VND 116,000–118,000 per kg (≈ US$4.6) deliver strong profits, given production costs of VND 35,000–40,000.

However, Typhoons Kalmaegi and Fengshen threaten flooding and landslides in the Central Highlands. Vicofa forecasts a 5–10% increase in 2025/26 output, but warns that persistent storms or fertilizer shortages could reverse those gains. The sector’s new EU “low-risk” status on traceability protects access to European buyers but not against climate volatility.

To explore how traders can capitalise on such volatility, Deriv’s trading calculator help estimate margin and profit scenarios for coffee, gold, and oil positions.

Global production: Record high, but shortages remain

According to the USDA FAS, world coffee production for 2025/26 will reach a record 178.7 million bags (+2.5 %). Yet, arabica output is expected to fall 1.7% to 97 million bags, while robusta rises 7.9% to 81.7 million bags. Ending stocks are expected to rise 4.9% to 22.8 million bags, but this aggregate figure masks an arabica shortfall.

Trader Volcafe projects a global arabica deficit of 8.5 million bags - the fifth straight year of undersupply - wider than last season’s 5.5 million. Even with record totals, the quality mix and logistical bottlenecks leave roasters short of premium beans.

U.S. roasters face an expensive squeeze

American roasters, relying heavily on Brazilian arabica, are drawing down remaining inventories. Some redirected beans to Canada to avoid tariffs, incurring higher freight costs. Others cancelled shipments outright, paying penalty fees. 

Small and mid-sized roasters report margins collapsing as replacement beans from Colombia and Mexico cost 10% more, while Brazilian beans - though cheaper - carry the 50% duty.

The ripple effect reaches consumers: a typical supermarket blend has risen from $ 6–7 to $11 per pack. The U.S. Labor Statistics Bureau links these increases directly to reduced imports and weather-related shortages. Analysts expect inventories to fall to 2.5–3 million bags by December, near critical levels.

Coffee price Market outlook

• Bullish scenario: Continued dryness, strong La Niña, and stalled trade talks push arabica through $425, extending the rally into early 2026.
  
• Base case: Partial tariff relief and modest rains keep prices range-bound $380–$420.
  
• Bearish scenario: Rapid trade détente plus Vietnam’s larger harvest could pull arabica back to $350–$370 by mid-2026.
  Even in the bearish case, structural deficits and climate risks suggest the long-term floor is moving higher.

Coffee price technical analysis

Coffee Arabica prices are consolidating near $411.75, showing a mixed but slightly bullish setup. Bollinger Bands are moderately wide, indicating ongoing volatility. The latest candle is testing the upper mid-band, indicating potential for a short-term push higher if momentum persists.

The key resistance remains at $430.00, where previous rallies faced profit-taking. A decisive break above this could attract fresh buying pressure. On the downside, $390.00 and $378.85 serve as major support zones - a breach below either could trigger liquidation-driven selling.

RSI (14) currently sits around 51, rising sharply from the midline, implying improving bullish momentum but not yet in overbought territory. This reinforces the idea of a cautious recovery phase rather than a breakout trend.

Coffee price investment implications

For traders and investors, the near-term setup points to heightened volatility rather than a sustained correction.

• Short term: Price swings will hinge on U.S.–Brazil trade headlines and rainfall updates; speculative spikes above $425 remain possible.
  
• Medium-term: Monitor Vietnam’s harvest and La Niña developments, as both could reset the global supply balance.
  
• Long-term: Structural climate risk keeps the floor higher - arabica below $350 looks unlikely barring a policy breakthrough. Coffee’s current rally may cool, but the underlying heat - political and climatic - shows no sign of dissipating.

For traders seeking exposure, coffee CFDs are available on Deriv MT5, alongside other soft commodities and energy assets, such as gold and oil.

According to reports, USD/JPY’s surge past 154 per dollar underscores the growing divide between Japan’s cautious monetary policy and the U.S. Federal Reserve’s firmer stance. The yen’s weakness reflects more than interest-rate differentials - it’s become a test of confidence in Japan’s policy credibility.

Despite Tokyo’s inflation running above target and rising government concern, traders continue to test how far the Bank of Japan (BOJ) will allow the currency to slide. The central question: does the pair push toward 155, or does a BOJ policy pivot spark a sustained yen recovery?

