Bitcoin Crumbles, Dollar Stumbles While Euro Gains

Unified threats articulated by a chorus of financial heavyweights on cryptocurrency regulations during the Davos conference, have exposed Bitcoin to significant downside risks.

Sentiment towards the cryptocurrency is turning increasingly bearish amid regulation fears, with recent news of a massive exchange in Japan halting client withdrawals further souring investor appetite. In the past, Bitcoin displayed unyielding resilience against a slew of negativity, but now price action suggests that bulls are tired, exhausted and close to waving the white flag. Although the bias towards Bitcoin is currently tilted to the downside, lessons of the past have taught investors how inherently volatile and erratic the cryptocurrency can be.

Focusing on the technical picture, there seems to be a painful struggle for prices to keep above the psychological $10,000 support level. A break below $10,000 may invite a further decline back toward $9000, $8400 and $8000, respectively. Alternatively, bulls need to push prices back above $11,900 to jump back into the game.

Dollar pressured despite Trump remarks

The Dollar found itself under renewed selling pressure during Friday’s trading session despite US President Donald Trump stating that he expects the currency to get "stronger and stronger". It seems that comments from Mnuchin stating a weaker Dollar is "good" for American trade, still has a lot of weight and this is reflected in the Dollar’s heavily bearish price action.

From a technical standpoint, the Dollar Index remains firmly bearish on the daily charts. A breakdown and daily close below 89.00 could open a clean path towards 88.50 and 88.00, respectively.

Currency spotlight – EURUSD

The Euro punched above 1.2500 during Thursday’s trading session after Mario Draghi stated that economic data indicated "solid and broad" growth. Bulls were injected with further inspiration to propel the Euro higher, after Draghi expressed optimism over inflation potentially rising in the medium term.

While concerns were raised over exchange volatility causing some uncertainty which "required monitoring", the overall tone of the ECB meeting remained hawkish-consequently boosting the Euro. From a technical standpoint, the EURUSD remains bullish on the daily charts. A breakout and daily close above 1.2500 could encourage an incline higher towards 1.2560 and 1.2600, respectively. In an alternative scenario, a failure for prices to keep above 1.2500 could trigger a decline back to 1.2440 and 1.2370, respectively.

Commodity spotlight – Gold

A severely depressed US Dollar has strongly supported Gold this week, with the yellow metal currently trading above $1355 during early trading on Friday. The fact that the Dollar remains under pressure, despite Donald Trump recently backing a stronger currency, continues to highlight the lack of buying sentiment. With the Greenback likely to remain on the back foot in the near term, Gold has further upside potential. Taking a look at the technical picture, the yellow metal is heavily bullish on the daily charts. A weekly close above $1360 could invite a further appreciation higher towards $1375.