First, a review of last week’s events:
EUR / USD. There is this term – “retraining on the go.” That is exactly what President Trump did on May 14. Before that, he talked a lot and often about the benefits of a weak dollar, which would increase the competitiveness of US products in foreign markets and push the Fed towards a softer monetary policy. And now he suddenly announced in an interview with Fox TV: “Right now it’s good to have a strong dollar. Having a strong dollar right now is great! “The head of the Federal Reserve, Jerome Powell, also supported his president, saying that the regulator does not and does not consider the possibility of switching to negative interest rates.
The main reason for this 180-degree reversal is that the crisis generated by the COVID-19 pandemic has sharply increased interest in the dollar as a safe harbor currency, and trying to counter it is like swimming against the tide. In addition, the US authorities have turned on the printing press at full capacity and it is very important for them now to maintain interest in their own currency. They are afraid that anyone can throw a large number of dollars into the secondary market at the same time, and to avoid this, they carefully fuel investors’ confidence that this currency will grow.
Despite this, EUR / USD quotes do not change much as the euro is not the Turkish Lira or the Brazilian real, but a currency comparable to the dollar in terms of volume and reliability. And if the couple moved in the side channel 1.0750-1.1000 earlier, the area of its oscillations has now dropped to 1.0770-1.0890. The pair is gradually consolidated near the horizon 1.0800, forming a triangle on a two-month chart and setting the week’s last chord at 1.0820;
GBP / USD. Pound forecasts still coincide with the realities. The UK currency is under pressure, Brexit-related problems have been repeatedly compounded by the coronavirus pandemic and GDP declines. The pound also falls. The GBP / USD pair lost approx. 285 points during the week, striving to break the lower bound of the seven-week corridor 1.2165-1.2650, ending the trading session of 1.2120;
USD / JPY. The USD / JPY pair consolidates around 107.00 and confirms the thesis that the yen is the same safe haven for investors as the euro or dollar. In addition, the Japanese currency has a clear advantage over the euro: if the European currency lost its positions against the dollar in the last year and a half to two months, on the contrary, the yen won them back. And the EUR / JPY crossover has fallen by more than 500 points since the end of March (from 121.00 to 116.00). For the past week, the Japanese currency was kept at a rather narrow range of 106.50-107.75 yen per dollar throughout the five-day period, ending it at 107.20;
cryptocurrencies. For starters, some stats. According to Glassnode, the number of bitcoin addresses with a balance of less than 1 BTC has increased by approx. 100% since the second half of 2016. Wallets with a balance of less than 0.01 BTC (less than $ 100) showed the largest increase. The number of such addresses has increased 235% over the last four years and exceeded 10 million. And that’s kind of good news. But if we make simple calculations, we will get that thanks to such a myriad but “small fish”, the capitalization of the crypto market has grown by only $ 0.5-1.0 billion. A drop in the sea! But the number of large cryptocurrency holders, real “whales” owning more than 1,000 BTC coins, has grown by only 13% in four years, suggesting a lack of interest from large institutional investors.
Just an example. Recently, the founder of Tudor Investment hedge fund Paul Tudor Jones, whose fortune is estimated at $ 5.1 billion on CNBC, said bitcoin is obviously a huge speculation, but he considers it only a small, just 1-2%, a part of his portfolio.
Cryptoin investors and big global regulators do not like it. So the U.S. court joined with the SEC and prevented the owner of Telegram messenger Pavel Durov from launching the TON cryptocurrency. A similar fate hit the Weight Coin initiated by Facebook, even though the project was supported by another 26 such powerful companies such as eBay, Uber, Booking.com, Vodafone and others. All of this suggests that the US authorities do not need competitors against the dollar at all, and they will do everything they can to prevent such from appearing.
The May 11 halving in the Bitcoin network also did not add optimism to the market. Since the beginning of the year, this event has generated a lot of controversy and speculation about what awaits the main cryptocurrency after that. And despite a lot of positive predictions, the coin experienced a halving of under $ 9,000. The main cryptocurrency failed to gain a foothold last week above the $ 10,000 sign level, after staying at a high of $ 10,003 for just a few minutes.
Halving the miners ’rewards has already led to, according to CoinMetrics, a 30% drop in bitcoin hashrat. Crypto exchanges started actively withdrawing funds, bids fell to $ 8,100, and the total market capitalization of the crypto market by mid-week dropped from $ 270 billion to $ 234 billion (-13.3%). However, the situation stabilized somewhat at the end of the week, the capitalization approached $ 260 billion and the BTC / USD pair aimed to storm the high of $ 10,000 again. The value of the Crypto Fear & Greed Index fell by 11 points during the week from 55 to 44.
