The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 18.06.2021
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The market is still recoiling from the events of Wednesday as the FOMC is still leaving its mark on the market. Overall, the USD has shown its strength against all other currencies and especially the EURUSD which has dropped heavily below the 1.1900 and trades just below it. Gold is not any better as it trades at March 2020 levels, while traders are waiting for the US inflation rate to understand how to trade as time goes by. Bitcoin, on the other hand, seems to be trading in a tight consolidation right at the $38,000 as it waits for more information on how to continue.
With that said, let’s find out how the markets are doing on June 18th, 2021.
Bitcoin Between Rock and Hard Place
It’s been difficult for the Bitcoin Bulls this week, as they’ve been trying to keep the price above $40,000. Unfortunately, the upward movement of the main support level of $31,000 touched the huge obstacle of $41,300 and disrupted the upward trend. Sellers took advantage of the weak bullish field to turn the tide. As a result, the price of Bitcoin fell below $40,000, extending the bearish leg to $37,000, which may fill the gap between the recent CME-BTC futures.
The flagship cryptocurrency is trading at the $37,850 level in a declining momentum. The 200-SMA and 50-SMA have consolidated at the $38,000 mark, which indicates the delay or lack of a rebound to $40,000. Based on tools such as the Moving Average Convergence and Divergence Index (MACD) and Relative Strength Index (RSI), the near-term technical outlook is very pessimistic. If MACD falls to the zero line in the background of the potential negative zone transition, the first outlook is clearly bearish. The MACD line crosses the signal line and the divergence increases and emphasizes the bearish signal.
At the same time, the RSI highlights the increasingly bearish control of falling out of the overbought zone. At present, the momentum indicator is looking for support at the level of 40, but shows an oversold area, indicating that the price may fall to $36,000 and $34,400. Please note that there will be two areas that will characterize Bitcoin trading on Friday; any action above $38,000 may confirm a rise to $40,000, and a break of 100 SMA to $37,000 may result in a huge loss of $36,000 and may climb to $34,000.
Current Market Sentiment:Bearish
EURUSD Falls on FOMC
The EURUSD hovered around 1.1925, an intraday high, and recently fell to 1.1920 in the first of three active trading days, and rose 0.10% the day before Friday's European session. Due to slow trading hours and slightly bullish markets, the US dollar consolidated its recent gains, and the currency pair subsequently fell. US inflation expectations are at a three-month low according to the latest inflation data from the Federal Reserve Bank of St. Louis (FRED), inflation expectations are the lowest since March.
This shows that the market believes in the Fed’s comments on the “temporary” rise in inflation and the suppression of the dollar’s safe-haven demand. It should be noted that due to the lack of important data/events and difficult signals from European Central Bank politicians about tapering, the EURUSD is seen to have more negative movements in the future. On a different note, the German Central Bank President and European Central Bank Executive Committee member Jens Weidman has approved the Pandemic Emergency End Procurement Plan (PEPP) the day before, which might put added pressure on the common currency.
As of press time, 10-year US Treasury bonds are striving for new directions, and traders may face trouble when trading the EURUSD. The German PPI and Eurozone Economy along with Finance Ministers’ meetings may offer some moves on the EURUSD pair during a rather lackluster day. However, the US inflation expectations and dollar index will be the key things to watch to later understand how the instrument will move.
Current Market Sentiment:Bearish
Gold Remains Negative After FOMC
Gold showed a corrective move in its worst week since March 2020, rising 0.57% to $1,783 before the European session opened on Friday. The recent rise in gold prices, deflationary concerns and optimism about President Joe Biden’s infrastructure spending plans are driving market consolidation. In the recent 10 years of inflation data from the Federal Reserve Bank of St. Louis (FRED), inflation expectations are at the lowest level. This shows that the market believes the Fed’s comments on the “temporary” rise in inflation and the suppression of the dollar’s safe-haven demand.
On the other hand, the "Wall Street Journal" (WSJ) published news that "the Biden government has spent billions of dollars" has made progress. More and more bipartisan lawmakers and the White House are arguing about how to fund an infrastructure proposal of about $1 trillion, and one of them is waiting for President Biden’s comment, because the Democratic Party starts a separate discussion that may cost as much as 6 trillion. It is worth noting that the recent Asian concerns about Covid have faded, and the problem of British Delta COVID variant has also eased.
This has also contributed to the recent correction of gold. The US dollar index (DXY) has risen from a two-month high, but it is still expected to set the highest weekly profit since September 2020, below zero. Although the U.S. 10-year Treasury bond yield has recently been struggling to find a clear direction and let gold buyers give it a try. On Friday, the price of gold may follow the dollar higher. This also emphasizes that inflation expectations and economic headlines are important catalysts that may bring new momentum at the end of a turbulent week.
Current Market Sentiment:Bearish
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