The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 25.05.2021
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The markets are simply focusing on the increased inflation in the markets, as the talks that tapering might be on the table at the next Fed meeting is putting pressure on the USD. This has in turn allowed the EURUSD to jump from the lows of 1.2160 as it attempts to break above the 1.2250 resistance level. Gold remains in a consolidation between the $1,870 and $1,890 levels as it looks ahead for more impetus to decide the next move. Bitcoin has found some much needed support around $31,000, which allowed it to jump back towards the $40,000 resistance level, but faces some strong resistance around said level.
With that said, let’s find out how the markets are doing on May 25th, 2021.
Bitcoin Turns Attractive
Bitcoin maintained a good bid above the $35,000 support which allowed the instrument to start a new surge. BTC broke through the main resistance zone of $37,000 and the 100-hour simple moving average and entered the positive zone. The price even broke through the $38,000 level and continued to rise. The price even tested the resistance zone of $40,000. However, it met some resistance at the 50-SMA and currently is consolidating earnings below the $40,000 and $39,500 levels.
A short-term trading triangle has also formed on the chart, with a resistance level of approximately $39,500 on the 1-hour chart. The initial support for the downtrend is near $38,000. The 23.6% Fibonacci retracement level of recent fluctuations from the low of $31,000 to the $40,000 area is also close to the $38,000 area, with resistance levels seen around $39,500 and $40,000. The next major resistance is at $41,500. Any further progress may open the door for a further rebound to the $45,000 level.
If Bitcoin fails to break the $40,000 resistance level, a downside correction may occur; initially the downside support is located near $38,000. Now the first major support level is near the $37,000 area and the 100-hour moving average. A break below the $37,000 support level may push the price towards the $35,550 support level. It is close to the 50% Fibonacci retracement level of the latest wave from a low of $31,000 to the $40,000 area.
Current Market Sentiment:Cautiously Bearish
EURUSD Enters Consolidation
The selling pressure around the USD and the decline in US Treasury yields put the EUR/USD on the verge of daily gains. In the past five trading days, the currency pair has been very defensive near the 1.2230 level, this is mainly due to the pessimistic performance of the US dollar. The conflict between growth and inflation concerns has hit the dollar. The Federal Reserve has confirmed that despite the strong economic performance, measures to reduce tapering are still unacceptable.
Fed officials’ comments on the timing of the termination of quantitative easing and the cancellation of the current ultra-loose monetary policy also hindered investors’ investment in the USD. At the same time, strong economic data in the United States, the Eurozone, and the United Kingdom have increased risk appetite and pushed market participants into high-risk assets. Market sentiment risks are driving the euro/dollar exchange rate to rise.
At the same time, Christine Lagarde, President of the European Central Bank, rejected previous expectations about canceling the bond purchase plan. Eurozone Finance Minister Pascal Donohoe remains optimistic about the economic recovery, but expressed concerns about the problem and keeps pace with China and the United States. These comments hindered the growth of the euro/dollar exchange rate.
Current Market Sentiment:Consolidation
Gold Seeks $1,900
Gold rebounded from a bullish trend after rebounding from intraday lows as it bounces in a tight consolidation zone. Although buyers rose to $1,879 the day before the European session on Tuesday, there was a decline of 0.10%. Although the yields on the USD and government bonds are still low, commodity prices have fallen for the second day in a row. The reason may be the ambiguity of the federal authorities’ statements and rising inflation expectations, not to mention the cautious sentiment before the release of key US data on Friday.
According to data from the St. Louis Federal Reserve, the annual inflation rate extended Friday’s recovery to the highest level since April 2013 since the beginning of this month. Although this also represents positive market sentiment and rising gold prices, inflation concerns are forcing the Fed to use loose currencies, putting pressure on risk appetite, and tame yellow metal buyers. Like the hybrid proposal, both Fed Chairman Esther George and Dallas Federal Reserve Chairman Robert Kaplan talked about the need to cut interest rates.
Supporters such as Fed Governor Lael Brainard and St. Louis Fed Chairman James Bullard are also at risk, which makes the deal interesting for gold traders. It should also be noted that the federal language update, the coronavirus (COVID-19) and the returns from the US Treasury Department are also important for the near-term prospects of gold prices.
Current Market Sentiment:Neutral - Bullish Bias
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