TA Tuesday: Crypto Surges, Rates Shift, and Equities Hold Steady

Week-over-week performance:

  • BTCUSD: 71,048 / +7.20%
  • ETHUSD: 3,692 / +10.37% (!)
  • US10Y: 4.41% / +10bps
  • DXY: 104.10 / -0.91%
  • GOLD (USD/OZ): 2,345 / +3.99% (!)
  • NDX: 18,100 / -1.05%
  • VIX: 15.18 / +11.12%

On the macro side:
Last week, the US NFP once again surpassed expectations, adding 303k jobs compared to the forecast of 212k.
This, along with speeches by Powell and others, has led to a shift in expectations for rate cuts.
The EoY target rate is now expected to be 475-500 bps, with two rate cuts anticipated throughout the year.
This marks a significant change from just a month ago, when the EoY target rate was expected to fall between 425-450 bps, and the market was expecting three rate cuts.

This shift highlights a notable change in duration positioning.
Despite the increase in long rates by 10 bps and gold hitting new all-time highs, US equities remained unchanged week-over-week.
This underscores the continued risk-on sentiment in the market, where disappointing figures are perceived as favourable buying opportunities.

Chart 1: Target rate probabilities for the 18 December 2024 Fed meeting

Looking ahead:

  • Wednesday, 10 April: US CPI, BoC Interest Rate Decision, FOMC minutes
  • Thursday, 11 April: ECB Interest Rate Decision, US PPI, US Jobs, Fed’s BS
  • Friday, 12 April: UK GDP, DE CPI

On the FX side:
Despite expectations of a prolonged period of elevated USD lending rates, the DXY once again failed to break through the 105 mark.
As we prepare for a key week with both the US CPI and the ECB rate decision, we should be prepared for potential volatility.

However, I expect the ECB to closely mirror the Fed’s actions, leading to a consolidation of the DXY within the 104/105 range.

In the USDCHF and EURCHF pairs, the persistent consolidation around the key levels of 0.9076 and 0.9824, respectively, continues to signal bullish sentiment in my view.
Consequently, I remain long on both positions.

Chart 2: DXY 1d

On the crypto side:
Crypto surged again, accompanied by an easing in derivatives positioning during the week.
BTC funding rates even dipped into negative territory over the weekend, signalling a decline in speculative activity.
Moreover, front-end implied volatilities have started to ease as realised volatility has not materialised as anticipated.
The combination of weaker positioning and higher prices is a bullish indicator.
However, selling pressure remains pronounced around USD 73,000 and above for BTC.
In the short-run, USD 72,300/ USD 73,000 represents key resistance levels, while USD 69,400 serves as a pivotal point.
For short-term reversal opportunities, favourable entry points are now being observed around USD 67,000.

Chart 3: BTCUSD 1

In altcoins, I see ETH’s outperformance as a confirmation that risk is on, and when risk is on, beta trades pay off.
With ETHBTC bouncing back above 0.05, the next target is 0.055.

Chart 4: ETHBTC 1d

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