Last year started with markets expecting the FED to stop raising rates and reverse policy, which kept the USD soft in Q1 and Q2, but the FED kept continued to keep the hawkisgh tone until recently, based on a strong labour market. However, they started giving dovish signals in Q4 and the USD turned bearish while risk assets turned bullish. So, that’s how 2024 ended, with the USD in retreat and stock markets at record highs.

Last week the volatility was low, being in the Christmass period, however there was enough price action, as traders made their last adjustmnets before the end of the year. Unemployment claims jumped to 218K from 206K previously, beating expectations of 211K while the Spanish CPI (consumer price index) inflation ticked lower to 3.1%, which showes that inflation continues to head toward 2% in the Eurozone. 

This means that the European Central Bank will accept the reality and announce the policy shift soon, as the FED did last month, starting to cut interest ratesas well. The Central Bank of Israel lower rates to 4.50% yesterday from 4.75% previously, opening the door for other central banks to start doing so.   

This Week’s Market Expectations

Today the economic calendar is light, with only the manufacturing PMI report. The Caixin Manufacturing PMI is expected to slow to 50.4 points as it approaches contraction, which is bad news for commodity dollars, while the final European manufacturing PMI readings are expected to remanin unchaged.

Tomorrow we have the JOLTS Job Openings which are expected to show a slight improvement and the FOMC meeting minutes, which will likely confirm the bearish bias and give the USD another push lower. The Chinese Caixin Services PMI are scheduled for Thursday, as well as the ADP Non-Farm Employment Change and th Unemployment Claims, which are expected to come down to 210K this week. The US and Canadian employment reports will close the week on Friday.

BTC/USD has been one of the best-performing assets this year, but it is now in a consolidation period after a 160% surge. Despite the poor state of the economy, the value of Bitcoin has risen above $43,000 and is projected to beat traditional assets. It started at $40,000 in December, but bbuyers have been very active, keeping the entire price optimistic. However, after a substantial decline the day before, buyers reappeared at the 20 SMA (gray) again, which continues to act as support on the daily chart.

BTC/USD – Daily Chart 

 Ethereum Keeps Making Higher Lows Ahead of the Decnun Upgrade 

Cryptocurrencies suffered substantial losses in 2022, with some to lose up to 80% of their market capitalization, with Ethereum plunging from below $5,000. However, this year has been positive for digital currencies, with ETH/USD reaching new highs, demonstrating that the trend has been bullish all year, with moving averages continueing to push the lows higher.

Ethereum – Daily Chart

• ETH Buy Signal
• Entry Price: $1,947.38
• Stop Loss: $1,490
• Take Profit: $2,500