Daily Market Analysis from NordFX

NordFX Wins Two Nominations at the Finance Derivative Awards

Finance Derivative magazine announced the Awards 2023. Among the awardees is the NordFX brokerage company, which won in two categories at once: "Most Transparent Forex Brokerage Company UAE 2023" and "Best Forex Affiliate Program South East Asia 2023".

Finance Derivative is a print and online publication that publishes news and insights about the financial industry. It was founded in 2017 and provides its readers with information on financial technology, investment, banking, and other topics related to the financial sector. Finance Derivative's readership includes financial industry professionals, among them bankers, traders, analysts, consultants, investors, and managers.

In addition to publications, Finance Derivative hosts the annual Awards to celebrate outstanding achievements in the financial industry. The award includes several categories, such as "Best Bank", "Best Investment Fund", "Best Financial Startup", "Best Broker" and others. The award is given by a team of journalists and experts from the financial industry who conduct in-depth analysis and evaluation of candidates and decide who deserves the award. Past winners include such world-famous organizations as Barclays Bank and JPMorgan Chase, BlackRock investment fund, Visa and Revolut payment systems.

In 2023, the brokerage company NordFX is among the winners. «Finance Derivative would like to congratulate you and offers special recognition and appreciation for your outstanding performance and dedication to excellence. Honoring your outstanding performance, we are delighted to announce that Nord FX is the Winner 2023 for the Category "Most Transparent Forex Brokerage Company UAE 2023" and "Best Forex Affiliate Program South East Asia 2023".
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for April 17 - 21, 2023

EUR/USD: The Dollar Continues to Sink


The DXY dollar index updated a 12-month low last week, and EUR/USD, respectively, rose to a maximum (1.1075) since April 04, 2022. The US currency has been falling for the fifth week in a row: the longest series since summer 2020.

The dollar received a serious blow on Wednesday, April 12, when data on consumer inflation (CPI) and the minutes of the March US Federal Reserve FOMC (Federal Open Market Committee) meeting were published. Statistics showed that prices are under control and inflation in the US has been consistently slowing down for nine consecutive months, going from 9.1% y/y to the current 5.0% y/y. The US Producer Price Index (PPI), released a day later, also showed a decrease in inflation, although at the basic level, US price pressure still looks stable.

With regard to the Fed Protocol, at the meeting on March 22, FOMC members discussed the possibility of taking a pause in the rate hike cycle due to problems in the banking sector. Information about a possible mild recession in the US economy later this year was also discussed. However, the rate is likely to be raised again at the next meeting of the Committee on May 3. According to CME FedWatch forecasts, it is likely to grow by another 25 basis points (bp) to 5.25% per annum.

This increase has already been taken into account by the market in quotes and is unlikely to provide any support to the dollar. Moreover, 5.25% is likely to be the peak value of the rate, until the last months of the year, when it starts to decline. The futures market expects that federal funds spending will be 4.30-4.40% in December 2023, and they will fall even lower to 4.12-4.20% in January 2024.

Slower inflation and the end of the Fed's tight monetary policy cycle are putting pressure on the dollar, pushing the DXY down. At the same time, forecasts suggest that, unlike the Fed, the European Central Bank will continue its tightening cycle for now. This was confirmed by the Member of the Board of Governors of the ECB, President of the Bundesbank Joachim Nagel. He said on Thursday, April 13 that it is necessary to continue raising rates, as core inflation in the Eurozone is still very high.

Data on retail sales in the US released at the very end of the working week, on Friday, April 14 slightly supported the US currency. They showed that sales, although falling, were much slower than expected. With the forecast of -0.4% and the previous value of -0.2%, in reality, the decline was -0.1%. Market participants regarded such dynamics in favor of the dollar, and as a result, EUR/USD ended the last week at 1.0993. At the time of writing the review, on Friday evening, April 14, analysts' opinions are almost equally divided: 45% of them expect the dollar to further weaken, 45% expect it to strengthen, and the remaining 10% have taken a neutral position. As for technical analysis, all oscillators and trend indicators on D1 are 100% colored green. The nearest support for the pair is at 1.0975, then 1.0925, 1.0865-1.0885, 1.0740-1.0760, 1.0675-1.0710, 1.0620 and 1.0490-1.0530. Bulls will meet resistance at 1.1050-1.1070, then 1.1110, 1.1230, 1.1280 and 1.1355-1.1390.

