Gold and Cryptocurrency Challenges
Bitcoin, Ethereum, and Ripple stall their two-day recovery as the positive impact of the Vanguard Group lifting its crypto ETF ban diminishes. Ripple faces pressure, failing to breach a resistance level, and might decline further amid ongoing market sentiment.
EUR/USD maintains above 1.1650 after upbeat US data, while GBP/USD holds gains above 1.3350 despite the USD’s recovery struggles. XRP pressures persist despite strong on-chain activity and stable ETF inflows.
The Federal Reserve’s policy approach is complex, reflecting shifts from rate cuts to potential pauses and more anticipated cuts in December. This complicated landscape requires close market analysis to understand the Fed’s evolving strategy.
Labor Market and Inflation
We are seeing a significant drop in announced job cuts, which in normal times would strengthen the US Dollar. However, the market is completely ignoring this positive labor news. The focus for traders remains squarely on the Federal Reserve and the growing belief that a rate cut is coming this month.
This view is reinforced by other recent labor data. The November Non-Farm Payrolls report, released just last week from our 2025 perspective, showed a solid gain of 199,000 jobs while the unemployment rate edged down to 3.7%. Despite this picture of a resilient job market, the dollar has continued to lose ground against currencies like the Euro and the Pound.
The reason for this is the steady decline in inflation we have witnessed over the past year. The latest Consumer Price Index (CPI) data for October 2025 showed headline inflation falling to 3.1%, much closer to the Fed’s 2% target. This gives the central bank the room it needs to start easing policy to ensure a soft landing for the economy.
Market pricing reflects this conviction with near certainty. Looking at the CME FedWatch Tool, we can see that traders are pricing in over a 90% probability of a 25-basis-point rate cut at the upcoming December FOMC meeting. This makes derivative plays that bet against the US Dollar, such as buying call options on EUR/USD, seem attractive.
We have seen this playbook before. In 2019, the Fed cut rates as a form of “insurance” even though the labor market was strong, successfully extending the economic cycle. The current market sentiment suggests traders believe Fed officials are following a similar strategy now.
