Daily Market Analysis and News From NordFX

[Stan NordFX]

CryptoNews of the Week

- 60% of investors surveyed by Bloomberg believe that a decline in the price of bitcoin to $10,000 is more likely. The remaining 40% are waiting for a recovery to $30,000. The study involved 950 respondents. Compared to institutions, there were more skeptics among retail investors. Almost every fourth called the first cryptocurrency “garbage” (18% of professional market participants).
Respondents expressed confidence that recent developments in the crypto market will prompt regulators to tighten their supervision of the industry. This can increase trust and lead to further popularization of digital assets. At the same time, the majority of respondents expressed confidence in the strong positions of bitcoin and Ethereum in the next five years, despite the active preparation by Central banks to launch their own digital currencies (CBDC).
As for NFTs, only 9% of the study participants see them as an investment opportunity. For the rest, non-fungible tokens are art projects and status symbols, which will no longer return to the previous hype.

- The inflow of funds into cryptocurrency investment products amounted to $15 million in the first week of July. The rate of inflows into bear funds, which allow bitcoin shorts, has slowed from $51 million a week earlier to $6.3 million, according to data from investment firm CoinShares. There was an inflow to Ethereum-based products for the third week in a row. Analysts have linked this to Ethereum's upcoming transition from Proof-of-Work to Proof-of-Stake. Investors remain interested in products based on several assets. Investments in them have amounted to $217.3 million since the beginning of the year.

- Gold advocate and critic of the first cryptocurrency, Peter Schiff, said he was ready to sell his Euro Pacific bank for bitcoins or for any other digital asset. “Actually, yes, I would sell the bank for anything if the regulators let me do it. My main goal is to protect clients,” he wrote.
Recall that regulators in Puerto Rico closed Euro Pacific in early July due to allegations of insolvency and non-compliance. Schiff said that government authorities are taking revenge on him for criticizing excessive taxation and control by the authorities. According to him, the regulators have no evidence of violations, the bank has no loans or debts, but there are enough funds to fully pay all depositors.

- Galaxy Digital CEO Mike Novogratz said in an interview with CNBC that he does not believe in the possibility of reducing the price of the first cryptocurrency to $13,000. “There is a feeling that we are 90% over this deleveraging. […] The problem is that further growth requires more faith and new capital,” he said. According to Novogratz, companies in the cryptocurrency market had too many leveraged positions. This led to the bankruptcy of some of them. He also predicted a sideways trend in the digital asset industry until the US Federal Reserve stops raising the base rate. According to the head of Galaxy Digital, it will take about 18 months.
Rockefeller International CEO Ruchir Sharma also noted that bitcoin needs to get rid of excess leverage in order to become sustainable again.

- Ethereum should be classified as a security, since the asset was originally distributed to investors as part of an ICO. This was stated by the head of MicroStrategy Michael Saylor, who added that the periodic software updates of the Ethereum network, behind which the development team stands, are another argument in favor of such a classification. In his opinion, for a cryptocurrency to be considered a commodity, it should not have an issuer or someone who would “make decisions”.
Saylor also stated that the tokens of all networks based on Proof-of-Stake are securities. According to him, investing in these assets is “extremely risky” due to potential problems with regulators. According to the top manager, this is one of the key reasons why MicroStrategy only invests in bitcoin.

- Soo Kim, a former CIA analyst, said that North Korea will continue to focus on cyberattacks on cryptocurrency and technology companies as the DPRK regime faces severe shortages of food and other resources.
These attacks will become more sophisticated over time as the country struggles with lingering economic sanctions and profiting from cyberattacks has become a "way of life" for North Korea. According to the analyst, the country takes this job very seriously: it's not just some person sitting in the basement and trying to steal cryptocurrency. Pyongyang provides its hackers with the best equipment and education as they bring it a critical income stream. First of all, according to Kim, hackers pay attention to unsuspecting employees of technology companies and try to find vulnerabilities through them, and often get a job in one of the Western or Asian companies themselves.
Earlier, Reuters experts estimated that due to the downturn in the market, the cryptocurrency stolen by North Korea over the past year has fallen in price by $400 million.

- Miners in the US began to move to new states in order not to burn out on rising electricity prices. According to the US government, electricity costs in the country will grow by an average of 5% this summer. But it all depends on each individual state. For example, according to the forecast of the US Chamber of Commerce, electricity growth in New England will be 16.4%, while in the Southwest it will be only 2.4%.
However, moving is far from the only way to save your mining investment. There are many incentives for renewable energy in the US. For example, when installing large solar panels, miners can receive incentives from the government, sometimes reaching 50% of the electricity bill.

- Macroeconomics expert Lyn Alden believes that although there are no clear bullish signals in the crypto market, the time for global capitulation has already passed. In her opinion, the worst part of the bearish trend ended along with the volatile first half of 2022, when BTC lost over 56% of its value. The macro strategist believes that bitcoin can recover as the massive BTC sell-off has stopped.
However, Alden warns that bitcoin could still go down one step. “Macroeconomically, there are still not many bullish catalysts at the moment, and I would not rule out further price movement down.” “We have seen that, for the most part, bitcoin is very strongly correlated with the growth of the money supply, especially in dollars. So, when we have had a huge increase in the money supply around the world over the past couple of years, bitcoin has also done very well,” explained Alden. Now the reverse is happening as the US Federal Reserve and other Central banks try to tamp down inflation. And this, accordingly, affects the price of the cryptocurrency.

- CEO of Rockefeller International, formerly chief strategist at Morgan Stanley, Ruchir Sharma believes that bitcoin will soon return to growth and reach new heights. The financier recalled the situation with Amazon in the early 2000s, during the dot-com bubble, when the retailer's share price collapsed by 90%. However, stocks then bounced back, and rose another 300 times over the next 20 years. The top manager of Rockfeller International believes that a similar situation could happen with the first cryptocurrency.
Sharma noted that bitcoin and cryptocurrencies have become victims of a “global speculative mania.” At the same time, the deleveraging process is not over yet, and the bitcoin rate may further decline in the next six months against the backdrop of a fall in the stock market. Sharma recalled that a bearish trend usually lasts about a year in the stock market, and stock indices fall by 35%. At the moment, the market has decreased by only 20%. “I would not say that we are already at the bottom. The bearish trend in the US, which is the driver of demand for risky assets around the world, is still ongoing,” Sharma said.
According to the head of Rockfeller International, the position of the US dollar as the world's reserve currency is currently under threat. At the same time, he does not see competitors from other fiat currencies, but a “window of opportunity” has opened for cryptocurrencies. Sharma believes that top cryptocurrencies will become much more stable within three to five years, which will allow them to displace the US dollar.


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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[Stan NordFX]

NordFX Copy Trading

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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[Stan NordFX]

Forex and Cryptocurrencies Forecast for July 18 - 22, 2022​

EUR/USD: Parity 1:1 Achieved

What we've been talking about over the last few months has come true: the EUR/USD hit 1.0000 on Tuesday, July 12. The local bottom was fixed on Thursday July 14 at 0.9951. The last time the pair was so low was in December 2002. Note that the dollar strengthened not only against the euro, but also against other leading world currencies. The DXY index is also in the zone of 20-year highs, having approached the height of 108.99 on July 14.

