Markets On Edge – GBPUSD On The Verge Of A Breakout

Israeli security forces on Wednesday launched what the military described as a counter-terrorism operation in the northern West Bank, which Palestinians said was targeting the city of Tubas.

Tubas Governor Ahmed Al-Asaad told Reuters Israeli forces, backed by a helicopter that had opened fire, were encircling the city and establishing positions across several neighbourhoods.

"The incursion looks to be a long one; occupation (Israeli) forces have driven people from their houses, commandeered rooftops of buildings, and are conducting arrests," he said.

Al-Asaad said Israeli forces ordered those whom they forced to leave their homes not to return until the operation ends, which he anticipated could be several days.

The Israeli military said in an earlier statement that the operation, carried out with police and intelligence forces, began early on Wednesday morning.

ISRAELI OPERATIONS IN NORTHERN WEST BANK BEGAN IN JANUARY

Asked about the operation, a military spokesperson declined to comment, saying more details would be released soon.

Israel has said its security forces have been targeting Palestinian militancy in the West Bank, where hundreds of thousands of Israeli settlers live among 2.7 million Palestinians, granted limited self-rule under Israeli military occupation.

Hamas, which agreed to a ceasefire with Israel in Gaza last month, condemned the latest West Bank operation and called on the international community to intervene to stop it.

The assault on Tubas appeared to be an extension of a military operation launched by security forces in the northern West Bank city of Jenin in January, days after U.S. President Donald Trump returned to the White House.

That operation has since expanded to other Palestinian cities in the north of the West Bank, forcing thousands from their homes, with Israeli forces maintaining their longest presence in some West Bank cities for decades.

Israeli forces have cleared out refugee camps across the northern West Bank, with deadly raids destroying roads and homes. Human Rights Watch this month accused Israel of war crimes and crimes against humanity over what it said were forced expulsions. Israel denies committing such crimes.

Violence in the West Bank has escalated in recent months, with Israeli settlers carrying out attacks on Palestinian communities. Settlers are rarely arrested or prosecuted, although the wave of attacks has drawn criticism from Prime Minister Benjamin Netanyahu and others in his government.

Since Hamas carried out the October 7 attack on Israel from Gaza two years ago, Israel has sharply curtailed movement in the West Bank, with new checkpoints erected and some Palestinian communities effectively sealed off by gates and roadblocks.

Source: Reuters

The European Central Bank sees "elevated" risks to the region's financial stability, with stretched asset valuations prone to sharp adjustments and fiscal challenges in some countries that could test investor confidence.

"Market sentiment could shift abruptly on account of deteriorating growth prospects, for example, or disappointing news on artificial intelligence adoption," the ECB said in its bi-annual Financial Stability Review, published Wednesday.

It also cautioned that concern about high public debt in some advanced economies could strain global bond markets, which could shift international capital flows and jolt currencies.

The report echoes recent warnings from central bankers and regulators around the world about growing financial-stability risks. They, too, list record-high valuations in financial markets, rising public debt and lingering trade uncertainty.

In particular, the bull run in AI-related firms has captured the attention of officials who worry about a rapid correction. More recently, investors have started to question the scale of investments in the technology. That's helped put the S&P 500 on track for its first monthly decline since April.

The ECB stressed in its report that "persistently high valuations and increasing equity market concentration" raise the possibility of sudden price adjustments.

"Liquidity mismatches in open-ended investment funds, pockets of high leverage among hedge funds and opacity in private markets could amplify market stress," it said.

On a potential repricing of sovereign risk, the ECB said it "would be more difficult to absorb today than previously due to a gradual shift in the investor base towards more price-sensitive investors."

More recently, perceptions of risk have "focused on the deteriorating trajectory of fiscal fundamentals in France," the ECB said. The region's No. 2 economy is struggling to rein in its budget deficit and debt load.

At the same time, the ECB highlighted that — despite some trade agreements — doubts about the future and the longer-term economic and financial effects of tariffs continue to shape the euro-area financial stability landscape.

"Measures of trade policy-uncertainty have eased notably from their April highs," Vice President Luis de Guindos said. "But uncertainty continues to linger, with potential for renewed spikes."

Source: Bloomberg Europe

EUR/USD is attempting a recovery wave from the 1.1500 zone. USD/CHF climbed higher above 0.8050 and might correct some gains.