Key takeaways

• BOJ inaction vs. Fed firmness: The BOJ kept rates steady, while Powell signalled that a December rate cut isn’t guaranteed - widening the yield gap.
  
• 154 as a market trigger: The level has become a psychological battleground for traders testing Japan’s tolerance for yen weakness.
  
• Inflation pressure builds: Tokyo CPI accelerated to 2.8% YoY, well above target, yet Ueda remains focused on wage growth before tightening.
  
• Government warnings lose bite: Finance Minister Katayama’s verbal interventions briefly supported the yen but failed to reverse sentiment.
  
• Risk of policy credibility erosion: Unless the BOJ takes decisive action, the yen could remain vulnerable to further depreciation and speculative pressure.
  

BOJ’s hesitation leads to Japanese yen weakness

The BOJ’s decision to keep rates unchanged reinforced market perceptions that Japan will stay behind the curve of global tightening. Governor Kazuo Ueda suggested a rate hike could come as soon as December, but stressed that sustained wage growth remains essential for policy normalisation. 

In contrast, Federal Reserve Chair Jerome Powell’s cautious yet firm tone - hinting that another rate cut this year is not guaranteed - strengthened the dollar. This widening policy divergence continues to anchor USD/JPY above 154.

USD JPY at 154: Where psychology meets policy

The 154 level has evolved into a symbolic line between market conviction and policymaker caution, according to analysts. Traders recall previous interventions near similar levels and view 154 as the threshold of Tokyo’s tolerance.

Each government comment is now treated as a sentiment indicator rather than a credible warning. Brief yen recoveries after official remarks fade quickly without matching BOJ policy action. In this sense, the level represents a psychological battleground - one where traders, algorithms, and policymakers test each other’s resolve.

Japan inflation says “move”, policy says “wait”

Tokyo’s October CPI rose to 2.8% YoY, with core and core-core readings also above 2.8% - signalling broad-based inflation that’s been above the BOJ’s 2% target for over three years.
 

However, Ueda continues to emphasise wage-led inflation as the precondition for any tightening cycle. This cautious stance has created a credibility gap: inflation data suggest urgency, but policy rhetoric suggests patience. The result - investors perceive the BOJ as reluctant to respond decisively, reinforcing speculative yen selling.

Government warnings and the illusion of control

Finance Minister Satsuki Katayama’s recent warning that the government is monitoring FX moves with “a high sense of urgency” briefly lifted the yen to 153.65, before USD/JPY rebounded.

The move highlighted the short shelf-life of verbal interventions. Without direct market action, such warnings appear to acknowledge - rather than prevent - yen weakness. Tokyo’s “soft power” approach has lost influence, as markets now demand policy signals rather than rhetoric.

Traders weigh conviction vs caution in USD/JPY

Market participants see three potential paths ahead:

• Continuation: USD/JPY pushes through 155, forcing Tokyo’s hand on direct intervention.
  
• Correction: A surprise BOJ hike or coordinated move with U.S. authorities sparks a sharp yen rebound.
  
• Consolidation: The pair stabilises between 153–154, awaiting wage and inflation data.

Futures positioning shows speculative yen shorts at multi-month highs - meaning a sudden shift in sentiment could cause a fast, disorderly reversal.

Credibility becomes Japan’s real currency

Every move above 154 underscores a deeper issue: trust. The yen’s weakness now reflects investor scepticism about Japan’s willingness to tighten policy, not just interest-rate gaps.

 Until the BOJ backs its rhetoric with action, markets will continue to test the limits of its tolerance, according to experts. The next 100 pips - between 154 and 155 - may determine whether Japan’s credibility holds or erodes further.

USD/JPY technical insight

At the time of writing, USD/JPY is trading around 154.28, hovering near its recent highs in what appears to be a price discovery phase. The pair has maintained a strong bullish momentum, riding the upper Bollinger Band - a sign of persistent buying pressure. However, such positioning often precedes short-term pullbacks as traders take profit.

The RSI is rising sharply toward overbought territory (above 70), suggesting that bullish momentum may be overextended. If RSI crosses into that zone, a corrective move could follow as buying enthusiasm cools.

Key downside levels to watch are 150.25 and 147.05, marked as notable support zones. A sustained break below 150.25 could trigger sell liquidations and accelerate downward momentum, while a deeper move under 147.05 would signal a broader shift in market sentiment.