The greenback's rally was spurred on by recent US inflation data. The consumer price index (CPI) reached 9.1% in June, exceeding the forecast of 8.8%. Note that this was observed only 12 times in 110 years, and the last time inflation rose above 9% was in 1981. This record (rather an anti-record) strengthened market expectations regarding the pace of tightening monetary policy (QT) by the US Central Bank. If earlier it was assumed that the rate would be increased by 50-75 basis points at the next meeting of the FOMC (Federal Open Market Committee) on July 27, there is talk now that federal funds costs may increase immediately by 100 bp. The probability of such a move is estimated by analysts at 82%, and the probability that the rate will be raised by a total of 175 basis points at the two upcoming meetings is 75%, according to CME Group FedWatch.

Atlanta Federal Reserve Bank (FRB) President Rafael Bostic dismissed the possibility, adding that inflation could rise even further by the end of the year, requiring the Fed to act even more decisively. According to experts, the desire of the US Central Bank to stop inflation at any cost may lead to the fact that the rate will eventually reach 4.00% (it is 1.75% at the moment). And this will be done even though the country's economy may fall into the deepest recession.

What is good for the dollar is bad for the stock market. Flight from risky assets intensified amid market fears about a prolonged economic downturn. S&P500, Dow Jones and Nasdaq fell down, while DXY flew up. Data on retail sales in the US, which were released on Friday evening, July 15, slowed down the flight. With a previous reading of -0.1% and a forecast of 0.8%, this figure reached 1.0% in June, which pushed the EUR/USD pair up and finished at 1.0082.

It should be noted that the tightening of the Fed's monetary policy creates problems not only for the US economy, but also for the entire global economy. The share of the US dollar in international reserves was 59% at the end of 2020, and the share in international settlements as of February 2022 reached 39%. Thus, the dollar is both the main reserve currency and the main means of payment in the world. With its strengthening, the burden increases primarily on emerging market economies that have received large loans from the IMF. Debt service difficulties have already led to a default in Sri Lanka, problems await El Salvador, Tunisia, Egypt, Pakistan, and Ghana.

The popularity of the dollar as a defensive asset will continue to grow with the approach of a recession and thanks to the policy of the US Federal Reserve. At the time of writing the review, on the evening of July 15, this forecast is supported by 60% of experts. Further correction to the north is expected by 30%, and 10% of analysts have given a neutral forecast. The oscillator readings on D1 give a completely unambiguous signal: all 100% are colored red. There are 85% of those among the trend indicators, the remaining 15% have taken the opposite position.

The closest strong support for the EUR/USD pair is the 1.0040-1.0050 zone, followed by the 1.0000 level. After it is broken, the bears will target the July 14 low at 0.9950, even lower is the strong 2002 support/resistance zone. 0.9900-0.9930. The nearest serious target of the bulls is a return to the zone 1.0350-1.0450, then there are zones 1.0450-1.0600 and 1.0625-1.0770. There are several levels on the way to 1.0350, which the pair broke very easily during the fall, so it is still difficult to determine which of them can become a serious obstacle when moving up.

The highlight of the coming week will undoubtedly be the ECB meeting on Thursday July 21. It is expected that the regulator will raise the interest rate from 0.0% to 0.25%. Such a move could support the euro a little, although it looks rather timid against the backdrop of the Fed's hawkish policy. Of undoubted interest are the subsequent press conference and comments of the ECB management, which should give the market an idea about the future plans of this regulator.

Other events include the publication on Tuesday, July 19 of the Consumer Price Index (CPI) and the report on bank lending in the Eurozone. Data on the labor market and manufacturing activity in the US will be released on Thursday, July 21, and the value of the PMI (Purchasing Managers Index) in the manufacturing sector in Germany will become known the next day. In addition, we advise you to pay attention to the decision of the People's Bank of China on the interest rate on July 20. This decision is especially interesting, since China's GDP in the Q2 2022. decreased by 2.6% against the forecast of a decrease by 1.5%, which indicates the approach of the country's economy to a recession.

continued below...

 

[Stan NordFX]

GBP/USD: The Battle for 1.2000 Is Lost, But It's Not Over Yet

The GBP/USD pair, unlike the EUR/USD, has not yet broken a multi-year record, but is already close to it. The local bottom was fixed at 1.1759 last week, and the last chord of the five-day period was set at 1.1865. Below are two serious targets: 1.1409, the collapse point caused by the start of the COVID-19 pandemic in March 2020, and the December 1984 low of 1.0757. We think it's too early to talk about the parity of the pound with the dollar 1:1.

The macro data released on Wednesday July 13 turned out to be unexpectedly green. Thus, the UK GDP (yoy) with a forecast of 2.7% in reality amounted to 3.5%, while the June GDP, with the previous value of -0.2% and the forecast of 0.1%, rose to 0.5%. Despite this positive, the factors of pressure on the country's economy have not gone away. Among them are problems related to Brexit and the customs conflict between Britain and Northern Ireland. Inflation remains the highest in 40 years, and it is possible that it could exceed 11% by November, pushing the economy into a deep recession. We must add the government crisis that caused the resignation of Prime Minister Boris Johnson to all this, as well as the difficulties associated with sanctions against Russia due to its armed invasion of Ukraine.

Despite statements from BoE officials that they are ready to accept a faster pace of monetary tightening, in reality the regulator is acting more cautiously than the market expected. The current interest rate is 1.25%, which is lower than the corresponding Fed rate (1.75%), and the next BOE meeting will take place only on August 04, 2022. And this cannot but exert downward pressure on the GBP/USD pair.

At the moment, 50% of experts believe that the British currency will continue to lose ground, 25% on the contrary expect a rebound upwards, and 25% have taken a neutral position. The readings of the indicators on D1 are as follows. Among the trend indicators on D1, the power ratio is 100:0% in favor of the reds. Among the oscillators, the advantage of the bears is slightly less: 90% indicate a fall, the remaining 10% have turned their eyes to the north.

The nearest support is at 1.1800, followed by the July 14 low of 1.1759. Further, 1.1650, 1.1535 and March 2020 lows in the 1.1400-1.1450 zone. The immediate task of the bulls is to rise to the 1.1875-1.1915 zone, and then a new stage of the battle for 1.2000, which they ingloriously lost last week. In case of victory, the pair will meet resistance in the zones and at the levels of 1.2100, 1.2160-1.2175, 1.2200-1.2235, 1.2300-1.2325 and 1.2400-1.2430.

As for the macroeconomic calendar for the United Kingdom, we advise you to pay attention to Tuesday July 19, when data from the UK labor market arrives. The speech of the head of the Bank of England Andrew Bailey is scheduled on the same day. The value of the Consumer Price Index (CPI) will become known on Wednesday, July 20, and a whole package of data regarding the state of the British economy will be received on Friday. It will include retail sales data for June, as well as data on business activity (PMI) both in individual sectors and in the country as a whole.