The charts with the main altcoins at first glance repeat the dynamics of BTC / USD, but their recovery is much slower. Unlike bitcoin, etherium (ETH / USD), maturation (XRP / USD) and litecoin (LTC / USD) were only able to recover half of the losses following the May 10 failure.
As for the forecast for the coming week, in which we summarize the views of a number of experts as well as forecasts made on the basis of a variety of methods for technical and graphical analysis, we can say the following:
EUR / USD. Attenuated risk sentiment and the sale of exchange-traded funds strengthen the dollar. It is now backed by US President Trump with his threats to cut off any relationship with China at all and the Federal Reserve, which has refused to lower the key policy rate to negative values. Even the judge of the Constitutional Court in Germany, Peter Huber, helped the US currency to say that the ECB was not the “master of the universe” in complying with all its decisions.
All of this has led to 65% of analysts supported by 60% of the oscillators and 100% of the trend indicators on D1 alongside the bears and voting for the decline of the EUR / USD pair. The nearest targets are 1.0750 and 1.0650.
10% of the experts and 30% of the oscillators, painted in neutral gray, have voted that the couple will continue to consolidate on the horizon 1.0800. And finally, the remaining 25% of analysts predict that the pair will return to the upper boundary of the side corridor 1.0750-1.1000. At D1, they were supported by 10% of the oscillators that signal the pair’s oversale;
GBP / USD. According to most experts, the pound is not at all the currency in which it is worth investing, even with a fall in risky sentiment. It has long ceased to be a refuge from economic storms. The European Union is currently busy with the process of forming its seven-year budget and its funding problems, the ECB is in conflict with the German Constitutional Court and Brussels is not at all concerned with the resolution of Brexit-related issues. And in addition to a divorce from the EU, the United Kingdom also has a constantly falling GDP, rising unemployment and a negative balance in foreign trade.
As a result, 65% of experts expect a further weakening of the UK currency and its decline to the horizon of 1.2000. In the event of a breakout of this important level, the couple will rush to the lowest areas in March: 1.1640 and 1.1450. Sustainable mood is also supported by indicators of H4 and D1, which shows a rare entity: 85% of the oscillators and 100% of the trend indicators are colored red.
The opposite view is shared by 35% of analysts, 15% of oscillators indicate that the pair is oversold, and graphical analysis on both time frames. In their opinion, the division of the lower boundary of the channel 1.2165-1.2650 is false and the pair is expected to first return to the central zone of this channel 1.2245-1.2465 and then possibly rise to its upper limit;
USD / JPY. The Yen froze and waited for the next trade and now political war between the US and China was to develop. We must not forget that its offerings are also strongly influenced by the level of risk sentiment in the market. There is also a correlation with 10-year US government bonds and the Japanese economy’s dependence on oil prices. Such an abundance of factors does not yet identify the most likely direction for the breakthrough of the consolidation zone in the 107.00 range. Currently, supporters of the couple’s growth have little advantage (40%), supported by 65% of the oscillators on H4. 20% of the analysts look to the south and another 40% – to the east.
The nearest support levels are 106.75, 106.00 and 105.00. The resistance levels are 107.45, 108.00, 108.50 and 109.35;
cryptocurrencies. So the bitcoin halving has reduced the reward for mining a block to 6.25 coins. Some miners are already leaving the company or selling assets to cover losses. Even before the halving, much equipment for mining the BTC made minimal profit, and now it has become completely unprofitable. It seems that things are moving towards further monopolization of the mining market, which contradicts the very idea of cryptocurrency decentralization. However, many experts hope that the crisis caused by COVID-19 and the printing of fiat from central banks will nonetheless push up the key cryptocurrency.
“Bitcoin was able to survive the expected half-life in four years, and now it’s ready to take on new boundaries,” said billionaire Mike Novogratz, head of the Galaxy Digital crypto bank. According to him, the main coin reaches a level of $ 20,000 by December, and so the asset has every chance to update the absolute maximum.
In addition to Novogratz, there are still enough optimists in the expert group who predict a rise in bitcoin in the medium term. So, according to Leonard Neo, head of research at Stack, the BTC rise is starting at approx. 6-9 months after halving. First, miners adjust to new working conditions, after which bitcoin will turn to growth. “Further upheavals in the global economy may accelerate its upward trajectory,” the CNBC quoted the expert.
In the near future, the # 1 task for BTC / USD is to overcome the $ 10,000 high. In addition, Bitcoin should not only take this line, but also gain a foothold over it. Only in this case can we expect further rapid growth of deals from this pair. 60% of analysts agree that it will be able to rise to the $ 10,500-1,000 level in May-June. The remaining 40% expect to see the pair significantly lower: in the $ 8,000-9,000 zone. And here it should be noted that a number of experts are drawing apocalyptic paintings altogether and predicting failure of the main cryptocurrency to levels around $ 6,500.