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The euro declined on Monday as the energy crisis in Europe continued over the weekend. Last week, Russia decided to cut its natural gas shipments to some key European countries like France, Italy, and Germany. It lowered sales to Germany by 60% citing the impact of sanctions. As a result, Germany announced that it will restart its coal plants in a bid to protect its industry. The euro will react to a speech by key European Central Bank (ECB) officials like Christine Lagarde and Philip Lane, the bank’s chief economist. The two are expected to signal that the bank will hike interest rates by 0.25% in its July meeting.

Cryptocurrency prices crashed hard during the weekend as concerns about the industry remained. Bitcoin moved below $20,000 for the first time since 2020. Similarly, Ethereum dropped below $1,000 while the total market cap of all cryptocurrencies declined below $1 trillion. Investors are concerned about the lack of demand for coins. Also, many investors are experiencing margin calls as their holdings slide. For example, Three Arrows, a well-known hedge fund became the latest big firm to implode. At its peak, the fund had over $10 billion in assets.

The price of crude oil remained under pressure as investors continue focusing on important news in the industry. There is uncertainty about the outcome of Biden’s meeting with Saudi’s Salman. It is unclear whether Saudi Arabia will agree to raise production in a bid to stabilize prices. Meanwhile, investors are concerned about Libya’s output. In a statement, the country’s prime minister said that it’s unlikely the country will hold elections this year. Output from Libya has dropped to between 100k and 200k from last year’s high of 1.3 million barrels.

XBRUSD

The XBRUSD pair has dropped sharply in the past few days as concerns in the industry continued. It is trading at 111.46, which is lower than this month’s high of over 123. It has moved below the upper side of the ascending channel shown in white. At the same time, the pair has dropped below the 25-day moving average while the MACD has moved below the neutral point. The Relative Strength Index has dropped below the oversold level. Therefore, the pair will likely have a relief rally today.

EURUSD

The EURUSD pair is trading at 1.0495, which is higher than last Friday’s low of 1.0440. On the four-hour chart, the pair moved above the 25-day moving average while the RSI is above the neutral point at 50. It has moved slightly below the 61.8% Fibonacci retracement level. The pair will likely resume the uptrend as investors wait for the upcoming speech by Lagarde and Lane.

USDJPY

The USDJPY pair continued its bullish trend after the Bank of Japan decided to maintain its dovish tone. It is trading at 134.92, which is slightly below the highest point this year. It has moved slightly above the 25-day moving average while the RSI and momentum have moved upwards. The pair will likely continue rising, with the next key target being at 135.61.

ECB Governing Council member Martins Kazaks said he would support 25bps rate hike in July and 50bps in September. He added that inflation would "need to surprise on the low side" for it not to be 50bps in September.

But he emphasized that investors should not think that 50 bps rate hikes are "the new default."

In June economic report, Japan's government said "industrial production appears to be pausing for picking up." That's a downgraded assessment from May's "industrial production shows movements of picking up." Exports continued to be "almost flat".

It reiterated that "full attention should be given to the downside risks due to rising raw material prices, supply-side constraints and fluctuations in the financial and capital markets while there are concerns regarding the effects of lengthening the state of affairs of Ukraine and suppression of economic activities in China."

Nevertheless, for the short-term, the economy is "expected to show movements of picking up, supported by the effects of the policies while all possible measures are being taken against infectious diseases, and economic and social activities proceed to normalization".

Full release here.

After a meeting with Japan Prime Minister Fumio Kishida, BoJ Governor Haruhiko Kuroda said "I told the prime minister that recent rapid yen moves were undesirable".

"(Kishida) did not say anything special but I told him that it was important for currencies to move stably reflecting economic fundamentals," he added. "I'll fully watch currency movements carefully from now on as well and will appropriately respond to them while liaising with the government."