USD/JPY: The Storm After the Calm

We called the previous review “The Calm Before the Storm” as USD/JPY did not renew its 24-year high for the first time in five weeks and took a breather. But since a storm was promised, it must break out. A new high at 139.38 was recorded on July 14, and the pair met the end of the trading session at 138.50.

The reason for the new weakening of the yen is the same: the difference between the hawkish monetary policy of the US Federal Reserve and the ultra-dove one of the Bank of Japan (BOJ). By the way, the next meeting of the Japanese Central Bank is to be held next week, on Thursday, July 21, at which it is likely to once again leave the interest rate unchanged at the negative level of -0.1%.

If we usually talk about the fight between bulls and bears, then regarding the future of the yen, the fight is between… analysts and BOJ. The former, for the most part, are waiting for the Central Bank to finally change its policy, and therefore stubbornly vote for the strengthening of the yen. The latter, no less stubbornly, leaves this policy unchanged, and the USD/JPY pair stubbornly moves up.

This time, only 40% of experts speak about the pair's movement to the height of 142.00. The remaining 60% hope for a downward trend reversal. There are no such disagreements in the readings of indicators on D1: all 100% of trend indicators and oscillators are looking north, although 20% of the latter are in the overbought zone. Supports are located at the levels and in the zones 137.65, 137.00, 136.60 135.50-135.70, 134.00, 133.50 and 133.00. The bulls' targets ¬are 140.00 and 142.00. And if the pair's growth rates remain the same as in recent months, it will be able to reach the 150.00 zone in late August - early September

Apart from the meeting of the Japanese Central Bank and the subsequent press conference of its management, there are no other significant events expected in Japan this week.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: The Beginning of the End of the Bear Phase

The previous review drew attention to an anomaly when both the dollar and the US stock indices - S&P500, Dow Jones and Nasdaq were growing at the same time. Things fell into place last week: the US currency continued to grow, and the indices fell down. It should be noted to bitcoin's credit that, despite another wave of investor flight from risks, it managed to stay in the $20,000 zone. Now, how long will it last?

CEO of Rockefeller International, who previously held the post of chief strategist at Morgan Stanley, Ruchir Sharma, recalled that a bearish trend usually lasts about a year in the stock market, and stock exchanges indices are falling by 35%. At the moment, the market has decreased by only 20%. So we can expect a further drop in demand for risky assets including bitcoin in the next six months.

“I would not say that we are already at the bottom,” Sharma said, adding that bitcoin will return to growth and reach new highs after the end of the bear cycle. The financier recalled the situation with Amazon in the early 2000s, during the dot-com bubble, when the retailer's share price collapsed by 90%. However, stocks then bounced back, and rose another 300 times over the next 20 years.

If you look at the BTC/USD chart, it's easy to see that the flagship currency has been clinging to round levels lately. So, bulls and bears fought for $40,000 from April 11 to May 5. The front line was at $30,000 from May 10 to June 10. The battle has been taking place in the $20,000 zone since mid-June. At the moment, 60% of investors surveyed by Bloomberg consider another decline in the price of bitcoin more likely, this time to $10,000. The remaining 40% are waiting for a recovery to $30,000. The study involved 950 respondents. Compared to institutions, there were more skeptics among retail investors. Almost every fourth called the first cryptocurrency “garbage” (18% of professional market participants).

Galaxy Digital CEO Mike Novogratz said in an interview with CNBC that he does not believe in the possibility of reducing the price of the first cryptocurrency to $13,000. “There is a feeling that we are 90% over this deleveraging. […] The problem is that further growth requires more faith and new capital,” he said. According to Novogratz, the sideways trend of digital assets will last until the US Federal Reserve stops raising the base rate, which will take about 18 months.

Macroeconomics expert Lyn Alden made a similar point. She believes that although there are no clear bullish signals in the crypto market, the time for global capitulation has already passed. In her opinion, the worst part of the bearish trend ended along with the unstable first half of 2022. The macro strategist believes that bitcoin can recover as the massive BTC sell-off has stopped.

However, Alden warns that bitcoin could still go down one step. “Macroeconomically, there are still not many bullish catalysts at the moment, and I would not rule out further price movement down.” “We have seen that, for the most part, bitcoin is very strongly correlated with the growth of the money supply, especially in dollars. So, when we have had a huge increase in the money supply around the world over the past couple of years, bitcoin has also done very well,” explained Alden. 1Now the reverse is happening as the US Federal Reserve and other central banks try to tamp down inflation. This, accordingly, affects the price of the cryptocurrency. In other words, now that the flow of cheap liquidity has dried up and interest rates are rising, investors prefer not to get involved in risky assets.

Some experts prefer to call what is happening in the crypto market not a collapse, but simply another deep correction. In addition, referring to historical data, they declare entering the final phase of a bear market. So, at the end of 2018, the total drop was 84% from the previous historical maximum. The BTC/USD pair has currently fallen from the November 11, 2021 high by only 71%. Thus, if we follow this model, we can expect the completion of the correction in the region of $10,000-11,000, and the subsequent consolidation may last about a year or more.

According to Glassnode, market shrinkage has virtually eliminated the rest of the "market tourists" from the game, leaving only hodlers "at the front". On average, unrealized losses of each of them are now 33%. This is not the worst indicator in history, which also suggests that the final bearish phase has just begun.

The start of the final phase is also signaled by the capitulation of the miners, which has a high correlation with the bottoming of bitcoin. Most of the public mining companies used to expand their production with loans. Now their earnings have dropped to 50%, forcing them to sell off their coin holdings to cover operating and borrowing costs. Glassnode estimates that miner inventories are now around 70,000 BTC worth about $1.3 billion. And in the event of a prolonged consolidation, they will also be forced to put them on sale, which will put additional pressure on the market.

Please note that in this case, we are talking only about the beginning, and not about the end of the final phase of the bearish trend. Thus, the surrender of miners in 2018-19 lasted four months, while the current cycle lasts a little more than a month.

As for Ethereum, the dynamics of the ETH/USD pair quotes almost repeats the dynamics of BTC/USD. Some experts do not exclude its temporary rise to $1,280, however, they believe that this will be another trap for the bulls. And the pair will return to the $1,000 zone after its triggering. The next target of the bears is $500.

Returning to the Bloomberg survey, most of the 950 investors surveyed expressed confidence in the strong position of bitcoin and ethereum over the next five years. In their opinion, developments in the crypto market will prompt regulators to tighten supervision over the industry. This can increase trust and lead to further popularization of digital assets. Ruchir Sharma of Rockefeller International also believes that top cryptocurrencies will become much more stable within three to five years, which will allow them to seriously push the US dollar.