We expect quite a lot of economic statistics from the EU next week. Thus, the ZEW Economic Sentiment Index in Germany, the main locomotive of the European economy, will be published on Tuesday, April 18. On Wednesday, we will find out what is happening with inflation (CPI) in the Eurozone as a whole. On Thursday, the Minutes of the last meeting of the ECB on monetary policy will be published, and on Friday, April 21, business activity indicators (PMI) in the manufacturing sector of Germany and in the country as a whole will become known. No significant macro statistics are expected from the US next week. 

GBP/USD: Things Are Much Better Than Expected

Against the backdrop of the dollar weakening, GBP/USD still feels good, and it made another high in the first half of Friday, April 14, reaching the height of 1.2545. The pound has not traded this high since the beginning of June 2022. However, then, after the publication of data on retail sales in the US, the dollar improved its position, and the pair completed the five-day period at the level of 1.2414.

As for the UK economy itself, the GDP release on Thursday 13 April showed that the economy stagnated at 0.0% in February, compared with the forecast of 0.1% and the previous reading of 0.3%. The growth of production in the manufacturing industry in February was also 0.0% against the expected 0.2% and -0.1% in January, while the total industrial output is still in the negative zone -0.2% against the forecast of 0.2% and -0.5% a month earlier. On an annualized basis, manufacturing output came in at -2.4%, beating expectations of -4.7%. The total volume of industrial production decreased by -3.1% against the forecast -3.7% and the previous value -3.2%. Data on the trade balance of goods in the UK was also published last week, which in February amounted to £17.534 billion, which is more than the forecast of £17.000 billion and the previous value of £16.093 billion.

What do all these numbers say? Together with the data on business activity (PMI), which became known on April 03 and remained above 50 points, all these statistics give investors hope that the British economy is able to avoid a recession. Which, in turn, supports the position of the national currency. This was confirmed on April 13 by British Treasury Secretary Jeremy Hunt, who said that the economic outlook looks brighter than expected. “Thanks to the steps we have taken, we will avoid a recession,” he assured the audience.

The Bank of England (BoE) Chief Economist Hugh Pill's comments were quite optimistic as well. According to him, although "the exact path of inflation may be more uneven than we expect," the Central Bank still forecasts a decrease in CPI in Q2 of this year. "The latest figures are somewhat disappointing," said Hugh Pill, "but they are much better than the BoE's forecasts made at the end of last year." The economist also noted that the UK banking system remains very sound and resilient, and inflationary dynamics is a key factor determining the direction of BoE's monetary policy.

At the moment, 75% of experts side with the pound and expect further growth of the pair, the remaining 25% side with the dollar. Among the oscillators on D1, the balance of power is as follows: 65% vote in favor of green (10% give overbought signals), 10% have turned red and 25% prefer neutral gray. Among the trend indicators, the advantage is also on the side of the greens, they have 65%, the enemy has 35%. Support levels and zones for the pair are 1.2390-1.2400, 1.2330, 1.2275, 1.2200, 1.2145, 1.2075-1.2085, 1.2000-1.2025, 1.1960, 1.1900-1.1920, 1.1800-1.1840. When the pair moves north, it will face resistance at levels 1.2440-1.2455, 1.2480, 1.2510-1.2540, 1.2575-1.2610, 1.2700, 1.2820 and 1.2940.

Among the events of the coming week, the calendar can and should note the publication of the latest unemployment data in the United Kingdom on Tuesday, April 18. On Wednesday, the value of the Consumer Price Index (CPI) will become known, and on Friday the statistics on retail sales and business activity (PMI) in the UK will be published.

USD/JPY: Bank of Japan Is an Island of Stability

Since last December, USD/JPY has been moving in a fairly wide sideways range of 129.00-138.00. (An exception is the brief strengthening of the yen to 127.15 in mid-January). The pair ended the last week almost in its very center, at the level of 133.75, which indicates the absence of significant drivers capable of giving the pair a powerful acceleration in one direction or another.

We have repeatedly written that even after Haruhiko Kuroda, Governor of the Bank of Japan (BoJ), leaves his post, the Central Bank “will continue to support his adequate and expedient policy.” This was once again confirmed by Kazuo Ueda, the new head of the regulator, who took office on April 9. He stated at the G20 meeting that he would support the current ultra-soft monetary policy. In addition, Ueda said that core consumer inflation in Japan, which is currently only about 3%, is likely to fall below 2% in the second half of this fiscal year. Market participants concluded from these words that there is no point in fighting it by raising rates for the Bank of Japan, and therefore it is not worth expecting a reversal of the BoJ rate in the foreseeable future. (Recall that economists at Societe Generale and ANZ Bank expected that this could still happen somewhere around June).

