The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 27.05.2021
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The market’s data calendar for this appears to be quite dry which will have traders focusing on additional Fed Speak as well as ECB Speak. This will undoubtedly offer fresh trading impetus for the market. EURUSD had fallen quite severely over the day reaching below 1.2200 as the US Treasury yields seem to be having quite the comeback which is pushing the common currency lower. Gold, on the other hand, remains trading near the top of the range despite the small tick downwards. Bitcoin seems to be starting an upward move, however with the presence of strong resistance levels on the top, the movement will be an uphill battle and might cause another drop.
With that said, let’s find out how the markets are doing on May 27th, 2021.
Bitcoin at Risk of Fresh Drop
Bitcoin has managed to break the resistance of $40,000 and prolonged the wave of recovery. BTC even exceeded the level of $40,500 reaching the high of $40,900. However, the Bulls failed to reach the strength above $40,900, before the instrument was met with heavy selling and pushed the instrument lower. That being said, the downside paused below the $40,000 support level. In addition, on the hourly chart of the BTC, there’s a break below the short-term trading triangle, and the support level is around $38,400.
Currently, BTC is rising from $37,000 as it seeks to reclaim the higher levels. Taking into consideration the Fibonacci retracement level between the low of $36,472 to the high of $40,923, we can notice the 76.4% level also provides support for this area. On the other hand, the immediate resistance of $38,500 is located near the broken triangle support. The first major resistance is at $39,500. The biggest resistance is still in the $40,000 area.
A reasonable closing price above the $40,000 resistance zone may trigger a sharp rise in Bitcoin. Failure to break the resistance level of $39,500 may lead to further declines. The initial downside support is near $37,000. The first major support is near the reversal level of 36,000 USD. If the decline is interrupted and is at the $36,000 support level, then the price may fall to the $34,000 support level in the short term.
Current Market Sentiment:Cautiously Bearish
EURUSD Battles Firmer US Yields
The EURUSD encountered heavy resistance at 1.2270 and began to fall reaching below the 1.2200, but seems to be on the mend and is expected to return to the price before the European session on Thursday. During the Asian market turmoil, the major currency pair fell to weekly lows and then rebounded from 1.2175. In search of clues of why this happened, we took note of the comments by officials of the Federal Reserve (Fed) and the European Central Bank (ECB) against gradual cuts in interest rates that have received increasing attention.
Talking to Reuters, Vice-Chairman for Supervision Randal Quarles said “There is still a long time to discuss raising interest rates, and he reiterated that the policy will remain very flexible for a period of time.” Similarly, Fabio Panetta of the European Central Bank underestimated Inflation expectations in an interview on Wednesday. In addition, tensions between China and the United States over the trade agreement and the coronavirus (COVID-19) have constrained the optimism of the vaccine in the Eurozone and the United States.
What's good for the market is that the yield on US Treasury bonds has increased and is currently up about 1.58%. At present, stock futures are still under pressure, limiting the rebound of the common currency. Looking ahead, US President Joe Biden's update of the China-US trade agreement and infrastructure spending plans will be supplemented by comments made by the Federal Reserve and European Central Bank politicians, which will keep EURUSD traders on their toes.
Current Market Sentiment:Cautiously Bearish
Gold Consolidates Around $1,900
The price of gold is recovering slightly and is trying to climb back higher after it posted losses that reached $1,891 on Wednesday. Due to the renewed optimism of Sino-US trade and the rebound in risk sentiment, the dollar has stopped rising and began to fall. The negotiations seem to be going well as conversations between Trade Representative Katherine Tai and China’s Vice-Premier Liu He are herald to be constructive and candid.
Treasury yields remained at the highest level, limiting the rise in gold prices. Supervisor Randal Quarles and other officials said they were ready to begin the talks on tapering and how they should proceed with them. Next, the new US data continues to have an important impact on gold traders (including potential PCE and durable goods) that are expected to provide traders with fresh impetus.
Gold was lower by 0.15% at the close of trading on Wall Street. However, it should also be pointed out that since the beginning of this year, the price of gold has boldly attempted to break through the psychological price of $1,900 for the first time. As the day progresses, there is almost no data, and central bank journalists follow the key data. The market also targets month-end events, which may be known for corrective and consolidated gains.
Current Market Sentiment:Consolidation
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