As of this writing (Friday evening, July 15), bitcoin is trading in the $20,900 zone. The total capitalization of the crypto market is $0.945 trillion ($0.966 trillion a week ago). The Crypto Fear & Greed Index has dropped 5 points over the week from 20 to 15 points and is still in the Extreme Fear zone.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

CryptoNews of the Week

- Congress and the SEC should take a tougher stance on the cryptocurrency industry. This was stated by a member of the US Senate Banking Committee Elizabeth Warren. “I am sounding the alarm about cryptocurrencies and the need for stricter regulations for consumer protection and financial stability. Too many companies have managed to deceive customers and rub ordinary investors in their face,” said the senator.
Warren's words came against the background of ongoing problems in the crypto industry. For example, Celsius Network suspended the withdrawal of funds “due to extreme market conditions” in June, after which it filed for bankruptcy. It became known about the introduction of limits on the withdrawal of funds by the CoinLoan platform on July 5, and the Vauld platform announced a possible restructuring.

- Assuming the market cycle repeats, the bearish phase of bitcoin will end in the first half of autumn. Such a conclusion can be drawn from the historical data provided by the analysts at Grayscale Investments. It took bitcoin 1,290 and 1,257 days to form a full cycle in 2012 and 2016, respectively. It took 391 and 364 days to fall from the peak by 73% in 2012 and by 84% in 2016. The duration of the current cycle, which began in 2020, has reached 1206 days (as of July 20, 2022). In other words, it may take another two or three months before the bottom is reached.

- A crypto strategist with the nickname Rekt Capital came to similar conclusions. In his opinion, despite the oversold signals, the downward exchange rate movement may continue for quite a long time. The analyst noted that the Relative Strength Index (RSI) on the BTC monthly timeframe is now below the lowest levels of the bear markets of 2015 and 2018, which could become new resistance levels for bitcoin.
According to Rekt Capital, the short-term prospects of the coin do not look very good, and the bottom can be reached only in a few months: “Bitcoin has about 650 days before the next halving (April 2024). Historically, it bottomed around 517-547 days before its halving. In the event of a repeat of history, bitcoin will need another 100-150 days before reaching the bottom, which will form in the fourth quarter of 2022.”

- Analysts at the Kraken cryptocurrency exchange use the 200-week moving average on the bitcoin chart as their main indicator. In particular, they drew attention to the multipliers with which BTC traded in the past relative to its 200-week SMA. Thus, having rebounded from the SMA200, bitcoin grew 15.2 times in December 2017. The growth was 13.2 times in November 2013. At the moment, BTC is trading close to its 200-week moving average. Its current value is about $22,485. If the coin shows a multiplier in the range of 13x - 15x again, it may rise to about $300,000.
Of course, the multiplier for BTC was not always 10x when touching the SMA200. Growth peaked at 5.8x in March 2021 before the crypto market began to decline noticeably. However, even with this value of the multiplier, bitcoin can rise to $130,000.

- The US Federal Bureau of Investigation has warned of a rise in fake applications for investing in cryptocurrencies. It is common for attackers to impersonate legitimate financial institutions in order to gain the trust of potential victims. They then persuade people to install fraudulent mobile apps and deposit money, which they then steal. According to FBI estimates, cybercriminals have recently managed to steal about $43 million in this way.
The Bureau recommended that cryptocurrency owners enable multi-factor authentication for all their accounts, reject requests to install suspicious applications, and verify phone numbers and email addresses on the official websites of companies allegedly acting on behalf of scammers.

- Edward Dowd, a former top manager at Blackrock investment firm, believes that despite the recent turmoil, bitcoin will become an integral part of any investment portfolio. The specialist believes that gold will remain a viable investment, but BTC is more likely to become a store of value. “At least BTC can be sold or exchanged digitally, but it is much more difficult with gold. Although I am not against gold, having a small amount of it is also a good idea,” says Dowd.
As the cryptocurrency industry matures, bitcoin will stand out from the rest of the market, the ex-CEO of Blackrock believes. He compared the cryptocurrency market to the era of the dot-com crisis, when the vast majority of Internet companies closed down, and only stronger competitors managed to survive. Dowd cited the example of Amazon, which is still considered one of the largest technology giants. Last month, Bank of England Deputy Governor Jon Cunliffe also compared the current bearish trend in the cryptocurrency market to the dot-com crisis.

- American businessman Thomas Peterffy, whose capital is estimated at $18.4 billion, is ready to buy bitcoins when the value of the cryptocurrency drops to $12,000. This chairman of Interactive Brokers admitted in a recent interview with Forbes that he already owns digital assets and plans to acquire a few more coins if BTC drops in price. The billionaire does not intend to buy cryptocurrency at the current, high in his opinion, price, as he believes that in the future bitcoin is likely to depreciate or be banned in the United States. Despite the high financial risks associated with buying cryptocurrencies, Peterffy advised investors in January to invest 2-3% of assets in bitcoin in case “money goes to hell.”
Last week, Finder portal experts made a forecast for a decline in the value of bitcoin to $13,676. Analysts doubt that the price will fall below this value, and then Thomas' plan will not come true.

- Despite the fall of the cryptocurrency market, a poll on the social network Weibo with the participation of more than 2,200 people showed that Chinese traders are waiting for further decline in the price of bitcoin. 8% of respondents said they would buy BTC at $18,000 per coin. 26% of respondents will start purchases at $15,000. But if the bitcoin rate falls to $10,000, 40% of respondents will buy the first cryptocurrency.
Recall that trading in cryptocurrencies is prohibited in China. The People's Bank of China reported in March that the volume of BTC transactions in the country decreased by 80%, which indicates the effectiveness of the ban.

- Bitcoin rose above $23,000 as the US dollar weakened. The DXY index, which determines the strength of the USD, finally broke the rally that began on February 24 and rebounded from its twenty-year high at around 109.294 points, registered on July 14. At the time of publication, this drop has reached almost 2.5%.
The maximum price of BTC at the time of publication on 07/20/2022 was $23,911. Thus, bitcoin has grown by 26.6% compared to the low of July 13 ($18.886). This movement could be regarded as a technical rebound; however, the main cryptocurrency has overcome an important psychological level in the form of a 200-week moving average. According to analysts at the Binance crypto exchange, if the bulls manage to close the week above this level, it will be possible to ascertain the restoration of strong support characteristic of bitcoin bearish cycles.

- Bitcoin's break above the 200-week SMA caused a surge of enthusiasm among investors. Amsterdam Stock Exchange trader Michael van de Poppe first tweeted out a graphical forecast anticipating a cryptocurrency rally to $28,000 and then compared the current market situation to the recovery from the memorable collapse triggered by the announcement of the coronavirus pandemic in March 2020. At that time, bitcoin collapsed to $3,782, but then rose by 1.600% over the next 13 months (to $64,853 in April 2021).