USD/JPY investment implications

For traders, USD/JPY above 154 signals continued short-term bullish momentum for the dollar, underpinned by policy divergence.

• Short-term strategies may favour tactical long positions near support around 153.50–153.80, while monitoring for sudden verbal or direct intervention near 155.
• Medium-term investors should stay cautious. A surprise BOJ policy move or shift in Fed guidance could quickly unwind the trade.
• For portfolio managers, the yen’s volatility presents both carry trade opportunities and macro risk exposure, making Japan’s currency landscape the most psychologically charged market of 2025.

The key is to balance exposure by using Deriv’s trading calculators and position-sizing tools to manage risk in real-time.

Traders seeking to take advantage of the volatility can analyse setups on Deriv MT5 , where comprehensive charting and technical indicators support detailed yen analysis.

Gold is holding steady near the $4,000 mark after the U.S. Federal Reserve cut interest rates by 25 basis points to the 3.75%–4% range - a widely expected move that revealed deep divisions within the central bank. 

While lower rates typically support gold by reducing the appeal of yield-bearing assets, Chair Jerome Powell’s cautious tone and the split vote have complicated the picture. 

With Powell warning that another rate cut in December is “not a foregone conclusion,” traders are now caught between two outcomes: a break above $4,100 if economic data softens, or a correction toward $3,900 if the Fed turns hawkish in December.

Key takeaways

• The Fed cut rates by 25 bps to a 3.75%–4% target range - its second cut of 2025, but not unanimously.
  
• Stephen Miran voted for a 50 bps cut, while Jeffrey Schmid preferred no change, underscoring internal division.
  
• The statement described moderate growth, slower job gains, and inflation still “somewhat elevated.”
  
• The Fed will end balance sheet reduction on 1 December, signalling a quiet pivot toward neutral liquidity policy.
  
• Gold trades between $3,990–$4,010, as Powell’s comments temper expectations for further easing.
  

The Federal Reserve interest rate divided decision

The latest policy meeting ended with a split 10-2 vote, reflecting an increasingly fractured Federal Open Market Committee (FOMC). Most members supported a 25 bps reduction to cushion a cooling labour market, but dissent came from both directions.

• Governor Stephen Miran argued for a 50 bps cut, warning that slower job growth warranted stronger action.
  
• Kansas City Fed President Jeffrey Schmid, however, voted to hold rates steady, citing inflation that “remains somewhat elevated.”
  

The official statement struck a cautious tone, noting that “economic activity has been expanding at a moderate pace” while acknowledging “job gains have slowed this year and the unemployment rate has edged up but remained low.” Inflation, the Fed said, “has moved up since earlier in the year and remains somewhat elevated.”

This rare two-way dissent marks only the third time since 1990 that Fed policymakers disagreed in opposite directions - a sign of deep uncertainty about the economic outlook.

Powell’s message: a cut, not a pivot

At the press conference, Jerome Powell stressed that this was a “solid” move to support a gradually cooling economy - not the start of an aggressive easing cycle. He cautioned that “a further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”

Powell also pointed to the ongoing government shutdown, which has disrupted official data collection, making it harder for policymakers to gauge economic momentum.

“When you’re driving in the fog, you slow down,” he said - a metaphor for the Fed’s new watch-and-wait posture.

Markets, which had priced in another cut for December, were quick to adjust. Fed funds futures trimmed expectations for additional easing, gold pared gains, slipping back from intraday highs near $4,010 and the U.S. dollar index (DXY) rebounded. 

The message was clear: policy is not on a preset course. This “pause disguised as a cut” has left gold traders uncertain whether to expect another round of support or a longer holding phase.

The quiet pivot: ending balance sheet reduction

Beyond the rate cut, one key line in the Fed statement went largely unnoticed: the Committee decided to conclude the reduction of its aggregate securities holdings on 1 December. This effectively ends the Fed’s multi-year quantitative tightening (QT) campaign - a significant shift in liquidity management. 

The move suggests the central bank aims to stabilise money markets after signs of funding stress and preserve flexibility ahead of a potentially volatile election year. 

In practice, ending QT means the Fed will reinvest maturing securities rather than shrinking its balance sheet, keeping liquidity conditions loose. For gold, that’s typically supportive: more liquidity tends to weaken real yields and boost demand for non-yielding assets like bullion. However, because Powell’s tone was measured and cautious, traders see this more as risk management than an outright pivot to stimulus.