Regarding the immediate prospects for USD/JPY, analysts' opinions are distributed as follows. At the moment, 40% of experts vote for the further movement of the pair to the north, 50% point in the opposite direction and 10% prefer neutrality. Among oscillators, 75% point upwards at D1 (a third of them are in the overbought zone), 10% look in the opposite direction and 15% are neutral. For trend indicators, 85% point to the north, the remaining 15% point to the south. The nearest support level is located in the zone 132.80-133.00, then there are levels and zones 132.00-132.40, 131.25, 130.50-130.60, 129.65, 128.00-128.15 and 127.20. Levels and resistance zones are 134.00, 134.90-135.10, 135.90-136.00, 137.00, 137.50 and 137.90-138.00.

As for the release of any important statistics on the state of the Japanese economy, it is not expected this week.

CRYPTOCURRENCIES: Weak Dollar Is Strong Bitcoin

Bitcoin rose above $30,000 on Tuesday, April 11, for the first time since June 2022. This happened due to instability in the banking sector and expectations that mega-regulators, primarily the Fed, will suspend raising interest rates. The MSCI World Index rose to its highest point since early February by Friday, April 14. This confirmed the fact that international investors are waiting for the American, and in the future, for other major Central Banks to curtail the policy of quantitative tightening (QT). Against this background, the main cryptocurrency continues to outperform other major asset classes, such as gold or oil. In addition, BTC has surpassed many top cryptocurrencies in terms of dynamics.

In the middle of the week, the bears had a chance to return BTC/USD to the support of $29,000. However, the FRS saved it from falling again: the published Minutes of the March FOMC meeting, coupled with macro statistics from the US, weakened the dollar, swinging the scales in favor of bitcoin.

The growth of BTC quotes pulls up the entire crypto market. The total market capitalization of cryptocurrencies has grown by more than 55% since the beginning of 2023, rising above $1.2 trillion. However, despite this, it still remains well below the all-time high of $2.9 trillion recorded in November 2021.

Several experts at once expressed their opinion on what happened on April 11. Michael Van De Poppe, a well-known strategist and founder of the investment company Eight, noted that bitcoin successfully passed the $28,600 test, which led to a breakthrough in resistance and reached $30,000. An analyst with the nickname PlanB tweeted that all the goals he set back in October 2022 have now been achieved. At that time, the expert predicted that BTC quotes would overcome $21,000, $24,000, and then $30,000. And another popular blogger and analyst, Lark Davis, stressed that the time will soon come when buying bitcoins for less than $30,000 will seem as fantastic as buying BTC at $3,000 now.

As of this writing, Friday evening April 14, BTC/USD is trading at $30,440. The total capitalization of the crypto market is $1.276 trillion ($1.177 trillion a week ago). The Crypto Fear & Greed Index rose from 64 to 68 in seven days and is still in the Greed zone. But what's next?

A well-known analyst under the nickname PlanB noted that bitcoin has left the deep bear zone and is at the very beginning of a new bull market. According to PlanB, the Stock to Flow (S2F) model he developed is still relevant. The expert claims that bitcoin fundamentals will eventually allow it to rise above the all-time high (ATH) of $69,000 set in November 2021. PlanB has previously predicted bitcoin will rise from $100,000 to $1 million after the 2024 halving. (Recall that the S2F (stock-to-flow ratio) model for predicting the BTC rate measures the relationship between the available supply of an asset and its production volume and has been repeatedly criticized by members of the crypto community).

Larry Lepard, managing partner at Boston-based equity firm Equity Management Associates, also looks extremely optimistic in the long-term outlook. According to him, the dollar will depreciate over the next 10 years, and citizens will begin to actively invest in cryptocurrencies, gold and real estate. The supply of bitcoins is limited, so the digital asset will become a highly sought-after investment vehicle and will benefit from the collapse of the fiat currency. “I believe that the price of bitcoin will go up a lot. I think it will first reach $100,000, then $1 million and eventually rise to $10 million per coin. I’m sure my grandchildren will be shocked at how rich people who own just one bitcoin become,” Lepard said in an interview.