The crypto market has set several historic lows in recent days, demonstrating the fragility and naivety of its historical patterns. In a 37% drop, Bitcoin closed below its 200-week moving average for the first time. Not only did we not see a rebound in retail action over the weekend, but an intensified sell-off sent the exchange rate below 2017 peak levels at $19.6K. At one point on Saturday, the price was down to $17.6K, disproving the idea that you can’t lose money owning Bitcoin for over four years.

The crypto market mostly added on Sunday, with BTCUSD trading at $20K at the start of the day on Monday. Ethereum lost 20.5% in seven days. After bottoming at $900 on Saturday night, the second cryptocurrency has now settled near $1070.

An essential characteristic of the crypto market was that altcoins were sidelined. Except for BNB (-12% for the week), we note either flat movements (XRP, Doge) or strengthening (Solana, Polkadot). The Bitcoin dominance index fell from 3.5% to 43.5% over the same period due to Bitcoin’s outperformance.

The Cryptocurrency Fear and Greed Index dropped 8 points for the week to 6 and continues to be in a state of “extreme fear”. By Monday, it had climbed to 9 due to positive coin movements the day before.

Bitcoin last week posted its highest decline since March 2020 on the back of a continuing fall in stock indices and a higher-than-expected US Federal Reserve key rate hike. At the weekend, BTC broke through the previous market cycle high of $20,000, which has never happened before.

The negative market sentiment was exacerbated when three cryptocurrency platforms, Celsius, Finblox and crypto hedge fund Three Arrows Capital, froze or restricted financial transactions and withdrawals.

The US has investigated the suspension of withdrawals by crypto lending platform Celsius. Experts say the bankruptcy of Celsius is almost inevitable.

The CEO of cryptocurrency OTC platform Genesis Trading, Michael Moreau, reported the liquidation of a “major counterparty” position. The hedge fund in question is presumably Three Arrows Capital.

The collapse in the cryptocurrency market will have a cleansing effect, and breakthrough projects launched during a bear market “will always succeed”, billionaire Mark Cuban said. Galaxy Digital CEO Mike Novogratz believes the cryptocurrency market recovery could take a long time and will depend heavily on the US Federal Reserve’s actions. He thinks the market will begin to grow after the Fed raises rates.

Gold got immediately congested within the $1,837 – $1,855 region following last week’s bounce off the $1,805 low.

The 20- and 200-day simple moving averages (SMAs) are currently limiting bullish pressures, while the RSI and the MACD provide little direction about the next move in the price as the former is drifting sideways below its 50 neutral mark and the latter remains stable within the negative territory.

If buyers claim the $1,855 boundary, the next challenge could develop within the $1,870 – $1,880 territory formed by the 50-day SMA and the surface of the short-term bullish channel. Notably, the upper boundary of the medium-term bearish channel is positioned within the same area. Therefore, any upside breakout from here could be critical for approaching the $1,910 barricade. Even higher, the ascend may pause somewhere between $1,935 and $1,950.

On the downside, a close below $1,837 may immediately stabilize around $1,825. Then, the lower bar of the upward-sloping channel may come to the rescue around $1,810, preventing a sharper decline towards the $1,780 mark, where the broken long-term resistance trendline stretched from the 2020 record high of $2,079 is also placed.

In brief, gold is preserving a neutral bias in the short-term picture, with traders waiting for a sustainable move above $1,880 or below $1,810 to get fresh direction in the market.

EURUSD is returning below the 1.0500 psychological level after the jump towards the 1.0600 barrier. The sideways move within the 1.0345 multi-month low and the 38.2% Fibonacci retracement level of the down leg from 1.1495 to 1.0345 at 1.0780 is continuing with the technical indicators, suggesting a negative bias.

The downside reversal in the RSI and the slowdown in the MACD oscillator justify the selling pressure, both remaining beneath their neutral thresholds keeping the short-term risk skewed to the downside.

Should selling forces strengthen, the more-than-five-year low of 1.0345 will come under the spotlight again before tumbling towards the 1.0220 support level, which is taken from the inside swing high in July 2002. Sliding lower, the next strong obstacle could come from the parity level at 1.0000, which will endorse the downside movement.