Market reaction: volatility replaces certainty

Gold’s intraday performance captured the market’s confusion. The metal briefly rallied after the announcement, but quickly pulled back once Powell began speaking. As of late Wednesday, XAU/USD fluctuated between $3,990 and $4,010, holding steady but showing no conviction.

Meanwhile, the U.S. dollar strengthened as traders trimmed rate-cut bets, while Treasuries extended gains, signalling expectations of slower growth rather than renewed inflation.

Equity markets initially rose, then fell back as investors realised Powell had effectively walked back expectations for a December cut.

“Gold had a logical reaction to Powell trying to walk back expectations for a December cut. That’s dollar positive and gold negative,” said Peter Grant, senior strategist at Zaner Metals.

The muted price response shows that gold is now trading less on rate outcomes and more on policy credibility - how much conviction the Fed can maintain in its cautious easing stance.

Gold price forecast: The road to December 

Heading into the final meeting of 2025, the key question is whether the Fed’s caution was justified - or premature.

• If inflation eases and job data soften, the Fed may be able to justify another 25 bps cut, potentially propelling gold above $4,100.
  
• If growth holds steady and inflation proves sticky, the Fed may pause, sending gold back toward $3,900 as the dollar extends gains.
  

Powell also noted that internal Fed views are diverging sharply - some members see the current stance as still “modestly restrictive,” while others believe rates are now “near neutral.” This widening policy gap makes December’s meeting potentially decisive for both gold direction and market confidence.

Gold technical insights

Gold prices are currently consolidating near the $3,958 support level, with price action showing fatigue after the recent rally. The Bollinger Bands have started to narrow, signalling that volatility is easing. The price is hovering around the middle band, suggesting indecision among traders - neither a clear bullish continuation nor a confirmed bearish reversal has yet formed.

The RSI, has now flattened near the midline (50). This flattening pattern reflects a balance between buying and selling pressure, implying that momentum is neutral and traders are waiting for a decisive move below or above key levels.

On the downside, a break below the $3,958 support could trigger sell liquidations, with the next potential target around $3,630. Conversely, if bulls regain control and push the price higher, resistance is seen near $4,365 - a zone where profit-taking and renewed selling could emerge. 

Traders analysing these levels can use Deriv MT5 for advanced charting tools, technical indicators, and live gold market data. Traders on Deriv platforms can also use multipliers to optimise their exposure to gold’s short-term volatility while managing risk, allowing them to benefit from smaller price movements without committing large capital upfront.

Gold investment implications

For traders, this Fed meeting marks the start of a data-driven phase in gold pricing rather than a one-way rally.

• Short-term outlook: Expect sideways trading between $3,950–$4,100, with spikes driven by employment and inflation reports.
  
• Medium-term bias: Modestly bullish if liquidity remains abundant after QT ends.
  
• Long-term view: Gold’s structural support remains intact as global central banks pivot toward looser liquidity management.
  

Ultimately, Powell’s pause, not the cut itself, defines this moment. The Fed has slowed the pace of easing, but by quietly ending its balance sheet runoff, it has also laid the groundwork for long-term gold resilience - even if short-term rallies face resistance. 

Before entering new positions, traders can use Deriv’s trading calculator to estimate margin requirements, contract sizes, and potential profit or loss - a practical tool for planning gold trades around volatile macro events.

Based on current momentum, Nvidia is positioned to take the lead in market valuation by 2026 - potentially becoming the first company closing in on a $5 trillion market cap. Its combination of record earnings, aggressive AI infrastructure investments, and vertical expansion across hardware and software ecosystems gives it a clear edge.

However, Microsoft remains its closest rival, leveraging its AI integration across productivity tools, cloud platforms, and gaming ecosystems to sustain stable, earnings-driven growth. The outcome may hinge on how effectively each company converts AI innovation into long-term revenue resilience.

Key takeaways

• Nvidia’s market value surged by $230 billion in one day, taking it within 3% of the $5 trillion mark - a first in market history.
  
• Nvidia’s share price closed at $201.03, up 5% on the day, and is now testing the $210 resistance as investors price in stronger AI infrastructure growth.
  
• The company announced a $1 billion partnership with Nokia to build AI-powered 5G and 6G networks, expanding its influence beyond data centres.
  
