The S&P 500 moved higher but remained under 6,900, forming a lower high. While stocks didn’t form a lower high, Nasdaq showed moderate outperformance. The recommendation was made for clients to take profits from long positions and consider shorting.
EUR/USD continued its monthly recovery past 1.1600, rising to around 1.1650 on Thursday. Investors are shifting focus to the upcoming flash Q3 GDP figures in the euro area. Concurrently, GBP/USD returned below 1.3200 due to mild selling pressure, despite broader risk-related market improvements affecting the US Dollar.
Gold Price Movement
Gold fell back to the $4,150 area per troy ounce despite prior gains. The retreat occurred amidst rising US Treasury yields and a weakening US Dollar. Aerodrome and Velodrome tokens both dropped 20% after their merger was announced by Dromos Labs.
The Bank of Japan is under scrutiny as speculation about potential interest rate hikes grows. With rates at 0.5%, pressure mounts on Governor Ueda regarding future decisions. Meanwhile, Ripple trades under $2.50, supported by positive sentiment in the cryptocurrency market.
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Nasdaq Internal Divergence
The S&P 500 is showing weakness, failing again to break 6,900, which suggests a lower high is forming. With the latest October 2025 Consumer Price Index data coming in hot at 3.8%, we are seeing the VIX creep back up towards 18 from its recent lows. This environment suggests trimming long positions and considering puts or short futures on the index.
We are also seeing a significant split inside the Nasdaq, which is a warning sign. While giants like Microsoft and NVIDIA are holding up, weakness in former leaders such as Apple and Meta is a concern. Traders should be wary of this internal divergence, as it often precedes a broader market pullback.
The US Dollar’s recent decline is a direct result of the 43-day government shutdown that ended in early November 2025. This event has likely shaved an estimated 0.4% off Q4 GDP growth forecasts, prompting us to favor currencies like the Euro. We see the EUR/USD pair having room to move higher past 1.1600, especially ahead of the Eurozone’s Q3 GDP figures.
Despite the weaker dollar, gold is struggling to hold gains around $4,150. The main headwind is the rise in U.S. Treasury yields, with the 10-year note pushing back above the 5.1% level. This makes holding non-yielding gold less attractive, so we would avoid aggressive long positions for now.
Over in Japan, speculation is growing that the Bank of Japan may be forced to hike its 0.5% interest rate soon. Japan’s core inflation has now stayed above 2.5% for over six months, increasing pressure on the central bank. This policy divergence from the U.S. could lead to significant volatility and potential shorting opportunities in the USD/JPY pair in the coming weeks.
