Capital flows out of the US after FED
However, traders are already starting to discount the dovishness of a supposed new FED’s president Kevin Hassett, who is known for his dovish rethorics. He had mentioned earlier this week that there might be even more than 3 rate cuts.
Euro, Yen and other major currencies are driven by hawkish narratives, in comparison to the US dollar. For example, the yield of 30-year bonds of Germany had reached yet another peak.
[caption id="attachment_176937" align="aligncenter" width="2382"]
Yields of 30-year bonds of Germany. Source: https://www.cnbc.com/quotes/DE30Y-DE[/caption]Other than declining the interest rates, the FED had announced buybacks of short-term bonds (T-bills) for about 40 billion monthly, which pushes down the real interest rate and brings some liquidity to the markets: that’s considered mildly positive news for stocks, metals and crypto.
The US stocks indices, however, struggle to maintain the momentum, whereas metals display a solid rally, having driven Gold above $4300, and silver to the new historical high. Platinum and palladium have set new intermediate-term highs too.
Bitcoin struggles to keep the momentum, having locked in a relatively narrow trading range near 92000 - 93000 price area. After the substantial outflow from Bitcoin ETFs and the rotation from crypto back to fiat assets, Bitcoin tries to find some demand back.
So far, the main driving narrative now is the differential between US and European assets, in favor of the latter. Chinese stocks also attract a significant amount of capital flows and hedge funds prepare for a rally, as Bloomberg experts say. Let’s dive into potential opportunities, given the information above.
DAX
DAX is setting up for the breakout of the massive consolidation pattern, having been built since June 2025. Despite the end of dovish monetary policy in the EU, inflation keeps steady around 2.3%. German bond yields have reached another peak, and stocks might attract some capital flows too, as yields are not expected to continue rising.
European stocks look like a balanced decision given the pressure on the US dollar and overheated AI sector. Before breaking to the new peak, DAX is supposed to test the 20-day moving average, as the probability of immediate continuation is relatively low.
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DE30. Source: Exness.com[/caption]HANG SENG
The Hang Seng index is locked in a consolidation, right above the 200-day moving average.
The market loses volatility, and in order to find a trigger for the move, it may need to test the strategic support zone below (200-day moving average).
That’s the common pattern for the triangular formation - it might be shaken to both sides with quick price impacts before determining the direction.
The logical destination for the move would be the 24500 area: after testing this area, the market may reverse higher and find a buying pressure as shown at the chart below.
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HK50. Source: Exness.com[/caption]