First review of last week’s events: EUR/USD. As expected, the Fed chief’s speech turned out to be quite interesting. Jerome Powell presented a semi-annual report on monetary policy to Congress, which shows that not everything is as good as we would have enjoyed when it comes to reviving the US economy. Economic activity has slowed in the summer of 2020. The fall in unemployment has slowed and household spending is also not rising. After the riots and turmoil of 2020, much attention has been paid to socio-demographic diversity, but the picture is not the most diverse. Unemployment among “white” Americans, according to the Fed, is 5.7%, while among Hispanics – 8.6%, and among African Americans it is even higher – 9.2%. There is also gender discrimination: in the last month of 2020, men gained 16 000 new jobs, while women, on the contrary, lost 140 000. All of the above raise some doubts about the early recovery of the U.S. economy, lead to a drop in risk sentiment and hit the stock market and the U.S. dollar. Investors are shifting their attention to long-term government bonds. Since the beginning of 2021, the yield on 10-year Government bonds has risen from 0.91% to 1.56%, and their growth has recently become particularly noticeable. When it comes to stock indices (especially shares of technology companies), they are therefore falling sharply. For example, the S&P500 lost 3.8% in just two days – February 25-26, while the Nasdaq Composite sank more than 3%. The DXY dollar index is also gradually approaching 2018 lows, losing about 9% this year. In this situation, the majority of analysts (65%) expectation of a weakening dollar and a rise to the 1.2200-1.2300 zone, which happened: at the weekly level on February 25, the EUR/USD pair was approaching 1.2245. However, then investors seem to have changed their minds and began to realise that the rising profitability of long-term Treasury securities directly affects the rate increase on current consumer credit. And this immediately brings to mind the 2008 mortgage crisis, which ushered in a series of serious Bankruptcies. As a result, the dollar strengthened slightly and the EUR/USD fell to 1.2070-1.2100 – a place where it has been several times since Last December. This can only be said of one thing: market turmoil and a lack of clarity about the prospects of european and US economies; GBP/USD. As expected, Prime Minister Boris Johnson’s speech on Monday 22 February, as well as the expectation of positive UK labour market data on Tuesday 23 February, continued to push the GBP/USD pair to 2018 highs, lifting it to 1.4240. And of course, the dynamics of the couple could not affect what was happening in the United States. As a result, repeating the EUR/USD parabola, the GBP/USD pair headed south on Thursday 25 February, especially since it was bought out and some reason was simply needed to profit on the pound. On Friday, after losing 355 points, the pair found the local bottom at 1.3885. This was followed by a rebound and a finish of 1.3930; USD/JPY. It was said last week that this couple was moving in the middle term of the side canal 102.60-107.00. Only 35% of experts believed at the time that the couple had not yet completed their move to the upper end of this commercial range. True, 75% of oscillators and 80% of trend indicators on D1 were on their side, which gave additional weight to this forecast, which turned out to be completely correct. The USD/JPY pair traded at a 26-week high of 106.70 in the second half of Friday, February 26. As for the final chord, it sounded at a height of 106.55; cryptocurrencies. We have repeatedly written that the presence of large institutional investors in the cryptocurrency market is a double-edged sword. On the one hand, they can push the market up strongly and, on the other hand, they can break down the quotes if they repair the profits. Moreover, the activities and moods of such institutions depend to a large extent on the actions and moods of regulators and other government agencies. We felt it all fully last week. After bitcoin hit a record high of $58,275 on February 21, investors were eagerly awaiting an increase of $60,000. However, there was a sudden reversal and a sharp decrease of 23% to $44,985. Then collect up to $50,000 and fall back to $44,000. According to many experts, the cause of the mass fixation of The profit by the “whales” was a statement by former Fed chief and now U.S. Treasury Secretary Janet Yellen on the speculative nature of the cryptocurrency and the possibility of using it for money laundering. According to analyst Sven Henrich, the head of the Ministry of Finance declared war on bitcoin. “Digital currencies can provide faster and cheaper payments. But there are many issues to explore, including consumer protection and money laundering,” said Janet Yelen, also mentioning the possibility of launching the Central Bank’s own digital currency (CBDC). The decline in bitcoin may also have been facilitated by the decline of global technology company indices and the start of large-scale vaccination against coronavirus, but the most important is