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #forex #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for July 25 - 29, 2022​

EUR/USD: The ECB's Monetary Experiment: Crossing a Hawk with a Dove

The single European currency showed slight growth at the beginning of last week, fixing a local high at 1.0272. There are three reasons for this. The first and most banal one is a corrective rebound after the EUR/USD pair, having broken through the parity level of 1.0000, found the bottom at 0.9951 on July 14. The second one is the resumption of Russian gas supplies to the EU via the Nord Stream pipeline. And finally, the third and most important one is the expectation of a rise in the euro interest rate. Moreover, the market expected that the rate would be raised by 50 basis points (bp) at once, and not by 25, as announced by the ECB itself at its previous meeting. This is what happened in reality. For the first time in 13 years, the European regulator raised the lending rate from 0 to 0.5% on Thursday, July 21, and brought the deposit rate out of the negative zone, raising it from -0.5% to 0%.

The ECB explained in its press release that it felt appropriate to take a larger first step towards rate normalization for two reasons. The first is obvious and consists of an updated assessment of inflation growth. As a second reason, the ECB announced the launch of a new instrument, the Transmission Protection Instrument (TPI), which should allow, despite the increase in the rate, not to increase the cost of borrowing too aggressively in the vulnerable economies of the Eurozone. The TPI description explains that this tool was introduced to counter the unreasonable erratic market movements that took place in mid-June.

In short, the essence of TPI is that the ECB will be able to buy back securities issued in those EU countries where there is a destabilization of financial conditions unjustified by fundamental factors, on the secondary market. The volume of purchases is not limited by anything and will depend on the severity of the risks. In other words, the regulator will try to cross a hawk with a dove: on the one hand, by raising the rate (QT), and on the other hand, by continuing potentially unlimited quantitative easing (QE). The market reaction to this monetary experiment turned out to be appropriate and predictable: the EUR/USD pair fell to 1.0152. After that, it went up again and completed the five-day period at the level of 1.0210.

There will be a meeting of the FOMC (Federal Open Market Committee) of the US Federal Reserve next week, on Wednesday, July 27. Almost no one doubts that the key interest rate will be raised there. But how much? By 100 bp, which hasn't happened since 1981, or by 75 bp? If the FOMC chooses the first option, the rate will reach 2.75%. It is this growth that the markets put into their quotes, expecting a new assault on the 1.0000 horizon by the EUR/USD pair. However, if the Fed abandons this idea and the rise is more modest, then a further rebound of the pair to the north is not ruled out.

At the time of writing this review, on the evening of July 22, 25% of experts supported the growth of the pair. The remaining 75% showed it the way to the south. The oscillator readings on D1 give a slightly different signal: 60% are colored red, 25% are green and 15% are neutral grey. As for the trend indicators, 65% look south, the remaining 35% have taken the opposite position. The immediate support for the EUR/USD pair is the 1.0150-1.0200 zone, then, of course, comes the 1.0000 level. After it is broken, the bears will target the July 14 low at 0.9950, even lower is the strong 2002 support/resistance zone. 0.9900-0.9930. The next serious task for the bulls will be to break through the resistance at 1.0270 and return to the 1.0400-1.0450 zone, followed by the 1.0520-1.0600 and 1.0650-1.0750 zones.

As already mentioned, the most important event of the upcoming week will be the FOMC meeting of the US Federal Reserve and its decision on the interest rate. The volume of US orders for capital goods and durable goods will become known on the same day, Wednesday, July 27. Data (CPI) on consumer markets in Germany and the Eurozone will arrive on Thursday, July 28 and Friday, July 29, respectively. The preliminary size of the US GDP (Q2) will be known on July 28, and the GDP of Germany and the Eurozone on July 29.

GBP/USD: The Battle for 1.2000 Continues

Last week was quite busy for the pound as for the publication of important macro-statistics on the UK. And although it turned out to be rather ambiguous, there were distinct positive notes in it, especially where it concerned the labor market. The number of applications for unemployment benefits in the country for the month decreased from 34.7K to 20.0K, and this is against the forecast of 41.2K.

Unlike EUR/USD, thanks to such statistics, the GBP/USD pair showed more confident growth and managed to return to where it was trading two and five weeks ago, putting the final chord at around 1.2000. And now the question arises: will this level turn into strong resistance or support?

At the moment, 75% of experts believe that the British currency will continue to lose ground, 25%, on the contrary, expect a rebound upwards. The readings of the indicators on D1 are as follows. Among the trend indicators, the balance of power is 65-35% in favor of the reds. Among the oscillators, the advantage of the bears is much less: 35% indicate a fall, 25% indicate an increase, the remaining 40% remain neutral. The closest support is located in the 1.1875-1.1915 zone. Below is the level of 1.1800, the low of July 14 of 1.1759, then 1.1650, 1.1535 and the lows of March 2020 in the zone 1.1400-1.1450. As for the bulls, they will meet resistance in the zones and at the levels of 1.2100, 1.2160-1.2175, 1.2200-1.2235, 1.2300-1.2325 and 1.2400-1.2430.

The macroeconomic calendar does not include major news from the United Kingdom itself. The determining factor for the dynamics of the GBP/USD pair, of course, will be the meeting of the US Federal Reserve on Wednesday, July 27. Recall that the interest rate on the pound is 1.25% at the moment , and the next meeting of the Bank of England (BOE) is scheduled for August 04, 2022.

USD/JPY: Correction or Trend Change?

What most experts dreamed about for so long has come true. The USD/JPY pair did not renew the 24-year high again, and did not even take a break, but literally collapsed down. And this despite the fact that the Bank of Japan (BOJ) once again left the interest rate unchanged at a negative level of -0.1% on Thursday, July 21. The management of the regulator did not even hint of tightening monetary policy. On the contrary, it was stated that the Japanese Central Bank will not hesitate to take additional easing measures (QE) if necessary, and also expects short-term and long-term interest rates to remain at the current or even lower (!) levels.

Although inflation in Japan tends to rise, it is still below 2%, which is many times lower than in the US and Europe. Thus, given the dynamics of domestic demand and weak wage growth, there is still little incentive for the BOJ to change its ultra-dove tack. So the current strengthening of the yen and the fall of the pair USD/JPY from 139.38 to 135.56 is due, with a high degree of probability, to its being strong overbought.

This time, 70% of experts are waiting for a new push of the pair to the height of 142.00. 15% hope for a continuation of the downtrend, the remaining 15% speak of a side corridor. The picture is vaguer in the readings of indicators on D1: trend indicators have a parity of 50% to 50%, 25% of oscillators look to the north, 40% to the south and 35% to the east. Supports are located at the levels and in the zones 135.55, 134.75, 134.00, 133.50, 133.00 and 131.40. Resistances are 136.35-137.00, 137.90-138.40, 138.50-1.139.00, followed by the July 14 high at 139.38 and round bull targets of 140.00 and 142.00.

No major events are expected in Japan this week. Of course, we can note the publication on Monday, July 26 of the report on the latest meeting of the Monetary Policy Committee of the Bank of Japan, however, it is unlikely that it will cause not only a tsunami, but even a small wave in the market. So the focus of attention, as for other currency pairs, will be on the meeting of the US Federal Reserve on Wednesday, July 27.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: A Little Patience, Ladies and Gentlemen!

