EURUSD is descending by a bearish channel. The instrument is going below the Ichimoku Cloud, which suggests a downtrend. A test of the Tenkan-Sen line at 1.0780 is expected, followed by falling to 1.0530. An additional signal confirming the decline will be a bounce off the upper border of the descending channel. The scenario can be cancelled by a breakaway of the upper border of the Cloud and securing above 1.0975, which will mean further growth to 1.1065.
GBPUSD, “Great Britain Pound vs US Dollar”
GBPUSD is testing the Tenkan-Sen line. The instrument is going below the Ichimoku Cloud, which suggests a downtrend. A test of the Kijun-Sen line at 1.2125 is expected, followed by falling to 1.1815. An additional signal confirming the decline will be a bounce off the upper border of the descending channel. The scenario can be cancelled by a breakaway of the upper border of the Cloud and securing above 1.2265, which will mean further growth to 1.2355.
AUDUSD, “Australian Dollar vs US Dollar”
AUDUSD is pushing off the signal lines of the Cloud. The instrument is going below the Ichimoku Cloud, which suggests a downtrend. A test of the lower border of the Cloud at 0.7005 is expected, followed by falling to 0.6695. An additional signal confirming the decline will be a bounce off the lower border of the bullish channel. The scenario can be cancelled by a breakaway of the upper border of the Cloud and securing above 0.7115, which will mean further growth to 0.7205.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The dollar jumped to a four-week high against the euro on Monday. Unexpectedly strong US jobs data last week raised the possibility that the US Federal Reserve will continue to raise interest rates to fight inflation. This news is still being “digested” by market participants. But it should be noted that despite the hawkish statements of the US Fed representatives, the ECB also continues to raise rates aggressively and plans to make another 0.5% increase in March. Therefore, traders should not count on a prolonged EUR/USD downtrend.
The trend on the EUR/USD currency pair on the hourly time frame has changed to bearish. The price is trading below the moving averages. The MACD indicator is deeply negative, but there are the first signs of divergence. Under such market conditions, waiting for a small pullback is best, as the price has deviated strongly from the moving averages. Buy trades are best considered from the support level of 1.0710, but confirmation in the form of a reverse reaction on the lower time frames is needed. Sell deals can be considered from the resistance level of 1.0838, but it is also better with confirmation in the form of a reverse initiative.
Alternative scenario: if the price breaks down through the resistance level of 1.0967 and fixes above it, the uptrend will likely resume.
News feed for 2023.02.07:
– German Industrial Production (m/m) at 09:00 (GMT+2);
– US Trade Balance (m/m) at 15:30 (GMT+2);
– US Fed Chair Powell Speaks at 19:00 (GMT+2).
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.2029
Prev Close: 1.2020
% chg. over the last day: -0.07 %
The British pound has been showing weakness lately. Economic data has not been strong enough to strengthen the pound compared to its peers, while ongoing strikes and the threat of more strikes in the coming weeks undermine sentiment. A recent International Monetary Fund (IMF) update indicated that the UK economy would contract by 0.6% this year, almost one percentage point below their previous estimate.
From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame has changed to bearish. The price is trading below the moving averages. The MACD indicator is in the negative zone, but there are the first signals of divergence. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.2035, but with confirmation in the form of reverse initiative. It is best to look for sell deals after a slight pullback, as the price has strongly deviated from the moving averages. The best resistance levels are 1.2147 and 1.2228, but it is also better with a confirmation in the form of the reverse initiative.
Alternative scenario: if the price breaks out through the 1.2416 resistance level and fixes above it, the uptrend will likely resume.
There is no news feed for today.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 132.39
Prev Close: 132.63
% chg. over the last day: +0.18 %
The Nikkei newspaper, citing anonymous sources in the government and the ruling party, reported yesterday that Masayoshi Amamiya, deputy governor of the Bank of Japan, is running for the post of the next governor. According to Saxo strategists, Amamiya is considered the most “dovish” among the contenders. Market participants believe that Amamiya will continue Governor Kuroda’s soft stimulus policy. The Japanese yen rapidly declined against the dollar on the back of this news.
