The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 29.07.2021
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The major risk event of yesterday was a prime boost for all instruments involved, but not so much for the USD. The Fed decided to adopt a slower-than-expected return to normal, which has aggravated all the USD buyers who decided to push the instrument lower, allowing the other instruments, namely EURUSD and Gold, to rise and see gains.
EURUSD was able to break above the 100-SMA (Simple Moving Average) and is on the verge of breaking above 1.1860. Gold was in the same bullish boat, as the move higher reached $1,820 and seemed content to attempt a try at the current resistance level of $1,825. Moreover, Bitcoin also witnessed a strong bullish pressure that allowed it to break above the $40,000 barrier and reach $41,000, before some correction takes place.
With that said, let’s find out how the markets are doing on July 29th, 2021.
Bitcoin Reaches $41,000
Bitcoin's price started a new rebound from the $36,500 support area. BTC maintained good quotes above the $37,000 mark and gained momentum above the $38,000 level. The price even climbed above $40,000 and closed above the 100-hour single moving average. A high was reached at around $40,930, and the price is currently consolidating profits, after having corrected below the $40,000 support level.
There was a break below the 23.6% Fib retracement level of the upward move, from the $36,397 swing low to $40,930 high. Also, an important trading triangle formed at the support level, and the hourly resistance of the BTC/USD pair was seen around $40,200. Now, if the pair breaks through the resistance zone of $40,200, there will be a chance for additional gains. The next major resistance levels are at $40,800 and $41,000. A closing price above $41,000 may trigger a sustained rebound to $42,000.
Yet, if Bitcoin fails to break the resistance levels of $40,200 and $40,500, it may start another downward correction. The downward trend could reach approximately $39,400, which coincides with the downward trend line of the triangle currently forming on the instrument. Now the first major support is near the $38,600 area. This is close to the 50% Fibonacci retracement level, from a low of $36,397 to a high of $40,930. Breaking below the $38,600 support level may require a move to the level of $37,600. The next major support is around $37,200.
Current Market Sentiment:Consolidating Gains
EURUSD Refreshes High at 1.1850
As regards to falling U.S. Treasury yields, the US dollar selling sentiment has put the EUR/USD on the verge of daily gains. After hitting a low of 1.1753, the currency pair has continued to rise since the beginning of the week. The EUR/USD traded at 1.1855, up 0.11% on the day. The steady rise of the euro/dollar currency pair is mainly related to the bearish behaviour of the dollar.
The US Dollar Index (DXY), which tracks the performance of the greenback against the six majors, remained on the back foot amid falling US Treasury yields. The Fed’s recent monetary policy meeting put pressure on the tug of war between growth and inflation concerns, keeping investors away from the dollar. On the other hand, bullish economic data and overall risk sentiment are driving the single currency.
Strong economic data from the United States and the Eurozone are believed to have improved risk appetite and prompted market participants to make higher-risk investments. The important data on the economic calendar to watch is the euro unemployment rate, consumer confidence data and the German inflation rate. Furthermore, economic indicators from the US, especially the GDP and Initial Jobless Claims will be on the traders’ radar.
Current Market Sentiment:Bullish
Gold Rises Above $1,800 After FED
Gold hit its highest daily closing price in more than two weeks, keeping the Fed's bullish momentum at $1,808, and it also rose by 0.10% during the Asian session on Thursday. However, following President Jerome Powell’s press conference, the general weakness of the U.S. dollar led the buyers of the yellow metal to enter the market. The Fed Chief said, “Economy has made progress toward goals, since setting the bar for taper in December, and will continue to assess progress in coming meetings.”
It is worth noting that the news about the Wall Street Journal (WSJ) supporting the Senate to pass procedures for approving US President Joe Biden’s infrastructure spending bill, also benefited precious metals during the quiet meeting. The preliminary US GDP data for the second quarter will also be major economic updates and viral news, not to mention headlines from China, such as Beijing’s crackdown on IT and private education.
The two-day meeting of the Federal Reserve Open Market Committee ended yesterday and issued a statement. The incident is widely regarded as an ad hoc meeting of the Fed, and the market expects the Fed to adopt the mild and aggressive stance suggested in the statement. From the subject matter, we can infer recognition of inflation risk, delta risk, and fine-tuning discussions.
Current Market Sentiment:Bullish
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