For the first time since June 13, BTC/USD rose above $23,000 and even hit $24,263 last week. What is this, a long-awaited change in trend? Or a brief thaw in the middle of a crypto winter? Or maybe another insidious trap arranged by bears for gullible investors? Let's figure it out.

We have repeatedly written that a popular marker among crypto-analysts is the 200-week moving average (SMA200), which has been referred to more and more often lately. The reason is that it used to be the main support for the BTC/USD pair. But it is not at all certain that what happened before will be repeated in the future. And the proof of this is the recent breakdown of this very SMA200. However, this technical analysis indicator is still one of the most used in making forecasts.

So, bitcoin managed to rise above the 200-week moving average last week. The reason for this, of course, is not that the flagship cryptocurrency has become stronger, but that the US dollar has weakened a little. Against this background, the US stock indices, S&P500, Dow Jones and Nasdaq went up, and after them the quotes of such risky assets as cryptocurrencies followed.

At the time of writing this review (Friday evening, July 22), bitcoin is trading around $22,670. The total capitalization of the crypto market is $1.026 trillion ($0.945 trillion a week ago). The Crypto Fear & Greed Index rose from 15 to 33 points in a week, and finally got out of the Extreme Fear zone into the Fear zone.

Thus, bitcoin is up about 20% from the July 13 low ($18.886) and is just above the 200-week moving average ($22.565). According to analysts at the Binance crypto exchange, such a close of the week gives hope for the restoration of strong support in the form of SMA200, which is typical for bitcoin bear cycles.

Bitcoin’s break above the 200-week SMA caused a surge of enthusiasm among investors. Amsterdam Stock Exchange trader Michael van de Poppe first tweeted out a graphical forecast anticipating a cryptocurrency rally to $28,000 and then compared the current market situation to the recovery from the memorable collapse triggered by the announcement of the coronavirus pandemic in March 2020. At that time, bitcoin collapsed to $3,782, but then rose by 1.600% over the next 13 months (to $64,853 in April 2021).

Analysts of the Kraken cryptocurrency exchange are equally optimistic, who also use the 200-week moving average as the main indicator. In particular, they drew attention to the multipliers with which BTC traded in the past relative to its 200-week SMA. Thus, having rebounded from the SMA200, bitcoin grew 15.2 times in December 2017. The growth was 13.2 times in November 2013. At the moment, BTC is trading close to its 200-week moving average. If the coin shows a multiplier in the range of 13x - 15x again, it may rise to about $300,000.

Of course, the multiplier for BTC was not always 10x when touching the SMA200. Growth peaked at 5.8x in March 2021 before the crypto market began to decline noticeably. However, even with this value of the multiplier, bitcoin can rise to $130,000. But when will this happen? The patience of many market participants has already run out.

We have already written that, according to Glassnode data, bitcoin's record price decline in June almost took the rest of the “market tourists” out of the game, leaving only hodlers “at the front”. In the context of monthly dynamics, the situation was worse only in 2011. The largest outflow was recorded among institutional investors (companies with investments from $1 million), public miners (expanding production on credit), as well as speculators and casual players.

Assuming the market cycle repeats, the bearish phase of bitcoin will end in the first half of autumn. Such a conclusion can be drawn from the historical data provided by the analysts at Grayscale Investments. It took bitcoin 1,290 and 1,257 days to form a full cycle in 2012 and 2016, respectively. It took 391 and 364 days to fall from the peak by 73% in 2012 and by 84% in 2016. The duration of the current cycle, which began in 2020, has reached 1206 days (as of July 20, 2022). In other words, it may take another two to three months before reaching the bottom.

A crypto strategist with the nickname Rekt Capital came to similar conclusions. In his opinion, despite the oversold signals, the downward exchange rate movement may continue for quite a long time. The analyst noted that the Relative Strength Index (RSI) on the BTC monthly timeframe is now below the lowest levels of the bear markets of 2015 and 2018, which could become new resistance levels for bitcoin.

According to Rekt Capital, the short-term prospects of the coin do not look very good, and the bottom can be reached only in a few months: “Bitcoin has about 650 days before the next halving (April 2024). Historically, it bottomed around 517-547 days before its halving. In the event of a repeat of history, bitcoin will need another 100-150 days before reaching the bottom, which will form in the fourth quarter of 2022.”

American businessman Thomas Peterffy, whose capital is estimated at $18.4 billion, is ready to buy bitcoins when the value of the cryptocurrency drops to $12,000. This chairman of Interactive Brokers admitted in a recent interview with Forbes that he does not intend to buy cryptocurrency at the current, in his opinion, high price, as he believes that in the future, bitcoin is very likely to depreciate or be banned in the United States.

Most traders from China are in solidarity with Thomas Peterffi. A poll on the social network Weibo with the participation of more than 2,200 people showed that Chinese traders are waiting for further decline in the price of bitcoin. 8% of respondents said they would buy BTC at $18,000 per coin. 26% of respondents will start purchases at $15,000. But if the bitcoin rate falls to $10,000, 40% of respondents will buy the first cryptocurrency.

It can be seen from all of the above that, despite the prospects for BTC to rise to the cosmic $300,000, there are no clear signals for investing in this coin yet. The US Federal Reserve will make a decision on the interest rate on Wednesday, July 27. And, most likely, the prospects for the BTC/USD pair will become more distinct after that. A sharp increase in the rate will lead to an increase in the DXY dollar index and a further drop in investor risk appetite. And then the chances of seeing bitcoin at $10,000 will increase dramatically. Otherwise, we'll see it aim for $30,000. It won't take long to find out which of these scenarios will come true. So, dear traders and investors, let's be patient.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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[Stan NordFX]

CryptoNews of the Week

- The number of attacks using ransomware has significantly decreased against the backdrop of the fall in the price of bitcoin, experts from the American company SonicWall noted. Researchers counted 236 million ransomware infection attempts in the first half of 2022. This is 23% less compared to the same period last year. According to the report, the number of ransomware incidents peaked in 2021. The targets of the attackers then were large companies that were forced to pay large amounts of cryptocurrency to hackers.

- The price of bitcoin bounced up from the $20,000 level, which concentrated the greatest attraction of speculators. This happened as a result of the transfer of coins from surrendered hodlers to "new" optimistic buyers. Glassnode experts emphasize that there was also demand from speculators earlier at the $30,000 and $40,000 levels.
Glassnode warns that it may take additional time to form a solid foundation. This is evidenced by such long-term indicators as URPD. To increase the chances of a market reversal, it is important to see the transition of speculative coins into the category of “held by long-term investors” (in other words, the “age” of coins from the moment of purchase must exceed 155 days).