• Microsoft continues to build AI leadership through Azure, OpenAI partnerships, and the Activision-Blizzard acquisition, reinforcing its diversified model.
  
• Analysts expect Nvidia to report $4.51 EPS in 2026 and $6.43 in 2027, implying a P/E ratio near 28.7 - relatively modest for its growth rate.
  
• Both companies could exceed $5 trillion before 2026, but Nvidia’s pure-play AI exposure makes it more sensitive to the next phase of the AI investment cycle.
  

Nvidia Nokia partnership: Nvidia’s $230 billion day 

Nvidia’s stock rally in late October - adding over $230 billion in market value - marks a new phase in the AI investment cycle. 

The surge followed the company’s GTC Washington conference, where it announced multiple partnerships and new AI infrastructure projects. The headline deal was with Nokia, where Nvidia committed $1 billion to integrate its AI-RAN (Radio Access Network) systems into next-generation 5G and 6G infrastructure.

This expansion moves Nvidia beyond its traditional GPU dominance into telecom infrastructure, widening its total addressable market. The firm’s strategy mirrors its approach to data centres - owning both the hardware layer and the software stack that powers AI workloads.

Investors can track Nvidia’s price action and volatility directly through CFDs on Deriv MT5.

Race to $5 Trillion market cap: Nvidia’s vs Microsoft’s stability

The competition between Nvidia and Microsoft represents two distinct approaches to AI market leadership:

• Nvidia’s momentum-driven model: Fueled by exponential demand for GPUs, accelerated computing, and partnerships with every major AI player - including OpenAI, Meta, AWS, and Oracle.
  
• Microsoft’s diversified model: Built on recurring revenues from Azure, Microsoft 365, and gaming ecosystems like Activision-Blizzard, with AI woven throughout its services.
  

At current valuations, both companies are within reach of the $5 trillion milestone. Nvidia’s faster earnings trajectory - $86.59 billion in trailing 12-month net income - gives it a near-term advantage. Yet Microsoft’s consistent cash flow and balance sheet strength make it more resilient in the event of an AI market slowdown.

AI expansion through strategic partnerships

Nvidia has positioned itself as a central node in the AI economy by investing directly in its ecosystem.

Recent moves include:

• $100 billion investment plan with OpenAI to deploy at least 10 gigawatts of Nvidia systems for next-generation model training.
  
• $5 billion equity stake in Intel, focusing on joint AI chip and data centre development.
  
• $1 billion equity investment in Nokia, supporting AI-native 5G/6G networks.
  

These investments transform Nvidia from a chip supplier into an AI infrastructure conglomerate - similar to how Microsoft evolved from a software company into a diversified tech leader in the 2010s.

Nvidia & Microsoft Earnings and valuation outlook 2026

Nvidia’s forward-looking metrics suggest its valuation may still be grounded in fundamentals:

• Fiscal 2026 earnings estimates: $4.51 per share.
  
• Fiscal 2027 projections: $6.43 per share.
  
• Forward P/E ratio around 28–30, assuming price stability near $200.
  

For Microsoft, consensus expects steady double-digit earnings growth, supported by Azure expansion and monetisation of AI tools across Office, GitHub, and LinkedIn.

If both companies meet current projections, Nvidia could exceed $5 trillion in market cap before mid-2026, while Microsoft may reach that milestone through consistent compound growth over a longer horizon.

Market drivers and risks ahead

The AI market is entering a capital-intensive phase where hyperscalers are increasing infrastructure spending, driving Nvidia’s top-line expansion.
However, potential risks include:

• A slowdown in corporate AI investment if macroeconomic conditions tighten.
  
• Competitive advances from AMD or custom silicon by hyperscalers.
  
• Regulatory pressures on AI model deployment that could affect demand.
  

For Microsoft, the key risk lies in monetisation speed - whether Copilot, Azure AI, and AI-integrated products deliver enough incremental revenue to justify its valuation expansion.

Use Deriv’s trading calculator to estimate price risk exposure to highly volatile AI tech stocks like Nvidia and Microsoft.

Nvidia technical insights

At the time of writing, Nvidia’s stock is trading around the $201 mark, breaking decisively above the upper band of the Bollinger Bands - a sign of strong bullish momentum. However, such a sharp move beyond the upper band often indicates overextension, suggesting the stock could be due for a short-term pullback or consolidation.