Trading recommendations
Support levels: 131.11, 130.34, 129.98, 129.19, 129.04, 128.16
Resistance levels: 132.95, 133.23
From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bullish. The price strongly deviated from the moving averages. The MACD indicator is in the positive zone with signs of overbuying and divergence, which limits the further growth of quotes. It is better to look for buy deals after a slight correction to the support levels in the “discount” zone – 130.34 or 129.19, but only with a confirmation on the lower time frames. At least, it is necessary to wait for the correction to the level of 131.11. Sell deals can be sought after an impulse return below the psychological level of 132.00, which will form a false breakout area above the level.
Alternative scenario: If the price fixes below the support level of 128.16, the downtrend will be renewed with a high probability.
There is no news feed for today.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.3309
Prev Close: 1.3445
% chg. over the last day: +1.02 %
Yesterday’s business activity data from Ivey showed a high jump from August 2022. Despite the rise in business activity, this might be the first sign of trouble ahead for Canada’s Central Bank. Increased business activity could lead to increased demand and spending by consumers, which could have an indirect effect on inflation. The Canadian dollar also remains under pressure due to uncertainty in the oil market. The outlook for the Canadian dollar in 2023 will largely depend on commodity prices, how the US dollar behaves, and whether central banks manage to avoid a major recession.
From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. But the price reached the daily resistance level of 1.3472 and slightly corrected to the moving averages, breaking through the trend line. The MACD indicator is in the positive zone, but there are first signs of weakness. Sell deals should be considered from the resistance level of 1.3434 in case of a reversal in the intraday time frames. Buy trades can be considered from the 1.3333 support level, but with additional confirmation in the form of an impulse initiative.
Alternative scenario: if the price breaks down and consolidates below the support level of 1.3263, the downtrend will likely resume.
News feed for 2023.02.07:
– Canada Trade Balance (m/m) at 15:30 (GMT+2);
– Canada BoC Gov Macklem’s Speech at 19:30 (GMT+2).
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
At Monday’s close, the Dow Jones Index (US30) decreased by 0.38%, and the S&P 500 (US500) was down by 1.04%. Technology Index NASDAQ (US100) fell by 1.00% yesterday. The stock market continues to be influenced by Friday’s news. Atlanta Federal Reserve Bank President Raphael Bostic said Monday that given the unexpectedly strong job growth data in January, the US Federal Reserve might need to raise the cost of borrowing higher. Today, investors are awaiting a speech by US Federal Reserve Chairman Jerome Powell, where they will be looking for clues as to the US Central Bank’s future actions.
The US Treasury Secretary Janet Yellen said Monday that she sees an opportunity to avoid a US recession, with inflation falling significantly and the economy remaining strong given the strength of the US labor market.
Shares of Dell Technologies Inc (DELL) fell by 4.3% yesterday after it reported cutting 6,650 jobs, or about 5% of the global workforce.
Stock markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.84%, French CAC 40 (FR40) fell by 1.34%, Spanish IBEX 35 (ES35) lost 0.72%, and British FTSE 100 (UK100) closed Monday down by 0.82%.
Yesterday ECB officials said with one voice that ECB rate hikes are far from over, despite lower inflation in the region. Policymakers explained that the risk of excessive policy tightening is negligible compared to the risk of doing too little. Analysts forecast a 0.5% rate hike from the ECB at the March meeting.
The Turkish lira has fallen to an all-time low under pressure from geopolitical risks as several major earthquakes hit the region, causing massive destruction and casualties. According to some reports, more than 4,300 people have died in Turkey and Syria, and more than 20,000 have been injured.
Oil prices rose slightly in choppy trading on Monday. Oil traders are evaluating the prospects of a recovery in demand from China. The International Energy Agency (IEA) expects China to account for half of global oil demand growth this year. However, a sharp increase in US jobs on Friday heightened expectations that the US Federal Reserve will raise rates more than previously planned, which could curb economic growth and reduce the need for fuel.
Asian markets were also down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.24%, China’s FTSE China A50 (CHA50) lost 1.74%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.65%, India’s NIFTY 50 (IND50) fell by 0.31%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 0.28%.
The Nikkei newspaper reported citing anonymous sources in the government and the ruling party, that deputy governor of the Bank of Japan Masayoshi Amamiya is nominated for the post of the next governor. According to Saxo strategists, Amamiya is considered the most “dovish” of the contenders, dashing hopes that a normalization of Bank of Japan policy could happen soon.