Alternatively, a close above the 40-day simple moving average (SMA) would take the currency until the immediate resistance level of the 23.6% Fibonacci of 1.0615. Marginally higher, the 20-day SMA, which overlaps with the 1.0635 resistance, may halt the bullish actions before meeting the medium-term descending trend line at 1.0700. Beyond that, the rally may gear up to the 38.2% Fibonacci of 1.0780.

In brief, EURUSD is facing a weakening bias in a narrow range in the short-term, where a drop below 1.0345 is expected to enhance selling interest in the medium-term outlook.

EUR/USD

The single European currency continues to lose ground against the dollar. And while the support at 1.0460 has so far managed to hold off the bearish pressure, the overall market mood remains negative. A successful breach of this level would pave the way for the pair towards the psychological level at 1.0400. In case of positive news about the war between Russia and Ukraine, the trend could change and the bulls might return to the market. If that’s the case, then their first resistance is expected to be the level of 1.0580.

USD/JPY

The bulls are striving to head the pair towards a test of the resistance at 135.00, where a successful breach would pave the way for the USD/JPY towards the next key resistance level at 136.00. On the other hand, the impulsive upward movement that we have witnessed during the last trading session from the previous week, would most probably be limited to around the mentioned resistance zone, and the pair may therefore enter a consolidation phase in the range of 133.00 – 135.00. Only a confirmed breach of the support at 134.60, however, would be considered as an opportunity for the bears to recover their losses and lead the the pair towards the support zone at 133.00.

GBP/USD

The forecasts for today’s trading session are for the pair to make another attempt at breaching the support at 1.2180, which could be considered as a confirmation signal that the negative sentiment is here to stay and thus provide sellers with the opportunity to attack the support level at 1.2100. Besides the negative market sentiment, a short consolidation in the range of 1.2180 – 1.2250 is also highly possible during today’s trading session. The resistance at 1.2380 may be considered as a better entry point for the bears, which may deepen the sell-off towards the next critical support at 1.2100.

EUGERMANY40

The resistance zone at 13225 is still holding under the bulls’ pressure and the downtrend would most probably continue, opening the way for the bears towards the support at 13000. However, a short consolidation above the resistance zone at 13225 is also а possible scenario for today’s trading session. In case the bulls manage to keep the price above the level at 13224, then this could lead to a deeper correction and a test of the key resistance at 13648.

US30

At the time of writing this analysis, the consolidation phase is confirmed and the forecasts for today’s trading session are for the price to remain locked in the range of 29870 – 30240. The overall market sentiment is still negative and the price of the index would most probably continue to decline towards the next support at 29500, provided that the lower border of the range is breached first.

Cable is consolidation after 1.1% drop on Friday, which was contained by 5DMA, with a narrow range in early Monday suggesting a lack of direction.

Daily studies are bearishly aligned with strong negative momentum and MA’s in bearish setup that keeps the downside vulnerable.

On the other side, Friday’s hammer candle after strong rejection on probe through psychological 1.20 level, signal formation of bear-trap and generate initial signal which needs more upside action for confirmation.

Lift above 1.2397 (Fibo 38.2% of 1.3147/1.1933) would improve near-term structure and signal further recovery.

Conversely, break and close below 5DMA (1.2196) would risk retest of 1.20 pivot, loss of which would open way for fresh extension of larger downtrend.

Res: 1.2303; 1.2360; 1.2397; 1.2434.
Sup: 1.2196; 1.2155; 1.2041; 1.2000.

The Dax 40 struggles as investors grapple with the prospect of stagflation. A break below the daily support at 13300 invalidated the May rebound and could put the index on a bearish course in the weeks to come. Buyers’ failure to hold onto 13250 suggests that the bears have doubled down at the latest bounce. The index is heading towards 12750, though the RSI’s oversold condition attracted some buying interest. The rebound might come under pressure near 13650 as the bears could be waiting to sell into strength.