The Relative Strength Index (RSI) is rising sharply, currently hovering around 65, and heading towards the overbought region (above 70). This momentum implies that bullish sentiment remains strong, but traders should watch for potential profit-taking once the RSI crosses into overbought territory.

In terms of support levels, Nvidia has established key zones at $180, $174.50, and $168. A break below these levels could trigger sell liquidations and increased downside pressure. Conversely, as long as the stock holds above $180, the current trend remains bullishly intact, though volatility is expected to stay elevated.

Nvidia & Microsoft investment implications

The AI market’s next two years will likely be defined by how fast companies can convert hype into sustained profit growth. Nvidia’s $230 billion single-day gain underscores its dominance in the current cycle, but maintaining that pace requires continuous innovation and client investment.

Microsoft’s diversified model gives it a defensive edge - less volatility, more predictable cash flow - making it a potential co-leader in the long-term AI economy.

For investors, 2026 may mark the first true test of AI’s market maturity: whether hardware-driven earnings (Nvidia) or ecosystem-based monetisation (Microsoft) delivers the stronger foundation for the next decade of growth.

According to analysts, WTI crude could slide toward $55 per barrel as hedge funds pile into record short positions and oversupply fears dominate the market. Short calls on Brent surged by 40,233 contracts in the week ending 21 October, bringing total bearish positions to 197,868 - the most on record. 

This marks the third consecutive weekly increase and a doubling of short exposure in just three months. Institutional traders are signalling a clear message: supply is rising faster than demand, OPEC+ is pumping more barrels, and global demand remains too weak to absorb the excess.

Still, with fresh U.S. sanctions on Russian oil and OPEC production politics adding new variables, short-covering rallies back toward $65 per barrel remain possible. The battle between macro fundamentals and geopolitical risk continues to define oil’s volatile range.

Key takeaways

• Record hedge-fund shorts: Brent and WTI short positions have doubled since July, signalling broad institutional pessimism.
  
• Short-term volatility: U.S. sanctions on Russia lifted Brent +10% in a week, but analysts expect the effect to fade.
  
• Bearish fundamentals: Rising OPEC output, record U.S. supply, and weak demand point to continued downside pressure.
  
• Structural shift: U.S. shale costs are climbing, setting the stage for longer-term tightening once oversupply eases.
  
• Price risk: If oversupply persists, WTI could test $55, though a short-covering rally toward $65 remains possible.
  

Hedge fund oil trading takes control of the narrative

Speculative funds are now at their most bearish on record. In the week ending 21 October, short positions in Brent futures surged by over 40,000 contracts, marking the third consecutive weekly increase. This sharp rise suggests confidence that near-term fundamentals - particularly oversupply and weak demand - will push prices lower.

By comparison, short-only positions stood at just 26,000 contracts a year ago. The current build-up mirrors the mid-2018 and 2020 oil corrections, when rising inventories and a strong U.S. dollar fuelled steep sell-offs.

OPEC oil production increases are overwhelming the market

Oil prices rallied nearly 8% last week after the U.S. announced sanctions on Russia’s Rosneft and Lukoil, but quickly lost steam as OPEC signalled more output ahead. Eight member states are backing another production hike in November, roughly 137,000 bpd, as Saudi Arabia leads an effort to reclaim market share.

This deliberate oversupply strategy aims to undercut higher-cost U.S. producers while keeping a lid on global prices. With both OPEC+ and non-OPEC producers such as the U.S., Brazil, and Canada expanding supply, the market remains saturated despite geopolitical tension.

Demand weakness compounds the pressure

Analysts from Standard Chartered cut their 2026–2027 oil price forecasts by $15 per barrel, citing a shift to contango - where futures prices exceed spot prices, signalling near-term softness.

Global demand growth has slowed as trade frictions and tariff uncertainty weigh on consumption. The International Energy Agency and S&P Global both expect oil to dip below $60 early next year as oversupply persists.

Even with record refining runs, estimated above 85 million bpd, the market may not be able to absorb the extra barrels.

Geopolitical shocks can still spark short-covering rallies

The short trade is not risk-free. The Trump administration’s sanctions on Russia drove a brief 10% rally, showing how exposed shorts are to policy moves.