Important Takeaways for EUR/USD and USD/CHF Analysis Today

• The Euro declined toward 1.1500 before it started a recovery wave against the US Dollar.
• There was a break above a major bearish trend line with resistance at 1.1530 on the hourly chart of EUR/USD at FXOpen.
• USD/CHF climbed higher above 0.8050 and 0.8080 before it faced hurdles.
• There was a break below a bullish trend line with support at 0.8085 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair extended the decline below 1.1550. The Euro even declined below 1.1520 before the bulls appeared against the US Dollar.

The pair tested 1.1490 and recently started a recovery wave. There was a move above 1.1520 and 1.1550. The pair climbed above the 50% Fib retracement level of the downward move from the 1.1653 swing high to the 1.1491 low.

More importantly, there was a break above a major bearish trend line with resistance at 1.1530. The pair is now trading above 1.1575 and the 50-hour simple moving average. Immediate hurdle on the EUR/USD chart is near the 61.8% Fib retracement at 1.1590.

The first key breakout zone sits at 1.1615. An upside break above 1.1615 might send the pair toward 1.1655. Any more gains might open the doors for a move toward the 1.1700 zone. If there is a fresh decline, the pair might find bids near 1.1550.

The next major support is 1.1540. A downside break below 1.1540 could send the pair toward 1.1510. Any more losses might send the pair to 1.1490.

USD/CHF Technical Analysis

On the hourly chart of USD/CHF at FXOpen, the pair started a decent increase from 0.7940. The US Dollar climbed above the 0.8000 handle against the Swiss Franc.

The bulls were able to pump the pair above the 50-hour simple moving average and 0.8050. Finally, the pair tested 0.8100. A high was formed near 0.8101 and the pair is now consolidating gains. The pair dipped below the 23.6% Fib retracement level of the upward move from the 0.7937 swing low to the 0.8101 high.

Besides, there was a break below a bullish trend line at 0.8085. On the downside, immediate support on the USD/CHF chart is near 0.8040. The first key area of interest might be near the 50% Fib retracement at 0.8020.

A downside break below 0.8020 might call for a drop to 0.7975. Any more losses may possibly open the doors for a move toward 0.7940.

On the upside, the pair could struggle near 0.8080. The first major barrier for bulls is 0.8100. If there is a clear break above 0.8100 and the RSI climbs above 50, the pair could start another increase. In the stated case, it could test 0.8150.

Source: FXOpen

The race among Chinese manufacturers to build ever-larger wind turbines is expected to slow due to technical hurdles in the coming years, according to industry executives.

"The average wind turbine capacity will not see a significant increase in 2026 based on our general data, which indicates a slowdown in the trend to develop larger machines," said Wei Min, deputy chief executive officer of Windey Energy Technology Group Co. He spoke at the BloombergNEF conference in Shanghai on Wednesday.

Chinese wind manufacturers, which dominate the global industry, have spent the last few years one-upping each other with large turbines. But issues are emerging, like insufficient data and testing time for new machines, according to Wei. Transporting blades, which can be more than 100 meters (328 feet) long, is another issue.

China adopted a new power pricing policy for renewable sources this year, which has threatened the profitability of wind and solar farms. It has forced manufacturers to find new ways of reducing costs for their clients by developing different approaches in turbine size.

Goldwind International Holdings' Vice President Wu Kai also believes turbine size will plateau in the next few years. "Onshore wind turbines will not become larger" even as we approach the end of the decade, he said.

Source: Bloomberg Europe

There is some decent drama unfolding among the Big Tech bros this week — and Google and Nvidia are right in the middle of it. The former victim in the AI race, Google, which only months ago looked like it could be eaten alive by OpenAI's next-gen AI chatbot, is suddenly storming back and, in a twist, pushing Nvidia dangerously close to the cliff as it takes the lead in a way few saw coming.

To put things rapidly into context: the past two years haven't been rosy for Google. Gemini took time to lift off, hallucinated and became a punchline in its early days. The model quietly improved its way through end users until Gemini 3 hit hard last week. Google eventually got its AI model right and moved aggressively into 3D reasoning, agentic coding and "vibe coding" — the kinds of end-products that could mint billions in revenue.

But that's not where the story ends.

It's where it begins.