Geopolitical tensions between the US and China have escalated again. The US shot down a Chinese balloon off the coast of South Carolina that had entered US airspace. The US Department of Defense released a statement over the weekend stating that Chinese balloons had entered US airspace three times under the previous administration. This news is likely to affect sentiment as markets were hoping for a quick recovery in demand from the Chinese economy in February.
S&P 500 (F) (US500) 4,111.08 −25.40 (−0.61%)
Dow Jones (US30) 33,891.02 −34.99 (−0.10%)
DAX (DE40) 15,345.91 −130.52 (−0.84%)
FTSE 100 (UK100) 7,836.71 −65.09 (−0.82%)
USD Index 103.62 +0.70 (+0.68%)
Important events for today:
– Australia RBA Interest Rate Decision at 05:30 (GMT+2);
– Australia RBA Rate Statement at 05:30 (GMT+2);
– Switzerland Unemployment Rate (m/m) at 08:45 (GMT+2);
– German Industrial Production (m/m) at 09:00 (GMT+2);
– US Trade Balance (m/m) at 15:30 (GMT+2);
– Canada Trade Balance (m/m) at 15:30 (GMT+2);
– US Fed Chair Powell Speaks at 19:00 (GMT+2);
– Canada BoC Gov Macklem’s Speech at 19:30 (GMT+2).
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
Asian markets stabilised somewhat on Tuesday morning following the broadly negative cues from Wall Street overnight as concerns over higher US interest rates left investors on edge. US and European futures seem to be pointing to a positive open despite the overall caution, with all attention directed towards commentary from Fed Chair Jerome Powell later today. In the currency space, the dollar pulled back slightly along with Treasury yields, allowing other G10 currencies room to fight back. Although gold has taken the opportunity to shine this morning, last Friday’s blockbuster jobs data may set the tone for direction in February.
In other news, the Reserve Bank of Australia hiked interest rates to the highest level in over 10 years. As expected, the central bank announced a 25-basis point hike, taking the cash rate to 3.35%. Buying sentiment towards the Aussie received a boost as markets saw the statement as hawkish with more tightening signaled down the road. AUDUSD is up over 0.7% this morning, trading back within a narrow range with resistance found at 0.7000. A softer dollar could support upside gains in the short term.
All eyes on Jerome Powell
After last week’s freakishly strong US jobs data, market expectations around the Fed switching to rates cuts later in 2023 have taken a massive hit. The robust strength of the US labour force is expected to fuel fears over inflation remaining stubbornly high, ultimately empowering the Fed hawks. Given the latest developments, much attention will be directed on Powell’s tone, messaging and whether fresh insight is offered over monetary policy for 2023, especially after the market’s dovish reaction to his recent FOMC press conference. Should the central bank head signal that rate cut bets were misplaced, this could boost dollar bulls along with Treasury yields. It will also be wise to keep a close eye on US President Joe Biden’s second State of Union address later this afternoon. Biden is expected to use this event to address key topical matters revolving around geopolitical developments and other important themes.
Talking technicals, the DXY still remains in a downtrend on the daily charts despite the recent breakout above 103.00. Prices need to push prices back above 105.00 for the outlook to swing in favour of the bulls. A move back below 103.00 could trigger a selloff towards 101.20 – 101.00.
Currency spotlight – EURUSD
A broadly stronger dollar may ensure EURUSD remains under pressure in the short to medium term. Since failing to secure a solid weekly close above the 1.0900 resistance level, prices have been under noticeable pressure despite the ECB recently raising interest rates to combat inflation. The main risk event for the euro this morning will be Germany’s industrial production figures for December. A figure that exceeds market expectations could provide some support to the euro.
Looking at EURUSD, prices are wobbling above 1.0700 as of writing. Should this level prove to be reliable support, a move back towards 1.0900 could be on the cards. Weakness below 1.0700 may open a path towards 1.0550.
Commodity spotlight – Gold
Gold drew strength from a slightly weaker dollar and small drop in Treasury yields on Tuesday as investors braced themselves for Jerome Powell’s speech.
If Powell strikes a hawkish note and signals that the Fed will still be hiking rates down the road, gold prices are likely to suffer as the dollar jumps. Alternatively, a cautious sounding Powell could offer the precious metal a lifeline which could limit downside losses. Looking at technical levels, a breakdown below $1860 may open the door towards $1825 and $1800, respectively. If prices can push back above $1900, gold could challenge $1950 and $2000.
