Fed Jitters – Tech Earnings & PMIs to Drive the Markets
BTC/USD => The hit 6 month low
IBM => The stock dropped 3% last week
EUR/GBP => The pair falls towards 0.8350
BTC/USD Pauses After 10% Drop on Friday
Bitcoin had a bruising week last week as the risk-off mood in the broader stock market spilled over in the cryptocurrency world. BTC/USD tanked 18.5% last week, in its worst weekly performance since May last year. The mood in the market is being hurt by expectations of a more hawkish Fed, as the US central bank looks to start hiking interest rates in March but could also start reducing its balance sheet. Concerns that Russia is on the brink of invading Ukraine are adding to the gloomy mood.
What’s Next for BTC/USD?
BTC/USD has been trading in a falling channel since early November. The 50 sma also crossed below the 200 sma last week, in a bearish signal and the price also broke through decent support around 40k with relative ease. The RSI has dipped into oversold territory so there could be some consolidating at this level or even a move higher before the downtrend is resumed. Buyers would need to retake 40k to negate the near-term downtrend. A move above 43500 could see buyers gain traction. Meanwhile, sellers would need to break below 34,000, the weekend low in order to open the door to support around 30,000, 29500.
IBM Q4 Earnings Preview
IBM will kick off what is expected to be a monstrous week for US earnings., with tech giants Apple, Tesla, Microsoft, to name a few, due to report. This will be the first financial update from IBM since completing the spinoff of Kyndryl, its former IT services business unit. Expectations are for revenue of $16 billion, down from $20.4 billion, reflecting the divestment, but could rise 3% when that is stripped out. EPS is forecast to rise to $3.23 up from $2.07. Global Business Services is expected to perform well amid robust demand for cloud services and security products.
EUR/GBP Looks to Business Activity Data
EUR/GBP dropped to a fresh 23-month low last week, at 0.8303, before recovering some of those losses to close the week at 0.8364. Worse than expected UK retail sales combined with better than forecast Eurozone consumer confidence helped boost the pair on Friday.
Today all eyes are on the PMI data releases. The composite PMI is broadly recognized as a good gauge for business activity. Whilst the eurozone composite PMI is expected to tick lower, the UK index is expected to rise, which could help the pound against the euro. However, the ongoing political storm in London could keep the pound under pressure.
|EU composite PMI Jan
UK composite PMI Jan
|Expected: 52.6 (0.7)
Expected: 55 (1.4)
Support can be found at 0.8346 (50 sma 4-hour chart) and 0.83 (last week’s low).
Resistance can be seen at 0.8380 (last week’s high) and 0.8425 (200 sma 4-hour chart).
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