Good morning, profit seekers! Gold and crypto assets tend to weaken due to the US Dollar being bullish after the comments by The Fed officials regarding the prospects for interest rates. EUR/USD was not spared from bearish pressure.
What is the full review on each market? Let's dissect one by one.
Forex
After the hawkish comments from ECB and The Fed policy makers, EUR/USD is still trading in a bearish bias.
Fundamentals
The Fed Governor Christopher Waller targets that 2% inflation will be achieved through expectations of a tighter and longer monetary policy than expected.
Meanwhile, New York Fed President John Williams said that the labor market is still very strong so a lot of adjustments need to be made to interest rates.
One member of the ECB board, Klaas Knot, said if inflation seems to have peaked. However, the pace of rate hikes may need to be maintained into May if inflation has not subsided.
technical
Based on the observations of FXStreet analyst Sagar Dua, EUR/USD is trading in the 1.0710-1.0716 area during today's Asian session.
The 20 EMA at 1.0732 will act as EUR/USD's main resistance in the near future.
The RSI indicator is seen moving in the bearish range 20.00-40.00.
If EUR/USD succeeds in breaking 1.0766, the price could be pushed towards the resistance level (1.0800) or even the 38.2% Fibo retracement at 1.0823.
However, if EUR/USD declines to cross 1.0669, the price has the potential to be dragged towards 1.0635 to the lowest level on December 22 at 1.0573.
Crypto
The crypto market experienced a correction arising from investors' concerns about The Fed's interest rates. Ethereum also entered the red zone.
Fundamentals
The Fear & Greed Bitcoin index shot up 4 points to 58/100, shifting BTC sentiment from "neutral" to "greed".
The total global crypto market cap stands at $1.09 trillion, up around 2.86% from the previous trading session.
However, the release of solid US economic data has the potential to overshadow cryptocurrencies as it could trigger the Fed to take another aggressive rate hike.
The development of the Shanghai Hard fork as well as the testing of the Zhejiang Ethereum testnet are also the focus of the crypto market at the moment.
technical
Bitcoin is currently trading in the $23,300 area, up 2.04% on a daily basis.
Ethereum is hovering around $1640, down 2.05% from the previous trading session.
According to FXEmpire analyst Bob Mason, Ethereum needs to move away from the $1654 Pivot level and target the R1 ($1696) and $1700 areas to regain its bullish momentum.
If it manages to break through the R1 area, there is a potential for ETH to rally up to R2 $1720 and $1750.
If it falls below the Pivot level, Ethereum will be corrected up to S1 $ 1630 or even below the psychological level of $ 1600.
Gold
The hawkish comments from the officials of the Fed and the US Treasury Secretary put pressure on gold prices again. Technically, XAU/USD is forming a Bear Flag targeting a downside to $1780.
Fundamentals
The Dollar Index recovered sharply after comments from some of the Fed's officials who agreed with monetary policy tightening in the long term.
Not only Fed officials, US Treasury Secretary Janet Yellen also hinted at inflation concerns leading to the central bank's aggressive policy to overcome them.
On the other hand, US-China tensions eased after Yellen said she would increase communication regarding the economic sector.
Some economic data from the European region can limit the weakness of gold prices in the short term.
technical
XAU/USD is still moving in the rising channel which is part of the Bear Flag pattern on the H1 time frame.
The downside risk of XAU/USD is getting stronger with the bearish signals from the MACD and RSI indicators.
A downside break of $1860 could target gold's downside to around $1780.
If XAU/USD can break loose and break the upside of the channel at $1888, gold could target the 200 HMA resistance at $1905.
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