Several major airlines have pledged to reach net-zero carbon emissions by midcentury to fight climate change. It’s an ambitious goal that will require an enormous ramp-up in sustainable aviation fuels, but that alone won’t be enough, our latest research shows.
The idea of jetliners running solely on fuel made from used cooking oil from restaurants or corn stalks might seem futuristic, but it’s not that far away.
Several airlines arealready experimenting with sustainable aviation fuels. These include biofuels made from agriculture residues, trees, corn and used cooking oil. Other fuels are synthetic, made by combining captured carbon from the air and green hydrogen, made with renewable energy. Often, they can go straight into existing aircraft fuel tanks that normally hold fossil jet fuel.
United Airlines, which has been using a blend of used oil or waste fat and fossil fuels on some flights from Los Angeles and Amsterdam, announced in February 2023 that it had formed a partnership with biofuel companies to power 50,000 flights a year between its Chicago and Denver hubs using ethanol-based sustainable aviation fuels by 2028.
In a new study, we examined different options for aviation to reach net-zero emissions and assessed how air travel could continue without contributing to climate change.
The bottom line: Each pathway has important trade-offs and hurdles. Replacing fossil jet fuel with sustainable aviation fuels will be crucial, but the industry will still need to invest in direct-air carbon capture and storage to offset emissions that can’t be cut.
Scenarios for the future
Before the pandemic, in 2019, aviation accounted for about 3.1% of total global CO₂ emissions from fossil fuel combustion, and the number of passenger miles traveled each year was rising. If aviation emissions were a country, that would make it the sixth-largest emitter, closely following Japan.
In addition to releasing carbon emissions, burning jet fuel produces soot and water vapor, known as contrails, that contribute to warming, and these are not avoided by switching to sustainable aviation fuels.
Aviation is also one of the hardest-to-decarbonize sectors of the economy. Small electric and hydrogen-powered planes are being developed, but long-haul flights with lots of passengers are likely decades away.
We developed and analyzed nine scenarios spanning a range of projected passenger and freight demand, energy intensity and carbon intensity of aviation to explore how the industry might get to net-zero emissions by 2050.
Nine scenarios illustrate how much carbon offsets would be required to reach net-zero emissions, depending on choices made about demand and energy and carbon intensity. Each starts with 2021’s emissions (1.2 gigatons of carbon dioxide equivalent). With rising demand and no improvement in carbon intensity, a large amount of carbon capture will be necessary. Less fossil fuel use and slower demand growth reduce offset needs. Candelaria Bergero
We found that as much as 19.8 exajoules of sustainable aviation fuels could be needed for the entire sector to reach net-zero CO₂ emissions. With other efficiency improvements, that could be reduced to as little as 3 exajoules. To put that into context, 3 exajoules is almost equivalent to all biofuels produced in 2019 and far surpasses the 0.005 exajoules of bio-based jet fuel produced in 2019. An exajoule is a measure of energy.
Flying less and improving airplanes’ energy efficiency, such as using more efficient “glide” landings that allow airlines to approach the airport with engines at near idle, can help reduce the amount of fuel needed. But even in our rosiest scenarios – where demand grows at 1% per year, compared to the historical average of 4% per year, and energy efficiency improves by 4% per year rather than 1% – aviation would still need about 3 exajoules of sustainable aviation fuels.
Why offsets are still necessary
A rapid expansion in biofuel sustainable aviation fuels is easier said than done. It could require as much as 1.2 million square miles (300 million hectares) of dedicated land to grow crops to turn into fuel – roughly 19% of global cropland today.
Another challenge is cost. The global average price of fossil jet fuel is about about US$3 per gallon ($0.80 per liter), while the cost to produce bio-based jet fuels is often twice as much. The cheapest, HEFA, which uses fats, oils and greases, ranges in cost from $2.95 to $8.67 per gallon ($0.78 to $2.29 per liter), but it depends on the availability of waste oil.
Fischer-Tropsch biofuels, produced by a chemical reaction that converts carbon monoxide and hydrogen into liquid hydrocarbons, range from $3.79 to $8.71 per gallon ($1 to $2.30 per liter). And synthetic fuels are from $4.92 to $17.79 per gallon ($1.30 to $4.70 per liter).
Realistically, reaching net-zero emissions will likely also rely on carbon dioxide removal.