the position of the US government. According to Bloomberg, in the context of the decline in the bitcoin exchange rate, the head of Tesla and SpaceX, Elon Musk, lost the first place in the ranking of the richest people in the world. Tesla shares fell 8.6%, resulting in Musk losing $15.2 billion. At the same time, the decline in bitcoin, according to Bloomberg, may be partly due to a statement by Musk himself, who called cryptocurrency prices too high. There is a reason they say that the word is silver, and silence is gold. Musk would be better off keep his mouth shut J. Of course, someone loses and someone finds. So, for example, due to technical failures, some clients of the Philippine cryptocurrency exchange PDAX were able to buy bitcoin almost 10 times cheaper than the market price, reports Bitpinas. One user admitted that he bought bitcoins for 300,000 pesos ($6,150), while the average BTC market price was about $50,000, after which he moved the cryptocurrency to his wallet. A day later, PDAX sent him a letter requesting the return of bitcoins, but the buyer’s lawyer claims that “the transaction was lawful under applicable law and PDAX cannot withdraw the transaction unilaterally.” Another client of this cryptocurrency exchange unexpectedly found 40 billion Philippine pesos, or about $820 million in his account. It is not known if he was able to withdraw this “gift” from PDAX. In general, the credibility of cryptocurrency exchanges is still quite a painful topic. According to BDCenter Digital, Kraken, Coinbase and Binance are the safest exchanges. Here you can also see the brokerage company NordFX, whose customers can also make transactions and store deposits in cryptocurrencies. In 13 years of this broker, he did not have a single hack and not a penny of client funds was lost. On Friday evening, February 26, the BTC/USD pair is trading in the $46,000 zone. Total market capitalization fell during the week from $1.625 billion to $1.410 billion. And the Crypto Fear & Greed Index has finally emerged from a strong overbought zone to neutral levels, dropping from 93 to 55. When it comes to altcoins, there is both good news and bad news. For example, the largest gpu manufacturer – the American technology company Nvidia has announced plans to release a series of graphics cards specifically for ethereum mining. According to CNBC, they are expected to go on sale in March this year. But it seems that difficult times will not end for Ripple. One of the world’s largest money transfer services, MoneyGram, has refused to use the XRP token-based product due to claims by the U.S. Securities and Exchange Commission (SEC) against Ripple. Against the background of sec claims, in addition to MoneyGram, Coinbase and OKCoin, Galaxy Digital, Bitstamp, B2C2, eToro and Kraken have already refused to support the XRP token. Asset management company Grayscale Investments announced the liquidation of its XRP-based investment fund, and 21Shares removed the Ripple token from its listed products. As a result, Ripple lost up to 45% of its value last week and the XRP/USD pair was trading at $0.42 on the evening of February 26. As for the forecast for the coming week, summarizing the opinions of many experts, as well as forecasts made on the basis of various methods of technical and graphic analysis, we can say the following: EUR / USD. The data given in the first part of the review confirms the opinion of the US Federal Reserve management that it is still very, very early to talk about any reduction in the quantitative easing (QE) programme, as well as raising interest rates. As a result, the Fed will continue its soft monetary policy even as inflation expectations rise, due to a doubling of the Fed’s balance sheet over the past year. But it’s not just the US that is struggling with rising national debt. Europe is experiencing similar problems and the interest rate is even lower than after across the Atlantic. The profitability of European government securities is also increasing. As a result, the 10-year bond rate in Germany has reached an 11-month high. Overall, we can say that the balance between the problems and achievements of the Old and New Worlds remains on average at the same level, experiencing slight temporary fluctuations, as reflected in the three-month side trend of the EUR/USD pair. If you look at its graph, you can see that from December 2020, most of the time moves in a fairly narrow trading range of 1.2050-1.2185, with emissions up to 1.1950 and 1.2350. If we talk about the short term, 70% of analysts think the pair will continue to fall to the 1.1950-1.2000 zone. They are supported including by 75% of oscillators on H4, the remaining 25% give signals that the pair is sold out. As for the oscillators on D1, there are approximately equal shares in red, green and neutral gray. 95% of trend indicators on H4 and 65% on D1 are painted red. But graphical analysis in both time intervals gives priority to the movement up the pair. Resistance levels are 1.2170 1.2240 and 1.2270. However, after this push north, a graphical analysis on the D1 returns a drop in steam in March