Recession fears dominate ahead of Eurozone inflation
BTC/USD => The crypto falls below 20k
Gold => The commodity falls to $1800
EUR/JPY => The pair falls to 141.00
BTC/USD breaks below 20k after Grayscale’s rejection
Bitcoin is falling for a sixth straight day.
The cryptocurrency trades 11% lower this week and trades 40% lower this quarter in its largest quarterly drop in over a decade. The fall comes as risk sentiment takes a hammering, as rate hike expectations ramp up, and after several high-profile blowups. Three Arrows crypto fund has become the latest collapse, with fears of contagion adding selling pressure.
The SEC rejecting Grayscale’s Bitcoin ETF disappointed the market and has acted as the catalyst for the latest move lower and in initially sent bitcoin 5% lower yesterday before the price recovered slightly. Could the oversold chart and Money Flow Inflows still indicate that BTCUSD is enjoying inflows mean a turnaround could be on the cards?
Where next for BTCUSD?
BTCUSD has been trending lower since November forming a series of lower highs and lower lows.
The price trades below its 20& 50 sma and its multi-month falling trendline and fell to a low of 17600 in mid-June, taking the RSI into oversold territory, before buyers re-entered, lifting the price and meaning 17600 should be treated as the immediate support. A break below here opens the door to 14000, the June 2019 high.
Note that the RSI is again on the brink of oversold territory, so sellers should be wary of taking large sell positions. Buyers could look to re-test the 20 sma at 21000, looking for a breakout towards 25500 the May 12 low and 26500 the 50sma.
Gold looks weak while the Fed remains hawkish.
Gold is falling for a fifth straight session.
Gold is set to lose 1.3% across the week, its third consecutive week of declines, and lost 1.6% across the month, its third straight month of declines. Across Q2, gold shed 7%. The precious metal has come under pressure as hawkish Fed expectations have risen and the USD rises.
This week Federal Reserve Chair Powell voiced his commitment to bring inflation down, even if it means the US economy tipping into recession. Yesterday PCE, the Fed’s preferred metric for inflation, eased slightly for a 3rd straight month, but this is unlikely to take the Fed off its steep path to hiking rates. While the Fed sounds hawkish, gold could struggle.
EUR/JPY falls ahead of EZ inflation
EUR/JPY fell 0.2% in the previous session, marking the third straight day of losses.
The pair is set to lose 0.3% across the week, snapping a six-week winning run. While the yen has previously come under pressure due to central bank divergence, this week, the yen has rallied on safe-haven flows as the markets fret over aggressive Federal Reserve tightening, slowing global economic growth, and a potential recession in the US. German retail sales were stronger than expected, but German unemployment ticked higher.
Today the pair is falling as risk-off trade continues. Japanese data overnight showed that inflation ticked lower while manufacturing slowed. Looking ahead, eurozone inflation is the key data point, which is expected to rise to a record high.
|Expected: 8.3% (0.2%)
Actual: 2.3% (0.1%)
Support can be found at 140.00 (round number) and 138.76 (50 sma).
Resistance for the pair can be seen at 142.00 (20 sna) and 144.25 (2022 high).