In a future with similar airline use as today, as much as 3.4 gigatons of carbon dioxide would have to be captured from the air and locked away – pumped underground, for example – for aviation to reach net-zero. That could cost trillions of dollars.
Some caveats apply to our findings, which could increase the need for offsets even more.
Our assessment assumes sustainable aviation fuels to be net-zero carbon emissions. However, the feedstocks for these fuels currently have life-cycle emissions, including from fertilizer, farming and transportation. The American Society for Testing Materials also currently has a maximum blend limit: up to 50% sustainable fuels can be blended into conventional jet fuel for aviation in the U.S., though airlines have been testing 100% blends in Europe.
How to overcome the final hurdles
To meet the climate goals the world has set, emissions in all sectors must decrease – including aviation.
While reductions in demand would help reduce reliance on sustainable aviation fuels, it’s more likely that more and more people will fly in the future, as more people become wealthier. Efficiency improvements will help decrease the amount of energy needed to power aviation, but it won’t eliminate it.
Scaling up sustainable aviation fuel production could decrease its costs. Quotas, such as those introduced in the European Union’s “Fit for 55” plan, subsidies and tax credits, like those in the U.S. Inflation Reduction Act signed in 2022, and a carbon tax or other price on carbon, can all help achieve this.
Additionally, given the role that capturing carbon from the atmosphere will play in achieving net-zero emissions, a more robust accounting system is needed internationally to ensure that the offsets are compensating for aviation’s non-CO₂ impacts. If these hurdles are overcome, the aviation sector could achieve net-zero emissions by 2050.
“If you believe in Gold as a consumer price inflation hedge then…”
By Elliott Wave International
Back in the days of the Roman Empire, an ounce of gold could buy a Roman a well-made toga, belt and finely crafted sandals.
In modern day Rome, lo and behold, a businessman can become sharply dressed via the value of that same ounce of gold.
So, yes, gold has maintained its store of value over the centuries.
However, in the relative short term — which can last years — gold may not be the inflation hedge that gold bugs believe it to be.
In a moment, I’ll show you how this relates to what’s going on with gold and inflation now. However, let’s first get insights from a chart and commentary from our February 2022 Global Market Perspective, which published when inflation was really getting going (The monthly Global Market Perspective is an Elliott Wave International publication which covers 50-plus global financial markets):
The chart shows the U.S. dollar price of Gold versus the annualized rate-of-change in the U.S. Consumer Price Index (CPI). If you believe in Gold as a consumer price inflation hedge then, as the CPI is accelerating, the Gold price should be advancing. The green shaded areas show that there have been five occasions since 1980 when the opposite was true, the last year being a good example. On the other side, the Gold-Inflation myth would allude to the price of Gold declining as CPI was decelerating. The grey shaded areas show five occasions since 1970 when this was not the case, 2007 to 2010 being a prime example.
Fast forward to today and we have these headlines:
US inflation eases grip on economy, falling for a 6th month (AP News, Jan. 23)
Inflation in U.S. could turn negative by midyear, says [this] billionaire investor … (MarketWatch, Jan. 28)
What’s happened to the price of gold? It’s steadily climbed in the face of easing inflation. Of course, this is just the opposite of what was occurring around this time last year. In both cases, the price of gold went in the opposite direction from what many would expect.
On Sept. 28, gold was trading at $1613.75 and has been in an overall uptrend since. The precious metal traded as high as $1949.46 on Jan. 26 (as of this writing on Jan. 30).
The bottom-line takeaway is that the widespread expected relationship between gold and inflation is not always there — indeed, there have been several instances in the past several decades where the opposite is the case.
Know that Elliott wave analysis, which is by no means a crystal ball, can nonetheless help you anticipate gold’s next big price move.
If you’re unfamiliar with Elliott wave analysis, read Frost & Prechter’s Elliott Wave Principle: Key to Market Behavior. Here’s a quote from the book:
The Wave Principle is governed by man’s social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value.
Learn about these “forms” for free as a Club EWI member.
That’s right — you can gain free access to the entire online version of this Wall Street classic by joining Club EWI — the world’s largest Elliott wave educational community. A Club EWI membership is also free, and members enjoy complimentary access to a wealth of Elliott wave resources on investing and trading.
