The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 12.04.2021
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Jerome Powell’s interview on 60 minutes was the main aspect that most investors will be focusing on. After Bitcoin was able to reach a new high around $61,220, it has dropped back to trade around the previous psychological resistance at $60,000 and seems to be holding the gains it managed to make. EURUSD and Gold are both being affected by the comments from Jerome Powell as the former turns on the defensive side of things while the latter seeks to find enough support around the previous consolidation zone.
With that said, let’s find out how the markets are doing on April 12th, 2021.
Bitcoin Holding Gains
Bitcoin has moved sharply lower reaching the $58,000 support level after it attempted to climb above $61,220. The instrument reached the resistance level after the Bulls were able to finally break above the $60,000 psychological level, the continued momentum higher allowed BTC to establish the mentioned high before a $850 million long liquidation started, this was the main trigger to that led to the fall of the instrument. Since then, BTC was able to rise back above $59,000 and $60,000.
On the downside, the instrument is facing strong support levels at $59,250 and $59,100. Not only that, but there’s also a major contracting triangle forming with resistance near $60,050 on the hourly chart of the BTC/USD pair. If there’s an upside break above the $60,050 and $60,200 levels, there are high chances of a fresh rally. In the stated case, the price is likely to surge towards the $61,200 and $62,000 levels in the near term.
If bitcoin fails to climb above $60,050 and $60,200, there could be a short-term downside correction. An initial support on the downside is near the $58,350 level. The next major support is near the triangle at $58,750 and the 100-SMA on the hourly chart. If the Bulls fail to protect the 100-SMA, there could be a sharp downside break. In that case, the price might decline towards the $56,800 level in the near term.
Current Market Sentiment: Cautiously Bullish
EURUSD Defensive Below 1.1900
Throughout the Asian session, the EURUSD lacked any firm directional bias and remained confined in a narrow trading band, just below the 1.1900 mark through the Asian session. Asian equity markets kicked off the new week on the backfoot and extended some support to the safe-haven USD. The USD bulls further took cues from the Fed Chair Jerome Powell's upbeat comments and seemed rather unaffected by a mildly softer tone surrounding the US Treasury bond yields.
In an interview with 60 minutes, Powell said that the US economy really seems to be at an inflexion point. This reinforced the market expectations for a relatively faster US economic recovery from the pandemic, thanks to the impressive pace of coronavirus vaccinations and US President Joe Binde's over $2 trillion infrastructure spending plan. Powell further added that the Fed wants inflation moderately above 2% for some time but does not want it to go materially above 2% and return to the bad, old inflation days.
There isn't any major market-moving economic data due for release on Monday, either from the Eurozone or the US, leaving the EUR/USD pair at the mercy of the USD price dynamics. The broader market risk sentiment, along with the US bond yields will influence the USD and allow traders to grab some short-term opportunities around the major.
Current Market Sentiment: Defensive
Gold Enters Previous Consolidation Zone
The precious metal failed to capitalize on Friday's bounce from the $1,730 support zone, instead it met with some fresh supply on the first day of a new trading week. This marked the second consecutive day of a negative move and was exclusively sponsored by a modest pickup in the US dollar demand, which tends to weigh on the dollar-denominated commodity.
The USD found some support after Fed Chair Jerome Powell – during an interview with 60 Minutes – said that the US economy is set to make a turnaround and increased growth which should provide more jobs. The comments added to the narrative of a relatively faster US economic recovery from the pandemic, thanks to the impressive pace of coronavirus vaccinations.
The optimistic US economic outlook, along with US President Joe Biden's over $2 trillion infrastructure spending plan have been fueling speculations about an uptick in US inflation. This, in turn, raised doubts that the Fed would retain ultra-low interest rates for a longer period. Hence, the focus now shifts to the latest US consumer inflation figures, due on Tuesday.
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