If tensions in Ukraine, Iran, or China–U.S. trade talks escalate, supply disruptions could trigger a short-covering surge, temporarily driving WTI back above $65.

Still, analysts expect such rallies to fade quickly as long as U.S. production remains strong and OPEC continues to loosen output controls.

The structural story: rising shale costs and long-term tightness

While the near-term trend is bearish, the cost base of U.S. shale is climbing. Enverus analysts project that marginal production costs could rise from $70 to $95 per barrel by the mid-2030s as producers exhaust their most efficient wells. 

This implies that if prices fall too far, supply could contract sharply, setting the stage for future tightness once demand stabilises.

WTI crude oil price prediction: Market impact and price scenarios

If current dynamics persist, analysts see Brent testing $60 and WTI near $55 by early 2026. However, a shift in positioning - such as hedge-fund short-covering or renewed sanctions risk - could trigger rebounds toward $65–$70. For now, the balance of risk remains skewed lower as supply continues to exceed demand. 

Commodities traders tracking these scenarios often rely on Deriv’s trading calculator to manage position sizes and evaluate exposure in volatile markets.

Oil price technical insights

Oil is hovering near the upper Bollinger Band on Deriv MT5 following a rebound from recent lows - signalling fading bearish momentum and a potential short-term continuation higher. 

The RSI is climbing slowly around the midline, suggesting improving buying pressure but no overbought conditions yet. Key resistance levels sit at 62.35 and 65.00, where profit-taking could emerge. On the downside, 56.85 remains a crucial support - a break below it may trigger renewed selling pressure.

Oil Price investment implications

The current setup suggests heightened downside risk over the medium term for traders and portfolio managers. If volatility spikes, short-term strategies may favour tactical buying near support levels around $61–$62. However, medium-term positioning should reflect the bearish demand outlook and the likelihood of prolonged oversupply. 

Energy equities with low-cost production and strong balance sheets - particularly U.S. shale and Middle Eastern producers - could outperform, while high-cost offshore and frontier projects may struggle. Refiners, meanwhile, stand to benefit from strong margins even in a lower-price environment.

Eurozone business activity surged to a 17-month high in October, led by Germany’s strongest private-sector expansion in over two years, while inflation stayed near the European Central Bank’s 2% target. With the ECB pausing rate cuts and the Federal Reserve preparing to ease, traders see scope for EUR/USD to climb toward 1.20 in the short term.

However, the rally faces limits: France’s weakness, sliding business confidence, and uneven growth across the bloc suggest the recovery may not last long enough to sustain a breakout.

Key takeaways

• The Hamburg Commercial Bank (HCOB) Flash Eurozone Composite,  Purchasing Manager’s Index (PMI) rose to 52.2 in October, its 10th straight month of expansion and the highest since mid-2024, defying expectations of a slowdown.
  
• Germany’s services-led rebound powered the region’s growth, while France contracted faster than forecast, creating a two-speed recovery.
  
• Inflation pressures remain moderate, with services prices rising slightly but staying near the ECB’s long-term average.
  
• The ECB is expected to hold rates, contrasting with the Fed’s upcoming 25 bps cut, which could weaken the dollar.
  
• Despite strong data, business confidence fell to a five-month low, hinting that firms remain cautious about future demand.
  
• EUR/USD trades near 1.1650, supported by monetary divergence but capped by fragile sentiment and uneven growth.
  

Eurozone PMI data: Economic activity hits a 17-month high

The Eurozone economy accelerated unexpectedly at the start of Q4. The HCOB Flash Eurozone Composite PMI, compiled by S&P Global, climbed to 52.2 in October from 51.2 in September, far above the consensus estimate of 51.0. Readings above 50 indicate growth, marking the tenth consecutive month of expansion.

New orders grew at their fastest pace in 2½ years, suggesting renewed business momentum. 

"October’s flash PMIs suggest the euro-zone economy may have gained momentum at the start of the quarter."

- Adrian Prettejohn, Capital Economics

Germany was the standout performer. Its private sector recorded its strongest growth since early 2023, driven by a robust rise in services activity. This boosted the euro in currency markets and revived optimism that Europe’s largest economy could anchor a broader recovery.

France, however, painted a different picture. Its PMI fell deeper into contraction as demand for goods and services weakened amid political tensions and fiscal uncertainty. 