This article was syndicated by Elliott Wave International and was originally published under the headline Gold and Inflation: Here’s a Market Myth. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
On H4, the quotes are above the 200-day Moving Average, indicating prevalence of an uptrend. The RSI is nearing the oversold area. Currently, we expect a test of 4/8 (1.0742), a bounce off it, and growth to the resistance level of 5/8 (1.0742). The scenario can be cancelled by a downward breakaway of the support level of 4/8 (1.0742), in which case the trend might reverse, and the price may drop to 3/8 (1.0620).
On M15, an additional signal confirming growth of the price will be a breakaway of the upper border of VoltyChannel.
GBPUSD, “Great Britain Pound vs US Dollar”
On H4, the quotes have broken through the 200-day Moving Average and are now below it, which indicates possible development of a downtrend. However, the RSI is in the oversold area. As a result, the quotes are expected to rise above 3/8 (1.2085) and then reach the resistance level of 4/8 (1.2207). The scenario can be cancelled by a downward breakaway of 2/8 (1.1962). In this case, the quotes should keep falling and reach 1/8 (1.1840).
On M15, a breakaway of the upper border of VoltyChannel will increase the probability of price growth to 4/8 (1.2207) on H4.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
On Monday, the market major is neutral near 1.0800. The market has got all the info at hand: the decision of the Federal Reserve System to lift the interest rate by 25 base points and the confirmation of the ECB mood for it has lifted the rate by 50 base points.
The Fed will go on lifting the rate smoothly but is “mentally” preparing to put an end to the cycle. As for the ECB, it is decisive about lifting the rate until it gets inflation under control. As long as it lost quite a lot of time on monitoring the situation, things look quite logical.
The US employment market in January proved strong. The unemployment rate dropped to 3.4%, average wage grew by 0.3% m/m as expected. 517 thousand new workplaces were created by the NFP report, which is much more than forecast. The data taken together gave great support to the USD.
On H4, EURUSD has completed a wave of decline to 1.0840. Practically, this level has become a breakthrough for the ascending channel. At the moment, the market formed a consolidation range around this point, and with an escape downwards it opened a pathway for decline to 1.0750. After it is reached, a correction to 1.0840 should follow, and after that – a decline to 1.0650. Technically, this scenario is confirmed by the MACD. Its signal line is heading strictly downwards, getting ready to break through the zero level.
On H1, the pair has formed a structure of a consolidation range around 1.0840. With an escape downwards, a pathway for decline to 1.0750 will open. Then a correction up to 1.0840 and a decline to 1.0650 should follow. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is above 50. A decline to 20 is expected.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
The BTC lost its foothold and dropped to 22,787 USD. The decline over the week amounts to 3.95%.
After last Friday the US employment statistics was out, investors got anxious about future reactions of the Fed. The report was strong, which could assure the Fed about further tightening the credit and monetary policy. This is bad for the stock market, the S&P 500 and Nasdaq indices, with whom the BTC has quite a serious correlation.
An important support level is 23,000 USD. The faster the BTC returns above it, the better.
Capitalisation of the crypto market is 1.056 trillion USD. This result has lasted above trillion for 3 weeks, which gives reasons for being cautiously optimistic: investors are beginning to act. The BTC takes up 41.5% of the market and the ETH – 18.7%.
Digital pound may appear in 2030
The Bank of England and Treasury do not exclude the probability of issuing digital pound because the country needs it while cash is being used less and less. Statistics show that in 2021 only 15% of all transactions were in cash, while in 2011 the share was 50%.
Cardano: great result in 2023
Since the beginning of the year, the ADA has grown by 65%, and capitalisation of the project has extended to 13.81 billion USD from 8.63 billion USD. Thus, the ADA has become number 8 in the rating of the most required crypto. The main support comes from large investors.
FTX claims refund from politicians
The FTX crypto exchange asks all politicians who has received some financial support to give it back by the end of February. All politicians in question have received confidential messages. The total sum is 93 million USD.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
According to the US Bureau of Labor Statistics, total Nonfarm Payrolls rose by 517K in January (forecast 190K, forecast 223K), and the unemployment rate declined to 3.4% (forecast 3.6%, forecast 3.5%). The very strong labor market data leaves more leeway for the US Federal Reserve to keep raising rates. This brought panic back into the market as investors rushed to sell stocks and buy dollars. Financial markets are currently pricing in another 25 basis point rate hike at the US Fed’s March meeting and another 50 basis point hike from the ECB. In the medium term, a reduction in the interest rate spread should play for the European currency’s strengthening.