to support at 1.1950. And now about the events of the coming week, of which there will be a lot. Firstly, we look forward to the speeches of ECB Chief Christine Lagarde on Monday 01 March and US Federal Reserve Head Jerome Powell on Thursday 4 March. Statistics on the German and EU consumer markets will be published on 1 March, 02 and 04. As for U.S. macro statistics, ISM business activity indicators in manufacturing and private sectors will be known on Monday and Wednesday. In addition, labour market data will be published on Wednesday and Friday. In addition, it is forecast that there could be a significant increase in new jobs created outside the US agricultural sector (NFP) from 49K to 148K; GBP/USD. Firstly, readings of technical indicators. Oscillators: 90% on H4 looks south, 10% is in the sell-off zone; only 15% look south on D1, 50% in the north and 35% are neutral. Trend indicators: 80% see south on H4, 20% north, 25% south on D1, 75% north. Graphical analysis of D1 draws a side trend in the range of 1.3860-1.4240. And obvious is that since the couple ended the previous week closer to the lower limit of this channel, it will move upwards. 60% of experts agree with this forecast. Resistance levels are 1.3960, 1.4055, 1.4085 and 1.4175. The remaining 30% believe that the pair will break the lower limit of channel 1.3860, then support about 1.3800 and go to the zone of 1.3600-1.3760. It should be noted that when moving from a weekly to a monthly forecast, the number of bearish supporters increases to 65%. USD/JPY. That couple’s monthly downward trend was halted on January 6 and turned north, moving up the channel. According to a graphical analysis on D1, the USD/JPY pair has almost reached the upper limit, which is in the zone of 106.70-107.00 and should soon rebound in the south. This scenario is supported by 25% of oscillators giving signals about buying a pair. It is clear that the remaining 75% of oscillators and 100% of indicators in both time frameworks are so far green. As far as experts are concerned, a third of them are on the bulls’ side, a third vote for bears and a third are neutral. However, during the transition period from the weekly forecast to the monthly forecast, 75% of analysts vote to remain couples in the medium-term trading range of 102.60-107.00 (mentioned in the first part of the review) and therefore look forward to returning to the central zone at 105.00. Support levels are 106.10 and 105.70; The remaining 25% of experts believe that the couple will be able to reach the zone 108.00-108.50; cryptocurrencies. The popularity and exposing of cryptocurrencies continues to grow. According to BDCenter Digital, 12 out of 100 Twitter posts are about cryptocurrency. In just one week on February 7-14, Twitter users exchanged bitcoin more than 675,000 times. The last record was set on January 10, when the weekly number of posts mentioning bitcoin reached 576,000. In total, the number of users of cryptocurrencies exceeded 200 million people from more than 150 countries. Despite the decline last week, 2021 started well for bitcoin overall. The pair started at $28,800 on January 1 and is trading at $46,000 at the time of writing, after it gained nearly 60%. And now, importantly, the Crypto Fear & Greed Index has finally emerged from a strong buyout state, falling from 93 to neutral 55. Of course, this does not mean that btc/usd pairs will immediately fly up. However, what is happening gives investors hope of meeting the positive predictions of many experts and crypto gurus. recall that Lisa Edwards, sister of self-proclaimed bitcoin creator Craig Wright, predicted that the first cryptocurrency would rise to $142,000. Based on Elliott Wave Theory, it suggested that digital gold would rise to $90,000 by May 2021, fall to $55,000 by January 2022 and rise to $142,000 in March 2023. According to Morgan Creek Digital Assets co-founder Anthony Pompliano, the main cryptocurrency could reach $500,000 by the end of this decade, or even $1 million in the long run. However, the rise in cryptocurrency prices may stop due to the rapid recovery of the global economy after the recession caused by the coronavirus epidemic. In this case, central banks will start withdrawing their quantitative easing programs, raising interest rates, stop buying assets and printing cheap money. As a result, investment flows in bitcoin, as one of the most attractive safe havens, can dry up very quickly. So what did we see last week – a temporary correction or the beginning of a new “crypto-winter”? The question is still open. However, the vast majority of experts (70%) believes the BTC/USD pair will reach $60,000-75,000 zone in the spring. The pessimism of the remaining 30% of analysts is expressed in numbers of 30,000-35,000 USD. NordFX Analytical Group Note: These materials are not investment recommendations or guidelines for working in the financial markets and are for informational purposes only. Trading on the financial markets is risky and can result in a complete loss of deposited funds.
Forex and cryptocurrency forecast for March 1-5, 2021
07.03.2021Analytics