- Peter Brandt, the head of Factor LLC, trader with 45 years of experience, criticized MicroStrategy CEO Michael Saylor, who called bitcoin an ensured digital commodity. “It is ensured with energy only because of its excessive consumption, without ensuring an economic function. It's a huge myth that bitcoin is somehow more than just a consumer of energy,” Brandt wrote.
In response, Saylor emphasized that "all products consume energy." According to him, the economic function of bitcoin is to create a free global settlement network. "Since bitcoin is a commodity, it can fulfill the role of global digital money. The economic function is to grant property rights to 8 billion people, as well as to create a global settlement network that has already transferred $17 trillion of value in 2022,” he wrote.
Note that despite the criticisms of bitcoin, this cryptocurrency is one of the largest assets in the portfolio of Peter Brandt.

- Bitcoin continues to resist selling pressure and managed to stabilize above the $20,000 level on the eve of the US Federal Reserve meeting. According to a number of analysts, the main role in this was played by the whales (investors with a balance of 1000+ and 10000+ BTC), who maintain hodle sentiment and continue to buy bitcoin on exchange rate drawdowns.
It is worth noting the activity of the owners of small BTC balances. For example, the number of addresses with a balance of 0.01+ BTC has reached an all-time high of 10,543,548.

- A well-known analyst named PlanB, the creator of the Stock-to-Flow model, predicted the day when both US stocks and bitcoin reach new all-time highs. “Some people are afraid of macroeconomics, bitcoin's relationship with the stock market, etc.,” he tweeted. “My opinion is that the S&P 500 will be in the range of $5,000-$6,000 over the next 5 years, and bitcoin will be between $100,000 and $1 million.

- Sam Bankman-Fried, CEO of the FTX crypto exchange, said that the adoption of cryptocurrencies is currently best in Latin America, and has huge prospects. The potential is estimated at $128 billion. Digital currencies will be used in various areas of life, primarily as a means of payment.

- Analysts from Forex Suggest analyzed different countries and regions in terms of parameters characterizing the availability of cryptocurrencies for citizens. Several parameters were evaluated: the number and availability of crypto ATMs, regulation of cryptocurrencies at the state level, startup culture, and taxation.
Hong Kong came in first with 8.6 points, ahead of the US and Switzerland with 7.7 and 7.5 points respectively. These two countries have a better cryptocurrency infrastructure and more ATMs per 100,000 people (in the US - 10, Switzerland - 6.5, in Hong Kong - only 2), but Hong Kong won in the availability of these devices for the population due to its compactness.
Low taxes on cryptocurrency income are also important. Hong Kong, Switzerland, Panama, Portugal, Germany, Malaysia and Turkey win here. But the number of requests for cryptocurrencies in search engines is the highest in Australia (4,579 requests per 100,000 population). Ireland and the UK are in second and third place.

- Jim Rogers, a major American investor, co-founder of Quantum Fund and Soros Fund Management, said that it will be necessary to enlist government support for this sector before considering cryptocurrency a reliable investment. BTC is only a gambling tool, not real money. Bitcoin is well suited for speculation but will eventually fail as a currency.
The specialist stressed that he will consider buying BTC if the European Union accepts it as an official currency and introduces it into the region's payment system. However, he will not buy cryptocurrencies at the moment, regardless of the prices at which they can be traded. Recall that Jim Rogers predicted in 2020 that the price of the main cryptocurrency will eventually fall to zero.

- Hollywood producer Ryan Felton pleaded guilty to receiving $2.4 million through a cryptocurrency scam. This is stated in the US Department of Justice press release. He raised the money through an initial coin offering for a streaming platform FLiK. The producer said that the company has the potential to bypass Netflix. In addition, the team behind the platform which was introduced to the market at the height of the 2017 ICO boom, claimed to be entering into licensing agreements with major film and television studios. In addition, Felton promoted another ICO in 2018: the CoinSpark crypto exchange, promising investors a 25% profit in the form of dividends.
As a result, the investors' funds were transferred to Felton's accounts and cashed out. he used them to buy a house for $1.5 million, a Ferrari for $180,000, a Chevrolet Tahoe SUV for $58,250, and jewelry for $30,000.

- British IT engineer James Howells became famous all over the world for admitting that he lost his hard drive in 2013, which contained a wallet with 7,500 BTC. This loser threw a disk from an old computer that he used for mining back in 2009 in a landfill. The poor man did not follow the news and did not know that these bitcoins were worth about a million dollars even at that time.
Almost 10 years have passed since then, but he is still trying to find the loss. James Howels has repeatedly requested the Newport City Administration to organize a massive search for the HDD over the past few years. Officials refused him time after time, citing inevitable environmental problems and a trivial stench throughout the city when digging up the entire territory of the landfill. In 2021, the treasure hunter offered the city authorities 25% of the value of his BTC (about $72 million at that time), but this did not help either.
Now, disillusioned with people, Howels decided to bet on robots. He will order two search robots-dogs of the Spot type worth $75,000 each from the American Boston Dynamics. Iron friends will be nicknamed Satoshi and Hal in honor of the creator of bitcoin and the cryptographer who received the first transaction. It remains a mystery how robot dogs with cameras or even metal detectors will be able to find a laptop HDD in a giant garbage field, already deep under the surface. And what happened to the disc after nine years of lying in a landfill? The magnetic recording is most likely damaged, although there is still a chance to recover information on specialized equipment.

- The next big rise in cryptocurrency prices will occur before the next halving in the bitcoin network, which is scheduled for May 2024. This is the opinion of financial analyst Florian Grummes, Managing Director of the investment company Midas Touch Consulting. In his opinion, despite the recent minor recovery, the cryptocurrency winter is far from over. The rise to $35,000 will occur in 6-12 months. This will be a so-called "auxiliary rally" that may precede a larger rally.
In the long term, Grummes is confidently optimistic, but warns that since the crypto market is directly correlated with the stock market, one must be prepared for deviations not only upwards, but also downwards at the current stage.
This expert predicted BTC to rise to $100,000 in the 1st quarter of 2022 in the past, which did not happen. Therefore, his forecasts, as well as all other ones, should be treated with sufficient caution now as well.

- Raoul Pal, co-founder of Real Vision Group and former CEO of Goldman Sachs, believes that cryptocurrency markets are preparing for a serious positive trend reversal. The markets are mainly driven by liquidity, which comes from the M2 money supply, he said. This money supply correlates with the total amount of currency in circulation, plus it is highly liquid non-cash assets that can be easily converted into cash.
Most crypto investors believe that miner rewards at the next halving will drive up the price. However, Pal argues that the role of M2 is greater than that of halving: “Cryptocurrency is not driven by the business cycle, but by global liquidity. So the main indicator of the growth of bitcoin is the rate of change of M2. Every time there was an increase in the money supply, there was always a reversal, the specialist says.


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #forex #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for August 01-05, 2022​

EUR/USD: FOMC Meeting Results: Why the Dollar Is Falling and Stocks Are Rising

So, the meeting of the FOMC (Federal Open Market Committee) of the US Federal Reserve took place on Wednesday, July 27. There were no doubts that the key interest rate would be raised. But how much? By 100 basis points (bp), which has not happened since 1981, or by 75? It seems that the markets were counting on the first option, but the Fed went for the second, softer one. As a result, instead of a new assault on the 1.0000 horizon by the EUR/USD pair, it went up and returned to the 1.0150-1.0270 channel, where it had been moving since July 19. This was followed by an unsuccessful attempt by the bears to break through the lower border of the channel (the reasons are explained below, in the review for the GBP/USD pair) and the finish, which took place at the level of 1.0221.