The trend on the EUR/USD currency pair on the hourly time frame has changed to bearish. The price broke through the priority change level and consolidated lower. The MACD indicator is deeply negative, with no signs of a reversal. Under such market conditions, it is best to wait for a small pullback as the price has deviated strongly from the moving averages. Buy trades are best considered from the support level of 1.0781, but confirmation in the form of a reversal on the lower time frames is needed. Sell deals can be considered from the resistance level of 1.0838, but it is also better with confirmation in the form of a reverse initiative.
Alternative scenario: if the price breaks down through the resistance level of 1.0967 and fixes above it, the uptrend will likely resume.
News feed for 2023.02.06:
– Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
– ECB President Lagarde’s Speech at 20:00 (GMT+2).
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.2224
Prev Close: 1.2052
% chg. over the last day: -1.43 %
The Bank of England said last week that the UK is still set for a recession this year, but it will probably not be as deep as previously feared because of falling energy prices and weaker market interest rate expectations. Analysts believe that the current rate level of 4% may be the cap rate for the UK. The Monetary Policy Committee of England (MPC) abandoned the wording “may require a further increase in the bank rate,” which was constantly present in the meeting minutes. But everything will depend on the next inflation and GDP data. If inflation proves to be more robust and widespread, the Bank of England may hold another rate hike.
Trading recommendations
Support levels: 1.2035, 1.2000, 1.1930
Resistance levels: 1.2182, 1.2228, 1.2311, 1.2416
From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame has changed to bearish. The price declined sharply on the news on Friday and consolidated below the priority change level. The MACD indicator is in the negative zone with no signs of a reversal. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.2000, but with confirmation in the form of a reverse initiative. It is best to look for sell deals after the pullback, as the price has deviated strongly from the moving averages. The best resistance levels are 1.2147 and 1.2228, but it is also better with a confirmation in the form of the reverse initiative.
Alternative scenario: if the price breaks out through the 1.2416 resistance level and fixes above it, the uptrend will likely resume.
News feed for 2023.02.06:
– UK Construction PMI (m/m) at 11:30 (GMT+2).
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 128.65
Prev Close: 131.18
% chg. over the last day: +1.96 %
A sharp jump in the dollar index on the back of strong US labor market data led to an increase in USD/JPY quotes on Friday. The US Fed has more leeway to raise rates further, while the Bank of Japan continues to hold rates at negative levels and maintain its stimulative policy, even though inflation in the country is at a 42-year high and is expected to rise further. An increase in the interest rate differential will have a negative impact on the Japanese Yen, with Japan’s GDP growth not being able to offset this impact.
Trading recommendations
Support levels: 129.98, 129.19, 129.04, 128.16
Resistance levels: 132.37, 132.95, 133.23
From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bullish. The price strongly deviated from the moving averages. The MACD indicator is in the positive zone with signs of overbought but without divergence. It is better to look for buy trades after a slight correction to the support levels in the “discount” zone — 129.98 or 129.19, but only with confirmation on the lower time frames. At a minimum, it is necessary to wait for the correction to the level of 131.10. Sell deals can be sought after the impulse return of the price below the level of 131.58, which will form a false breakout area above the level.
Alternative scenario: If the price fixes below the support level of 128.16, the downtrend will be renewed with a high probability.
There is no news feed for today.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.3314
Prev Close: 1.3389
% chg. over the last day: +0.64 %
The Canadian dollar is a commodity currency and is dependent on instruments such as the dollar index and oil. Oil prices dropped sharply on Friday on the back of a stronger dollar index. The market is also pressured by sanctions on Russian oil products, which came into force on February 5. At the same time, traders should not forget about oil reserves, which have reached their highest level since the summer of 2021. What’s next? China’s opening continues. Hence traders should expect demand to increase. Russian oil will be limited in price, and the amount of Russian oil on the market will decrease. All this might lead to a new jump in oil prices, but only after the strategic reserves start to decline.
From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. But the price is close to the priority change level, and the buyers prevail inside the day. The MACD indicator is in the positive zone, but there are the first signs of weakness. Sell deals should be considered from the resistance level at 1.3424 or 1.3448 in case there is a reversal in the intraday time frames. Buy trades could be considered from the 1.3333 support level, but with additional confirmation in the form of an impulse initiative.
Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3424, the uptrend will likely resume.
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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