The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 01.06.2021
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As the market comes out of a long weekend, it looks ahead to the last day of the week when the unemployment report from the US is released. This will be the major risk event of the week, as traders will be looking to see how the Fed will react to the numbers of this important figure. EURUSD and Gold are both experiencing positive vibes thanks to the overall negative atmosphere of the USD, allowing both to rise. Bitcoin, on the other hand, seems to be consolidating its losses, but these dips have become rather attractive to buyers which might lead to a move above $40,000 in the medium term.
With that said, let’s find out how the markets are doing on June 1st, 2021.
Bitcoin Dips Turn Attractive
Bitcoin formed a foundation above the $34,000 area and started to rebound. This rebound allowed the pioneer cryptocurrency to break through the $35,000 and $36,000 resistance levels and enter the positive zone. On the hourly chart, BTCUSD crossed the main downtrend line with resistance near the $36,000 level. The currency pair climbed from above the 50% Fibonacci retracement level of the key decline, falling from a high of $40,420 to a low of $33,630.
The price even broke the resistance level of $37,000. However, the Bears were there to stop any full bullish control around the $38,000 mark, which is the key Fibonacci retracement level (from a high of $40,420 to a low of $33,630) for the key decline became a resistance level. However, before the instrument can reach the mentioned resistance, it will have to break above the $37,500 level. Breaking through the $38,000 area may set the pace for more upside momentum.
The next major resistance will be at $40,000. Intermediate resistance may be as high as $38,800. If Bitcoin fails to break the $38,000 resistance level, we could be seeing a correction to the bottom with initial support for the downside near $36,500. The first major support is near the $36,000 level and the 100-SMA on the 1 hour chart. If the price dips below the $36,000 support level, then the price may fall to the $35,200 support level. Further losses may pave the way for a retest of the $34,000 level.
Current Market Sentiment:Cautiously Bullish
EURUSD Breaks Above 1.2200
Before the European session kicked off on Tuesday, the EUR/USD remained below 1.2230, up 0.03% from the first trading day of June. In the context of cautious sentiment, the euro as well as other currency pairs couldn’t really benefit from the weakening dollar. This is due to the fact there are some economic indicators coming out which are putting a dent in any momentum that the market might be feeling. These economic indicators are the Consumer Price Index (CPI) and ISM US Manufacturing Purchasing Managers Index data in May.
Even if the US Treasury yields rise, buyers are excited to be back in the market after the long weekend in the US. In addition to the cautious attitude before the data is released, the chaos in the market is also attributed to the mixed sentiment surrounding inflation and incentive measures, as well as the update of the coronavirus (COVID-19) vaccine. Although the European Central Bank is not too worried about inflation data, the basic PCE price index in the US on Friday supported the interrupted conversation.
Although critics believe that US President Joe Biden’s budget is $6.0 trillion, don’t forget the $1.7 trillion in infrastructure spending brings hope to buyers. It is worth noting that the Eurozone has not yet caught up with the United States and the United Kingdom in vaccination attempts which might put a dent in the bullish momentum of the EURUSD. Prime Minister Angela Merkel recently commented that the virus lockdown will not extend beyond the currency's expiration date in June, and this has fueled the optimism surrounding the currency pair.
Current Market Sentiment:Cautiously Bullish
Gold's Rally to $1,930 at Risk
After a record one-month rise in ten months, the price of gold remains unstoppable, because since the beginning of the new month, the price of gold has set a new five-month high of approximately $1,915, which is being helped along due to the USD's pessimism on the Fed's policy. Now, concerns about rising global price pressures are also helping to hedge gold against inflation. The latest gold file brings the Bulls close to the January 8 high of $1,918, as the outlook of the Fed policy will play a huge role.
Although the long weekend in the United States and the United Kingdom highlighted the market trend the day before, the dollar index (DXY) is still in a defensive position, because Western countries also want to adopt further stimulus measures and stabilize vaccines, which is helping the metal as well due to the risk sentiment. The proposed budget of $6.0 trillion will become a major obstacle to the long-awaited economic turnaround, as the US President thinks that this will allow the economy to flourish.
Given the growing concerns about inflation, uncertainty about the Fed's next move is suppressing market sentiment. Similarly, there have recently been differences between China and Western friends including Australia and New Zealand. After the bullish benchmark PCE price index (the Fed’s preferred inflation indicator), the market expects the authorities to move away from bearish trends and hints from the Fed.
Current Market Sentiment:Bullish
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