Sample Category Title

Bitcoin fell 1.8% on Tuesday, ending the day around $37,700 and temporarily below a meaningful support line. Notably, it was a cryptocurrency selloff as stock indices developed gains. The demand for risk recovery has likely returned interest in cryptos that went into the green on Wednesday.

Locally, bitcoin manages to maintain its balance on support, which has withstood the onslaught of sellers over the past four months. On the other hand, we see a sequence of increasingly lower local peaks since the last days of March.

The lines of these two trends have reached their intersection point with a potential climax later today. Often, the outcome of such triangles is to break the support because if it goes under $38K, we might see a rising wave of selloffs. A return to the uptrend will require confirmation with a decisive move above $40K, the area of previous local lows.

Today, the market driver will be the FOMC, whose decisions and comments could reverse or reinforce the multi-week trend of the dollar leaving and curtailing demand for risky assets.

The cryptocurrency market is approaching the big event in a state of extreme fear, with the relevant index dropping 6 points to 21 by Wednesday.

The total capitalisation of the crypto market, according to CoinMarketCap, fell 1.3% overnight to $1.72 trillion.

According to Morgan Stanley, bitcoin’s dependence on the stock market undermines the cryptocurrency’s potential as an inflation risk hedge. Meanwhile, the correlation between bitcoin and a protective asset such as gold has fallen to its lowest level since 2018.

Brian Armstrong, Coinbase CEO, believes that despite the volatile state of the crypto market since early 2022, the number of cryptocurrency users will increase 5-fold over the next 10-20 years and reach more than 1 billion people.

The US Securities and Exchange Commission (SEC) creates a new unit to oversee the crypto market and expand its staff to combat digital fraud.

Argentina’s largest banks, Banco Galicia and Brubank, have announced that their customers will soon be able to trade in cryptocurrencies.

US stocks made some gains on Tuesday as investors continued focusing on the upcoming Fed decision. The Dow Jones rose by over 300 points while the Nasdaq 100 and S&P 500 indices added over 0.50%. Investors believe that the Fed will continue tightening its policy by hiking interest rates by 0.50%. Still, most analysts believe that the FOMC is between a rock and a hard place considering the economy is slowing down. Stocks also rose after data revealed that the number of job openings and workers who quit, rose in March. In total, over 4.5 million people quit their jobs while the number of openings rose to over 11.5 million. Hiring cooled to 6.7 million.

The price of crude oil moved sideways as investors waited for the important monthly meeting by OPEC+ members. They will deliberate the ongoing supply and demand dynamics and decide whether to maintain the status quo on supply increases. Analysts believe that members will decide to continue to increase their production gradually as demand from China slows. The price will react to the latest inventories data by the Energy Information Administration (EIA). Analysts expect the data to show that inventories declined by more than 1.16 million after climbing by 0.692 million in the previous week.

The most important event today will be the Fed decision. It will be the key driver for most assets like stocks, currencies, and cryptocurrencies. Before the Fed makes its decision, ADP will publish its estimates of jobs numbers. Analysts believe that the private sector added 395k jobs in April after adding 455k in the previous month. Other important numbers will be the latest services PMI numbers from the US and other countries. The UK will publish its mortgage approvals and lending data.

XBRUSD

The XBRUSD pair was little changed ahead of the upcoming OPEC+ meeting and US inventory data. It is trading at 105.93, which is slightly below the highest level last week. It is also trading along the 25-day and 50-day moving averages while oscillators like DeMarker and Stochastic have pointed downwards. It has formed head and shoulders and a small double-top patterns. Therefore, the pair will likely keep falling as bears target the key support at 100.

EURUSD

The EURUSD pair was little changed ahead of the upcoming interest rate decision by the Fed. It is trading at 1.0531, where it has been in the past few days. The pair is slightly above this week’s low of 1.0480. The Bollinger Bands have narrowed, signaling that there is no volatility. The Stochastic Oscillator is rising while the RSI is at 50. The pair will likely remain in this range ahead of the FOMC decision.

XNGUSD

The XNGUSD pair rose to a high of 8.20, which was the highest level since April 22. The pair has moved above the 25-day and 50-day moving averages. It has also crossed the important resistance at 7.5, which was the highest point since last week. The MACD and the DeMarker indicators have also kept rising. Therefore, the pair will likely keep rising.

Money markets have fully priced in a 50 basis-point hike by the FOMC at its meeting today. Anything else could send shockwaves across asset classes. The announcement of a start date to the Fed’s quantitative tightening is also widely anticipated.

While the Fed’s policy decision due today has been well telegraphed, the more pressing unknown for investors and traders is whether a 75 basis-point hike could be in the Fed’s policy pipeline over the coming months. As things stand, Fed Funds futures are already pricing in half-point hikes in June, July and September. Scorching hot consumer prices are forcing the Fed to “front-load” its rate hikes, which Fed Chair Powell cited as a possibility before the black-out period prior to this meeting.

Markets are primed to react to whether Powell turns up the hawkish dial even higher at his press conference. Refusal to overtly rule out a 75 basis-point hike may be interpreted as a hawkish signal, which should translate into more gains for the US dollar while sending the rest of the FX universe into a spiral.

Policymakers must walk a tightrope between staying aggressive to have a fighting chance at restoring their inflation-fighting credibility, while trying to pilot the economy into a soft landing. The Fed certainly faces an unenviably delicate task as one slip could break the economy and push markets into a sharper nosedive.

Eurozone PMI Services was finalized at 57.7 in April, up from March's 55.6, an 8-month high. PMI Composite was finalized at 55.8, up from March's 54.9, a 7-month high.