Speaking at the end of the meeting, Fed Chairman Jerome Powell tried to convince everyone that the regulator is still hawkish. He stated that he does not believe in a recession as the labor market and some sectors are still strong. And that the risk of continued high inflation is more significant than the risk of a recession. And that, if necessary, the Fed is ready to accelerate the pace of interest rate hikes.

However, the markets did not believe Powell and reacted to the results of the FOMC meeting with a turn towards the stock market. The DXY dollar index fell by 0.7%, but stock indices went up: S&P500 rose by 2.6%, Dow Jones - by 1.4%, NASDAQ - by 4.1%. Oil futures also increased by 3.4%.

It was previously predicted that as a result of monetary restriction, the key rate could reach 3.4% by the end of this year, and it could rise even higher to 3.8% by the end of 2023. Rumors have spread around the market now that the US Central Bank may completely stop raising rates in November, and it will return to the quantitative easing (QE) program in 2023. The main reason is that fighting inflation by raising rates and reducing the budget deficit, despite Powell's soothing assurances, has a negative impact on GDP. And this, in turn, can lead to a deterioration in the situation on the labor market.

What has just been said was confirmed by the macro statistics released on Thursday, July 28. The preliminary estimate of US GDP for the Q2 2022 was minus 0.9% against forecasts from +0.3% to +0.5%.

Thus, the decline in GDP plays against the dollar, as it may push the Fed to a more careful rate hike, much less than its 75 bp increase. at every meeting. According to the FedWatch tool from CME Group, the probability that the regulator will raise the discount rate by only 50 bp in September is almost 80%. The steady decline in the yield of ten-year US government bonds is also playing against the American currency: it fell from 3.4% to 2.68% in just a month. This gives market participants reason to think that inflation is under control and the program of quantitative tightening (QT) can be completed ahead of schedule.

On the other hand, things are not going smoothly in Europe either. Ongoing problems and interruptions in the supply of natural energy resources from Russia are playing against the euro. In response to energy blackmail from the Kremlin, the head of the European Commission Ursula von der Leyen called on the EU countries to prepare for a complete cessation of Russian gas supplies. In her opinion, it is necessary to save resources even in those countries where dependence on Russian energy carriers is small in order to avoid a full-scale collapse.

Klaus Müller, head of Germany's energy regulator (Bundesnetzagentur), believes that the threat of gas shortages will hang over the country for the next two winters, and electricity prices will rise again in August.

Speaking of the Eurozone, it should be noted that the economic data published on Friday, July 29, do not look so intimidating. On the one hand, inflation continues to grow: the consumer price index (CPI), with the previous value of 8.6% and the same forecast, rose actually to 8.9% in July. On the other hand, GDP (y/y, Q2) of the Eurozone, fell to 4.0% instead of the expected fall from 5.4% to 3.4%. The situation with the labor market in Germany also looks good, the number of unemployed fell from 132K to 48K over the month.

As for the near future of the EUR/USD pair, at the time of writing the review, on the evening of July 29, 45% of experts supported its growth, 45% showed it the way to the south and 10% to the east. Indicator readings on D1 do not give definite signals either. As for trend indicators, 50% look south, 50% look north. Oscillators have 35% on the side of the bears, 65% side with the bulls, of which 25% signal the pair is overbought.

With the exception of 1.0200, the closest support for the EUR/USD pair is the 1.0150-1.0180 zone, then 1.0100 and, of course, the 1.0000 level. After it is broken, the bears will target the July 14 low at 0.9950, even lower is the strong 2002 support/resistance zone of 0.9900-0.9930. The next serious task for the bulls will be to break through the resistance at 1.0250-1.0270 and return to the 1.0400-1.0450 zone, followed by the 1.0520-1.0600 and 1.0650-1.0750 zones.

Upcoming events include the publication of business activity indices (ISM) in the manufacturing sectors of Germany and the United States on Monday, August 01. The volume of retail sales in Germany will become known the same day. Data on retail sales in the Eurozone, as well as on business activity (ISM) in the US services sector, will be published on Wednesday, August 3. Ф portion of data from the US labor market will arrive at the very end of the working week, on Friday, August 05, including the unemployment rate and such an important indicator as NFP, the number of new jobs outside the US agricultural sector.

GBP/USD: BOE Decision Threatens to Become a Sensation

Cautious decisions by the Fed, careful comments by Jerome Powell and disappointing Q2 US economic growth data fueled the GBP/USD rally last week. As a result, the bulls managed to raise the pair to a monthly high of 1.2245 on July 29. The pair briefly went south to 1.2062 in the afternoon of the same day. The dollar was strengthened by the data on the Personal Consumption Expenditures (PCE) index in the USA. The growth of this inflation indicator in monthly terms amounted to 0.6% (twice higher than the previous value of 0.3% and higher than the forecast of 0.5%). This influenced market sentiment and helped the US currency to start recovering. In addition, July 29 is the last working day of the month, and many investors decided to take profits after the growth of the pound. However, the growth of the dollar did not last long and the last chord of the week sounded at 1.2176.

As for macroeconomic news coming from the United Kingdom next week, we can note the publication of the composite PMI index and the index of business activity in the UK services sector on Wednesday August 3. But the main event of the week will certainly be the meeting of the Bank of England (BOE) on Thursday August 4.

This regulator raised the interest rate from 1.00% to 1.25% at its previous meeting on June 16. It would seem that 25 basis points is only a third of the 75 bps by which the Fed raises the rate, but the pound then flew up sharply. The British currency strengthened by 365 points in just a few hours and the GBP/USD pair fixed a local high at 1.2405.

Let's see what happens this time and if it can return to this height. Or is it likely to exceed it? After all, according to forecasts, the BOE may decide to take a desperate step, raising the rate by 150 bps at once, in which case it will be 2.75% and will be higher than the current dollar rate of 2.50%, which will be a significant argument in favor of strengthening the British currency.

At the moment, 35% of experts believe that the British currency will continue to lose ground, 35% on the contrary expect a rebound upwards, and 30% remain neutral. The readings of the indicators on D1 are as follows. Among trend indicators, the parity is 50% to 50%. Among the oscillators, only 10% side with the bears, 90% indicate growth, of which 15% are in the overbought zone.

Immediate support is at 1.2045, followed by 1.2000 and 1.1875-1.1915 zone. Below is the level of 1.1800, the July 14 low of 1.1759, then 1.1650, 1.1535 and the lows of March 2020 in the zone 1.1400-1.1450. As for the bulls, they will meet resistance in the zones and at the levels of 1.2200-1.2245, 1.2300-1.2325 and 1.2400-1.2430.

continued below...