Yesterday the market gave back on a broad front, partly significantly: Indices lost heavily, gold fell back below 5,000 USD (now acting as temporary resistance), Bitcoin moved further away from the 70,000 USD mark, while the US dollar benefited slightly and consolidated below the 1.19 level (EUR/USD). This decline is no coincidence, but a reaction to the week's economic data and the resulting expectations for Fed policy. Here is a detailed overview of the causes, current situation and possible triggers for a reversal.

The Causes: Strong NFP Beat and CPI Expectations Put the Market Under Pressure

The trigger for yesterday's market decline lies mainly in the strong US labor market data (Nonfarm Payrolls) from Wednesday, which significantly exceeded expectations. Instead of the forecasted 66,000 new jobs, 130,000 were added, private payrolls even 172,000 (145 % above forecast), and the unemployment rate unexpectedly fell to 4.3 % (expected stable at 4.4 %). Hourly earnings rose 3.7 % YoY, slightly above expectation. These figures signal a robust labor market that reduces the likelihood of near-term Fed rate cuts. US Treasury yields rose (10-year to ~4.22–4.24 %), pressuring risk assets such as stocks, gold and crypto.

In addition, there are expectations for today's CPI data (Consumer Price Index). Analysts expect 0.3 % m/m and 2.5 % y/y, which would mean a slight cooling of inflation. However, if inflation comes out higher, it would cement the Fed's „higher for longer“ scenario and could support the selling pressure. The markets already anticipated yesterday that the Fed could keep rates higher for longer given stable inflation and strong labor market – this led to sector rotation: Tech and growth stocks weak, defensives (financials, energy) holding up better.

Geopolitical tensions (Ukraine, Middle East) and ongoing uncertainty from the recent government shutdown reinforce the pressure: Investors seek safety in Treasuries and the dollar, weighing on risk assets such as indices, gold and Bitcoin. Overall, the decline is a classic „good news is bad news“ reaction: Strong data = fewer rate cuts = higher yields = pressure on valuations.

Indices Give Back Heavily – Tech Under Pressure

The indices gave back clearly yesterday: The Dow Jones fell -1.2 % to around 49,800 points, the S&P 500 -1.5 % to below 6,900, the Nasdaq even -2.0 % to around 21,500. Losses are broad-based, with tech sectors (Nasdaq) most affected – growth stocks like NVIDIA or Tesla suffer from rising real yields, making their high valuations (P/E >30) less attractive. Europe followed (DAX -1.0 %, CAC 40 -1.2 %), Asia was mixed (Nikkei -0.5 %, Hang Seng +0.2 %). Pre-market shows a slight stabilization this morning, but without clear triggers, pressure could persist.

Gold Back Below 5,000 USD – Temporary Resistance

Gold suffered a flash crash yesterday and fell -3.08 % to 4,941 USD per ounce, below the psychologically important 5,000 USD mark. This morning it is hovering around ~4,950 USD, with 5,000 USD acting as temporary resistance. The strong dollar and higher yields make gold less attractive as a non-yielding asset. However, geopolitical risks and long-term inflation concerns keep the price stable – a dip below 4,900 USD could trigger further sales, but the market has reflexively bought dips recently.

Bitcoin Moves Further Away from 70,000 USD

Bitcoin lost -4 to -5 % yesterday and is currently trading at ~66,200 USD, significantly away from the 70,000 mark. The strong dollar and reduced rate cut expectations are weighing on crypto as a high-beta risk asset. Like gold, BTC reacts sensitively to real yields – higher yields make alternatives like bonds more attractive. Volatility remains high, a break below 65,000 USD could trigger further sales, but ETF inflows (BlackRock, Fidelity) are currently supporting the price.

US Dollar Benefits Slightly – Consolidation Below 1.19 on EUR/USD

The USD gained +0.8–1.0 % yesterday and is consolidating below 1.19 on EUR/USD (currently ~1.185). The strong NFP beat reduces the likelihood of a near-term rate cut (June now ~45–50 %), making the dollar more attractive as a carry-trade currency. Other currencies such as EUR, JPY and GBP are losing – the DXY rises to 98.5–99.0.

Triggers for a Reversal – What Could Turn the Market?

In the current situation, a reversal could only be triggered by several factors:

• Weaker CPI data today: If they come in below 2.5 % y/y, rate cut hopes rise again – dollar weaker, gold/indices stronger.
• Fed signals: Dovish comments from Fed members (e.g. Powell or Yellen) could calm the market and fuel rate cut bets.
• Geopolitical easing: Positive news from crisis regions such as Ukraine/Middle East (e.g. ceasefire) could trigger risk-on – indices/crypto up, gold down.
• Technical levels: Gold support at 4,900 USD holds, Bitcoin at 65,000 USD, S&P at 6,800 – a bounce from there could trigger buying. Sector rotation reverses: If tech valuations fall too low, value hunters buy in – Nasdaq could then lead.
• Global factors: Positive data from China (e.g. stimulus news) or Europe (ECB hints) could ease pressure. Long-term, the „higher for longer“ scenario remains dominant – a real reversal requires clear dovish signals.

Conclusion

Yesterday's decline is a reaction to strong NFP data and CPI expectations, which are dampening rate cut hopes. The dollar benefits, indices/gold/Bitcoin suffer – but revisions and geopolitical risks limit the sell-off. Triggers for reversal: Weaker CPI today, Fed signals or technical support. The market remains volatile – anyone who wants to follow the prices live will find a neutral overview here of established platforms that cover almost the entire range of assets: To the Trading Platform Overview.