Looking at some member states, France PMI composite was finalized at 57.6, a 51-month high. Spain rose to 55.7, 2-month high. Italy rose to 54.5, 4-month high. Germany, however, dropped to 54.3, 3-month low.

Chris Williamson, Chief Business Economist at S&P Global said:

"The eurozone economy has shown surprising resilience in the face of the Ukraine-Russia war, thanks to a renewed burst of service sector activity as virus containment measures were relaxed further during April. The survey data are consistent with GDP rising at a quarterly rate of around 0.7% at the start of the second quarter after signalling a 0.4% rise in the first quarter.

"Unfortunately the acceleration of output growth seen during the month was accompanied by a further surge in costs, which fed through to a record rise in average prices charged for goods and services.

"The combination of the stronger growth profile for the second quarter and a persistent acceleration of inflation signalled by the surveys will add to speculation that the ECB could start raising interest rates as soon as its July meeting.

"However, downside growth risks have increased, meaning policymakers could take a more cautious approach to tightening policy. Manufacturing growth has almost stalled, led by falling production in Germany, due to the new supply chain shocks and uncertainty caused by Russia's invasion of Ukraine. It also remains unclear as to whether the service sector can sustain its current growth once the initial rebound from the reopening of the economy fades, especially given the soaring cost of living. Hopes of the economy being buoyed by pent-up demand may be confounded if spending power is eroded by inflation and risk aversion sets in, encouraging saving. The data flow as we head into the summer will therefore likely prove pivotal to policymakers in their assessment of whether the eurozone's economic resilience can prove enduring."

Full release here.

Daily Pivots: (S1) 162.17; (P) 162.80; (R1) 163.23; More...

Intraday bias in GBP/JPY remains neutral for the moment. Corrective pattern from 168.40 could extend further. In case of another fall, downside should be contained by 61.8% retracement of 150.95 to 168.40 at 157.61 to bring rebound. On the upside, firm break of 168.40 will resume larger up trend.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will be a long term bullish signal, and could pave the way back to 195.86 high. This will now remain the favored case as long as 150.95 support holds, even in case of deep pull back.

Daily Pivots: (S1) 136.55; (P) 136.96; (R1) 137.37; More....

Intraday bias in EUR/JPY remains neutral as consolidation from 139.99 is still extending. Downside of retreat should be contained by 38.2% retracement of 124.37 to 139.99 at 134.02 to bring rebound. On the upside, firm break of 139.99 will resume larger up trend for 144.06 medium term projection level.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Such rise is seen as the third leg of the pattern from 109.30 (2016 low). Next target will be 100% projection of 114.42 to 134.11 from 124.37 at 144.06. In any case, outlook will now remain bullish as long as 124.37 support holds, in case of deep pull back.

Daily Pivots: (S1) 0.8385; (P) 0.8408; (R1) 0.8444; More...

Range trading continues in EUR/GBP and intraday bias remains neutral at this point. On the upside, above 0.8465 will turn focus back to 0.8511 resistance intact. Further break of 0.8511 will reaffirm that 0.8201 is a medium term bottom, and target 0.8697 medium term fibonacci level next. On the downside, below 0.8365 will bring deeper pull back.

In the bigger picture, a medium term bottom could be in place at 0.8201, on bullish convergence condition in daily and weekly MACD. Rise from there could either be a correction to the down trend from 0.9499 (2020 high), or a medium term up trend itself. In either case, further rise should be seen to 38.2% retracement of 0.9499 to 0.8201 at 0.8697. Sustained break there will target 61.8% retracement at 0.9003.

Daily Pivots: (S1) 1.4730; (P) 1.4824; (R1) 1.4925; More...

Intraday bias in EUR/AUD remains neutral as range trading continues. On the upside, break of 1.5053 will resume the rebound from 1.4318 to target 61.8% retracement of 1.6223 to 1.4318 at 1.5495. However, firm break of 1.4682 will argue that the rebound has completed and bring retest of 1.4318 low.

In the bigger picture, as long as 1.5354 support turned resistance holds, larger down trend form 1.9799 (2020 high) is still expected to continue. On resumption, next target is 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623, which is close to 1.3624 long term support (2017 low). However, firm break of 1.5354 will indicate medium term bottoming and bring stronger rally.

Daily Pivots: (S1) 1.0265; (P) 1.0290; (R1) 1.0325; More....

Intraday bias in EUR/CHF remains mildly on the upside for for 1.0369/0400 resistance zone. Firm break there will resume the rebound from 0.9970 to 1.0610 structural resistance. On the downside, below 1.0186 will extend the corrective pattern from 1.0400 with deeper fall back to 1.0086 support.

In the bigger picture, as long as 1.0505 support turned resistance (2020 low) holds, long term down trend from 1.2004 (2018 high) is expected to continue. Next target is 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. However, firm break of 1.0505 will suggest medium term bottoming, and bring stronger rebound towards 1.1149 structural resistance.

Daily Pivots: (S1) 1.0481; (P) 1.0530 (R1) 1.0567; More...

Intraday bias in EUR/USD remains neutral as consolidation from 1.0470 is still extending. Upside of recovery should be limited by 1.0756 support turned resistance to bring fall resumption. Break of 1.0470 will resume larger down trend and target 161.8% projection of 1.1494 to 1.0805 from 1.1184 at 1.0069.

In the bigger picture, the decline from 1.2348 (2021 high) is expected to continue as long as 1.1185 support turned resistance holds. The break of 1.0635 (2020 low) now raises the chance that it's resuming long term down trend from 1.6039 (2008 high). Retest of 1.0339 (2017 low) low should be seen next. Decisive break there will confirm this bearish case.