For traders analysing these developments on Deriv MT5, the PMI figures serve as a clear indicator of economic momentum likely to influence the EUR/USD trend through Q4.

ECB interest rate decision: Holding the line as inflation steadies

Inflation in the services sector remains moderate, with price increases near the ECB’s long-term average. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said the data “confirms the ECB’s stance not to implement further interest rate cuts.”

The central bank is widely seen as ending its easing cycle, with inflation hovering around 2%. In contrast, the U.S. Federal Reserve is expected to cut rates by 25 bps this week, following a softer-than-expected September CPI of 3.% year-on-year. Core CPI slowed to 3.1% from 2.9% in August, reinforcing bets on a dovish shift.

This policy divergence - ECB steady, Fed easing - creates favourable conditions for the euro, especially as the U.S. Dollar Index (DXY) trades near 99.00, its lowest in months.

Confidence falls despite the rebound

While headline data impressed, underlying sentiment weakened.

• Business confidence slipped to a five-month low, showing that firms remain cautious about demand.
  
• Employment rose again in October, with services hiring at the fastest pace since June 2024.
  
• Manufacturing employment, however, fell at the quickest pace in four months, underscoring uneven demand across sectors.
  

Operating costs increased at a slower pace, yet selling prices ticked higher, suggesting mild inflationary pressure but no signs of overheating. This dynamic - rising activity, but subdued confidence - suggests the current rebound could lose momentum if new-order growth cools.

U.S. factors: Fed cuts and dollar weakness

The U.S. Dollar Index (DXY) slipped below 99.00 after the soft CPI print, reflecting investor expectations for a 25-basis-point Fed rate cut. The Fed’s easing bias contrasts sharply with the ECB’s pause, reducing yield spreads in favour of the euro.

Geopolitical developments add another tailwind:

• U.S.–China trade talks in Kuala Lumpur have eased tariff concerns, with Washington dropping threats of 100% import duties.
  
• China’s delay of its rare-earth export restrictions and expected purchases of U.S. soybeans have improved global risk sentiment.
  

These factors have helped push EUR/USD higher for four consecutive sessions, now trading near 1.1630.

EUR/USD market outlook: 1.20 or fade?

Bullish case:

• Strong German services growth and 17-month-high PMIs signal a broader recovery.
  
• ECB’s rate stability supports euro yields versus a softening dollar.
  
• U.S. disinflation and dovish Fed policy narrow the transatlantic rate gap.
  
• Positive sentiment from trade diplomacy may lift risk assets, supporting the euro.
  

Bearish case:

• France’s weakness and Europe’s political instability could undermine confidence.
  
• A fragile manufacturing sector and slower new orders may limit follow-through.
  
• If U.S. data rebounds or the Fed signals caution on further cuts, dollar strength could return.
  

Most analysts see EUR/USD supported above 1.16, with 1.18–1.20 as near-term resistance. Sustained momentum above 1.20 will likely require a continuation of German outperformance and further confirmation that Eurozone growth is broad-based.

EUR/USD technical analysis

EUR/USD remains range-bound between 1.1870 resistance and 1.1566 support, with price hovering near the mid-Bollinger band and the RSI flat around 58, signalling neutral momentum. 

The narrowing Bollinger Bands indicate fading volatility and the potential for a breakout. A move above 1.1728 could invite renewed buying toward 1.1870, while a drop below 1.1566 may trigger further selling. Until then, the pair is likely to trade sideways, with traders watching for an RSI breakout or band expansion as the next directional cue.

EUR/USD investment implications

For traders and investors, the balance of risk in EUR/USD tilts upward in the short term but remains fragile.

• Short-term strategies: Buying dips near 1.1600 may offer upside toward 1.1850–1.20 if Fed dovishness persists and Eurozone data confirms sustained momentum.
  
• Medium-term positioning: Caution is warranted; if business sentiment fails to recover or German strength fades, EUR/USD could retreat toward 1.1550.
  
• Macro context: The ECB’s steady policy and Germany’s rebound contrast with the Fed’s softening stance - creating a favourable environment for euro resilience into Q4.
  
• Political watchpoints: France’s budget tensions and any disruption in U.S.–China trade progress could quickly dampen euro optimism.

Using Deriv’s trading calculator before entering positions helps estimate margin and pip values, a crucial step when managing risk around volatile currency pairs like EUR/USD.