In connection with this forecast, the businessman fears that the authorities will put spokes in the wheels of the crypto industry, trying to slow down the growth in the popularity of digital assets. For example, officials could raise taxes on profits from bitcoin trading and tighten regulation of coins to make it harder for startups to enter the market. However, Lepard is confident that bitcoin will be able to overcome these difficulties and succeed in the long run.

Many analysts agree that long-term macro conditions do point to a possible rise in BTC. But their estimates are much more restrained in relation to the current rally. This is due to the fact that bitcoin liquidity is now much lower than in the same period last year. This is manifested in a greater price dispersion among the leading exchanges. (In the previous review, we wrote that on the one hand, there is an increase in trading volumes, and on the other hand, a decrease in BTC liquidity to a 10-month low).

Although, of course, the prospects for this year will largely depend on the actions of the leading Central banks led by the Fed. Recall that the record capitalization of the crypto market in November 2021 was also the result of the actions of this regulator, which then flooded the economy with a huge amount of cheap money (the M2 monetary unit grew by 39%, which is an anomaly by historical standards). Moreover, interest rates were near zero levels at the time, which led to the emergence of a bubble in the market for risky assets, including stocks and digital currencies. The Fed then moved from quantitative easing (QE) to quantitative tightening (QT) through the fastest interest-rate hike cycle in 40 years, and... the bubble burst.

Speaking about the prospects of the flagship cryptocurrency, it is impossible not to mention those who still consider it a bubble and predict its final collapse. Dieter Wermuth, an economist and partner at Wermuth Asset Management, said last week that the economy would be better and simpler without bitcoin. In his opinion, these risky investments are associated with social costs, and the cryptocurrency itself does not contribute to global prosperity. If we consider bitcoin as a currency, then, given the high volatility and lack of real use, BTC is doomed to failure. In this vein, it makes sense to ditch bitcoin altogether: it could be good for shared prosperity, as investing in cryptocurrencies is wasteful and takes away funds from overall economic growth. In addition, bitcoin creates social inequality, allows for money laundering, tax evasion, and is very energy intensive due to mining. Dieter Wermuth even called bitcoin “the biggest climate killer.”

Cryptocurrency opponents received unexpected support from … artificial intelligence. ChatGPT Bot spoke about the formation of a recession-resistant investment portfolio. According to a document published by the Gold IRA Guide, it recommended allocating 20% for gold and other precious metals. The rest of its hypothetical portfolio consisted of bonds (40%), "defensive" stocks (30%) and cash (10%). The chatbot did not mention cryptocurrencies, much to the delight of well-known bitcoin critic and gold advocate Peter Schiff. “After all, artificial intelligence is pretty smart. It did not recommend any bitcoin deposit,” this investor wrote.

By the way, answering the question of which cryptocurrency is the most promising today, ChatGPT did not name bitcoin, but ethereum. Artificial intelligence, of course, did not know about the latest events, but it seems to have hit the mark. In the last review, we detailed the Shapella hard fork, which will allow validators to withdraw the frozen ETH coins they have invested and locked on the network over the past 3 years in exchange for interest. Investors and traders were worried that an unlock could lead to a massive selling wave and, as a result, a sharp drop in the price. However, we are still seeing the opposite process: on May 13, ETH/USD rose above $2,000, and on the evening of Friday, April 14, it is trading in the $2,100 zone.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrency Forecast for April 10 - 14, 2023

EUR/USD: Fed rate Divination Continues


The dollar seems to be either weakening or not. On the one hand, the DXY dollar index updated a two-month low on April 4, falling below the support of 101.50, and EUR/USD rose to a new high of 1.0972. On the other hand, the pair returned by the end of last week to where it had already been on March 23 and 31.

DXY continues to be pressured by poor US macro statistics. The country's GDP growth for Q4 2022 was 2.6%, which is lower than both the forecast and the previous value (2.7%). Business activity in March continued to decline at an accelerated pace: the PMI index in the manufacturing sector fell to 46.3 against the forecast of 47.5 and 47.7 in February, and it fell to 51.2 in the services sector (forecast 54.5, February value 55.1). New orders for industrial goods fell by 0.7% in February, worse than the forecast of 0.5% once again. And this despite the fact that they had already fallen by 2.1% a month earlier. The JOLTs job market report showed a decline in the number of open vacancies to 9.9 million, the lowest figure in the last two years.

