Ether (ETH) is trying to maintain its position above the $2,600 resistance level following a 15.1% gain between Sept. 18 and Sept. 23. Recent macroeconomic data indicating a weakening economy has fueled a rally in the stock market, increasing demand for short-term government bonds. In this context, traders are betting that the upcoming $2.78 billion monthly Ether options expiry on Sept. 27 could solidify the current bullish momentum.

Why Ether price is improving 

The surge in Ether’s price has been primarily driven by a cut in US Federal Reserve interest rates, signaling a shift toward a more accommodative monetary policy. As a result, the S&P 500 index hit an all-time high on Sept. 24. Further bolstering this outlook, a drop in the S&P Global Manufacturing PMI on Sept. 23 heightened investor concerns about the health of the economy.

Yields on the US 2-year Treasury bond fell to their lowest level in 24 months, as investors sought the relative safety of government-backed assets. The market's current fear of an impending recession has benefitted cryptocurrencies like Ether, which investors view as scarce assets.

However, from a broader perspective, Ether is down 33% over the last four months. This decline follows the highly anticipated US launch of a spot exchange-traded fund (ETF), which ultimately disappointed, resulting in $684 million in outflows, according to data from Farside Investors.

The $2.77 billion in open interest for options includes $1.82 billion in call (buy) options and $0.95 billion in put (sell) options. While the bulls appear to have the upper hand, with $1.47 billion of call options targeting prices of $2,700 or higher, those positions will expire worthless if Ether remains below that level by Sept. 27. Consequently, even with the smaller number of put options, bears still have an opportunity to shift the balance in their favor.

As Ether’s price gains momentum, so too has the demand for its smart contract processing capabilities. The number of transactions on the Ethereum network rose by 15% in the seven days leading up to Sept. 24, pushing the average transaction fee to over $4.50, up from $1.45 just ten days earlier.

Additionally, increased Ether issuance has contributed to the asset’s struggle to reclaim the $3,000 level. According to data from Ultrasound Money, a total of 58,856.4 ETH has been added to the supply over the past 30 days, representing a 0.6% annualized inflation rate. These factors have led to concerns among investors that Ether's upside potential may be constrained, especially with competition from platforms like Solana and BNB Chain, both of which offer transaction costs that are more than 20 times lower.

Bears are well positioned for the $2.8 billion monthly options expiry

In this environment, traders believe that Ether bulls must prevail in the upcoming options expiry to stand a chance of pushing the price back toward the $3,000 mark.

Below are the four most likely scenarios based on current Ether price trends, with the potential impact of call and put options for the Sept. 27 expiration. These estimates assume that put options represent bearish positions, while call options align with neutral-to-bullish strategies. However, it is important to note that this is a simplification and does not account for more complex investment approaches.

Between $2,400 and $2,500: The outcome would favor put (sell) options by $225 million.

Between $2,500 and $2,600: The result would favor put options by $100 million.

Between $2,600 and $2,700: The balance shifts, with call (buy) options gaining an advantage of about $70 million.

Between $2,700 and $2,800: The scenario favors call options, with a net result of $220 million in their favor.

In essence, Ether bulls’ best chance to secure a meaningful advantage is by pushing the price above $2,700 on Sept. 27. However, the path for put options to lock in a $100 million advantage appears clearer, as the current $2,600 support level continues to be tested.

Source: COINTELEGRAPH

The USD/CAD pair meets with some supply during the Asian session on Thursday and erodes a part of the overnight recovery gains from the 1.3420 region, or its lowest level since March 8. Spot prices currently trade around the 1.3470-1.3465 region, down over 0.10% for the day amid a modest US Dollar (USD) downtick, though some follow-through selling around Crude Oil prices could help limit deeper losses.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, stalls the overnight goodish rebound from the vicinity of the YTD low amid bets for another 50 basis points (bps) interest rate cut by the Federal Reserve (Fed) in November. Apart from this, the underlying bullish tone – as depicted by a fresh leg up in the equity markets – further undermines the safe-haven buck and exerts some downward pressure on the USD/CAD pair. 

Meanwhile, doubts about sustained fuel demand growth in China – the world's top oil importer – and easing worries over supply disruptions in Libya drag Crude Oil prices further away from a three-week high touched on Tuesday. Despite a slew of stimulus measures announced this week, investors remain uncertain about China's economic recovery. This, along with signs of the return of Libyan oil to the market, further seems to weigh on the black liquid. 

This, in turn, could undermine demand for the commodity-linked Loonie and lend some support to the USD/CAD pair. Traders might also prefer to move to the sidelines and refrain from placing aggressive directional bets ahead of speeches by influential FOMC members, including Fed Chair Jerome Powell, later during the North American session. Apart from this, the US economic data will drive the USD demand and produce short-term trading opportunities.

Source: FXSTREET

BOJ July Monetary Policy Meeting Minutes

The Bank of Japan (BoJ) board members shared their views on the monetary policy outlook on Thursday, per the BoJ Minutes of the July meeting.  

Key quotes

Members shared a view over the need for vigilance to the risk of inflation overshoot.Many members said it was appropriate to raise rates to 0.25%, adjusting the degree of monetary support.

A few members said it was appropriate to adjust the degree of monetary support moderately.

One member said economic conditions were good enough to somewhat push up the current very low policy rate.

One member said they must be vigilant to the impact of rising inflation, driven in part by the weak yen, on household sentiment and small firms' costs.

A few members said it was appropriate to gradually adjust very low rates now to avoid being forced to hike rates rapidly later.

One member said the BOJ must adjust the degree of monetary support further if the strength of capital expenditure and wage growth could be confirmed.

One member said they must carefully look at various risks in proceeding with monetary normalisation.

One member said BOJ must avoid creating too much market expectation of future rate hikes as inflation expectations have yet to be anchored at 2%

One member said it was difficult to move rates mechanically as there was high uncertainty on Japan's neutral rate. 

One member said it was difficult to move rates mechanically as there was high uncertainty on Japan's neutral rate level

Cabinet minister representative said must be vigilant to impact of weak yen, rising inflation on households' purchasing power, downside risks to overseas economies

Source: FXSTREET