As AI chatbots seep into everyday life, demand for inference is exploding. Inference is when AI takes your request and figures out an answer. And with it, the cost of inference — the cost of running a trained model every time someone queries it — is exploding too. For OpenAI, that bill for 2024 is projected to hit around $2.3 billion, roughly 15× its training costs.

And here comes the plot twist: Meta and OpenAI are reportedly moving toward Google's TPUs — Google's homegrown chips — to run their own models because they are cheaper to operate while offering comparable performance. Both Meta and OpenAI are said to be seeking up to 4× better performance-per-dollar on inference workloads.

And inference is the next big thing because it never stops: every time you chat with a bot, the cost accumulates. Inference costs are projected to make up almost three-quarters of total AI computing costs by 2030.

So the world's biggest AI players could be shifting toward Google's TPUs — cheaper, more tailored to AI workloads — and potentially replacing Nvidia.Read that again.

That's a real risk for Nvidia, whose client base is nearly half made up of these same Big Tech giants. This is why — on top of the accounting drama that hit the company last week — the stock shed another 2.60% yesterday, while Google rallied to a fresh ATH.

In the meantime, Meta boosted its ad revenue thanks to AI, but its long-term business model is unclear. Meta is spending billions to transform its social media platforms into AI-content platform — a direction that risks disengaging users. Its Llama model is rarely mentioned in enterprise-grade discussions, and its oversized compute spending could backfire. Unlike Google, which can simply rent excess compute through its existing cloud offering, Meta must actually build that business from scratch.

Outside the US, Alibaba's AI efforts may be paying off. The company announced a stronger-than-expected 34% growth in its cloud business, that helped counterweigh their spending on consumer subsidies and AI investments. But the numbers couldn't bring investors on board. The share price is struggling to a reverse October – November softness.

In summary, Nvidia is being broadly questioned, Meta may be hitting its potential, while Amazon is the one Big Tech name that could benefit meaningfully from robotics when the time is right.

But right now, Google suddenly seems to have it all: the data, the data centres, the chips, the AI model and the interface. It might well be the next $5 trillion beast. And if you think about it, Alibaba also has many of these assets. It's got the data, the data centres, its own chips, its AI model, its e-commerce empire, and incredible reach within China and beyond. So if you believe the future is "everything under one roof," Alibaba is – has always been – a strong candidate.

What about Nvidia? Nvidia has been struggling since its latest earnings blew up in its hands as investors focused on swelling inventories and deferred payments. The company has been compared to Enron, booed because of the Google-TPU news, and are now defending themselves by saying "we're not Enron" and "we are happy for Google." Their main argument is that Google's TPUs are designed for one specific function, whereas Nvidia's GPUs are compatible with every AI model. But will that matter if companies simply want chips that do the job cheaply and efficiently?

So, the moment has come ladies and gentlemen: competition for Nvidia is arriving from an unexpected direction. That could eat into its revenue potential and market share. Everyone is waiting to see how Nvidia will respond — by expanding customers beyond Big Tech, rolling out more inference-friendly GPUs, or pushing deeper into cost-competitive partnerships. We'll soon find out.

Meanwhile, US consumer sentiment is waning. More than half of the strong US GDP this year came from massive AI investment. Yesterday's retail sales and PPI came in soft — softer than expected — although major retailers upgraded their annual forecasts and said the holiday season should look fine.

And if not, the Fed will be there to save the day. The probability of a 25bp cut rose to around 85% after the latest data. The US dollar slipped below its 200-DMA, helping the EURUSD break above the September–November bearish consolidation trend.

Cable also extended gains into today's Budget announcement— an announcement that might bite. There have been plenty of leaks about where Rachel Reeves will squeeze out £30bn to get the numbers right and keep both markets and households happy. Ultimately, no one will be fully satisfied.

The good news is that stress in gilt markets has been contained over the past few days. The bad news is that yields are near the levels reached during the Liz Truss mini-budget crisis three years ago, and Reeves has the smallest fiscal headroom on record — giving her zero margin for error. After today's Budget, we'll have a clearer view on whether the measures will be enough to keep gilt markets tidy and whether they are deflationary enough to convince the Bank of England to cut rates in December — which I think they will be. If so, current levels look appetizing for GBP sellers.

Source: Swissquote Bank SA

Fed Sentiment Lifts Global Markets

Indices Point to a Positive Open

UK Autumn Budget in Focus

Source: CNBC