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The Week in FX and Crypto: November 4, 2025
Framework-Based Structure Analysis. Educational Only.
mark schaefer
November 04, 2025
IN THIS ISSUE:
Last week's structure update: USD breakout, USD/JPY at Jan highs
EUR/USD: Fib retracements in focus as bounce risk emerges
USD/JPY drivers: Rate differentials, carry trades, intervention risk
Week ahead: Watching for reversal signals in overbought USD
Subscriber Poll: Please share your ideas for future issues!
Market Structure Update
USD strength accelerated into week's end. Key developments:
USD Index - Closed outside upper Bollinger Band; testing August highs. Daily and weekly both in overbought territory. Extension beyond range now confirmed.
USD/JPY - Hit 154.44, highest since January 2025. Multiple drivers converging (see below). Flagged 4-hour bearish reversal October 30th—set up still active unless 4-hour close breaks above 154.44.
USD/CHF - Flagged bearish setup October 30th: bearish divergence, reversal bar, and stochastic overbought on 4-hour. Price moved slightly higher since, but setup remains intact. Still watching for downside follow-through.
USD/CAD - Flagged reversal candle with oversold momentum October 26th, watching for bounce risk. Set up failed—price broke lower instead. Framework noted the oversold condition but downside momentum overwhelmed bounce potential.
AUD/USD, NZD/USD - Ranges persist. No meaningful breaks yet.
GBP/AUD - After failing to hold inside the multi-month channel at 2.0490 (flagged Oct 29th), price dropped 500 pips (-2.4%). Now trading near lows and very oversold. Framework delivered on the breakdown call.
EUR/USD - Multi-week low at 1.0521. Weekly structure pointing down, but daily moving into oversold (bounce risk).
BTC - Following up on previous week's daily/4-hour alignment call from October 23rd at 109,100: After initial move to 112,000 (+2,900 points reported last week), price continued rallying another 3,100 points to approximately 116,000+. Total move from flagged level: 6,000+ points.
The Theme: USD breakout confirmed. Timeframes aligned on dollar strength. But overbought conditions suggest pullback risk ahead.
Note: These measure market reactions from flagged levels, not trading results. Implementation varies by individual approach.
USD/JPY: What's Driving the Move?
USD/JPY pushing toward multi-month highs isn't just broad dollar strength. Multiple factors are converging:
Technical Setup: Flagged a 4-hour bearish reversal pattern on October 30th as USD/JPY showed signs of exhaustion. The pair tested recent highs this week but hasn't confirmed a breakout on the 4-hour timeframe. A sustained 4-hour close above recent highs negates the short setup. Until then, the bearish reversal remains intact despite the push higher.
Why This Is a Tough Call:
1. Interest Rate Differentials Widening
The Fed holds rates elevated while the BOJ maintains ultra-low policy rates. This wide spread makes dollar-denominated assets significantly more attractive than yen, supporting carry trade flows: borrow cheap yen, invest in higher-yielding dollar assets.
2. BOJ Policy Uncertainty
Recent BOJ meetings have shown internal division on policy direction. While some members favor tightening, the majority has maintained an accommodative stance, citing economic uncertainties. Markets are questioning whether the BOJ has conviction to tighten meaningfully.
3. Carry Trade Dynamics
The carry trade remains profitable as long as the Fed holds rates elevated and the BOJ stays accommodative. These flows support USD/JPY upside, but also create unwind risk if policy expectations shift suddenly.
4. Intervention Risk
Japanese authorities have historically intervened when the yen weakens rapidly—not at specific levels, but based on the speed of moves. At current levels, policymakers are likely monitoring price action closely. Sharp further weakness could trigger verbal warnings or actual intervention.
The Framework Take: USD/JPY presents conflicting signals. The technical bearish reversal from Oct 30th suggests downside potential, but fundamental factors—wide rate differentials and carry trade flows—support upside. This creates two-way risk. Watching for 4-hour confirmation above recent highs to negate the bearish setup. Momentum favors dollar strength fundamentally, but the technical pattern and intervention risk warrant caution.
EUR/USD: Bounce Risk from Oversold
EUR/USD hit 1.0521 Friday—a multi-week low. Weekly structure is pointing down, confirming the broader downtrend. But the daily timeframe is moving into oversold territory, creating bounce risk.
Key Fibonacci Retracements (from Sept 17 high to Friday's low):
38.2%: 1.1672
50.0%: 1.1720
61.8%: 1.1767
If EUR/USD bounces, these are the levels to watch. The 38.2% (1.1672) would mark initial bounce momentum. But the critical level is 61.8% at 1.1767—a move above that would signal a stronger bounce with potential for further retracement.
Context matters: This is bounce risk, not reversal confirmation. Weekly structure still favors downside. Any bounce would be a retracement within the broader downtrend unless timeframes align higher.
Week Ahead: Watching for USD Reversal Signals
USD Index closed outside the upper Bollinger Band—a sign of extension. Both daily and weekly are in overbought territory. This doesn't mean the move is over, but it does raise the probability of a pullback or consolidation.
What I'm Watching:
USD Index Reversal Signals:
Daily reversal bar (large range day closing near lows)
Close back inside the upper Bollinger Band
Break below recent swing low
Any of these would suggest USD strength is losing momentum.
USD/JPY Critical Level:
4-hour close above 154.44 negates the Oct 30th bearish reversal signal
Below that level, short signal remains active
Watching for intervention risk if sharp moves accelerate
USD/CHF Bearish Setup:
Oct 30th confluence still in play (bearish divergence + overbought stochastics)
Price slightly higher but hasn't invalidated the setup
Watching for downside momentum to develop
EUR/USD Fib Retracements:
Watch for bounces toward 1.1672 (38.2%) as first test
Close above 1.1767 (61.8%) signals stronger bounce potential—the key level to watch
EUR/GBP Watch 0.8818:
Close above 0.8818 negates Friday's bearish engulfing setup
Below that level, targets 0.8645-0.8655 retracement zone
Stochastics overbought and turning lower adds confirmation
GBP/AUD Oversold/Bounce Risk:
Down 500 pips since channel break at 2.0490
Trading near lows, very oversold conditions
Watching for potential bounce from oversold
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