The US Bureau of Labor Statistics released its March employment report on Friday, March 07. The number of new jobs created outside the agricultural sector (NFP) in the United States, with a forecast of 240K, in reality fell to 236K. This figure was significantly higher in February and amounted to 326K. But the unemployment rate fell from 3.6% to 3.5%, which slightly supported the US currency (on the thin market, DXY rose above 102.00). However, the main reaction of the market to these data will follow only next week. April 07 in Europe, the USA and a number of other countries was a day off, Good Friday. Europe takes a break on Easter Monday, April 10 as well. The last time NFP was released on Good Friday was in 2021, and then, despite a sharp jump in this indicator, the delayed market response was very restrained.

Of course, all of the above indicators may lead to adjustments in market expectations for the US Federal Reserve rate. However, the next FOMC (Federal Open Market Committee) meeting will be held only on May 03, and many more significant statistics will be released before then. The weak state of the economy may cool the hawkish ardor of the FOMC members and force them to take a break in tightening monetary policy, leaving the rate at the same level of 5.00%. At the moment, according to the CME Group FedWatch Tool, there is a 52.7% chance of another rate hike of 25 basis points (bp).

EUR/USD closed last week at 1.0901. At the time of writing this review, on the evening of Friday, April 07, the opinions of analysts are divided almost equally: 35% of them expect further weakening of the dollar, 35% - its strengthening, and the remaining 30% have taken a neutral position. Among the oscillators on D1, 90% are colored green, another 10% are gray neutral. Among trend indicators, 75% recommend buying, 15% - selling. The nearest support for the pair is located at 1.0885, 1.0860, then 1.0740-1.0760, 1.0675-1.0710, 1.0620 and 1.0490-1.0530. Bulls will meet resistance at 1.0925, then 1.0955, 1.0985-1.1030, 1.1110, 1.1230, 1.1280 and 1.1355-1.1390.

Retail sales in the Eurozone will be announced this week on Monday April 11. The next day, important data on consumer inflation (CPI ) in the US will be released. The minutes of the March FOMC meeting will also be published on Wednesday. On Thursday, the CPI values in Germany, the number of initial jobless claims in the US and the US Producer Price Index (PPI) will be known. On Friday, we will have a whole package of statistics on retail sales in the US.

GBP/USD: PMI Gives Investors Hope

Against the backdrop of a weakened dollar, GBP/USD feels quite good, and the pound made another high on April 04, reaching a high of 1.2525. It has not traded this high since the beginning of June 2022. However, then there was a slight correction, and the pair completed the five-day period at the level of 1.2414, returning to the values of mid-December 2022 - the second half of January 2023.

As a matter of fact, the UK economy, like the US, had nothing to brag about last week. The index of business activity (PMI) in the manufacturing sector of the country, published on April 3, showed a decrease from 49.3 to 47.9 points (with a forecast of 48.0). PMI values in the services sector and the composite value of this Index also turned out to be lower than the previous values - 52.9/53.5 and 52.2/53.1, respectively. However, the fact that both of these Indexes are holding above the 50.0 mark gives investors hope that the British economy is able to avoid a recession. This, in turn, supports the position of the national currency.

At the moment, 40% of experts side with the pound, the same number (40%) have taken a wait-and-see position, only 20% have turned out to side with the dollar. Among the oscillators on D1, the balance of power is as follows: 90% vote in favor of green and 10% have turned red. Among the trend indicators, the advantage is on the side of the greens, they have 85%, the enemy has 15%. Support levels and zones for the pair are 1.2390, 1.2330, 1.2275, 1.2200, 1.2145, 1.2075-1.2085, 1.2000-1.2025, 1.1960, 1.1900-1.1920, 1.1800-1.1840. When the pair moves north, it will face resistance at levels 1.2450, 1.2510-1.2525, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

In terms of the UK economy, there are two speeches by Bank of England (BoE) Governor Andrew Bailey next week on Wednesday April 12. On Thursday, April 13, there will be data on production volumes in the manufacturing industry, as well as on the country's GDP. As a reminder, Monday April 10 is Easter Bank Holiday in the United Kingdom.

USD/JPY: BoJ Remains Ultra Soft

This time the dynamics of USD/JPY as a whole corresponded (as it should be, mirrored) to what its "colleagues" in DXY were doing. At the beginning of the week, it fell from a height of 133.75 and recorded a local low of 130.60 on April 5. And then it went up, reaching 132.37 in a thin market and a sluggish US employment report. The last chord of the week sounded a bit lower, at 132.14.

As far as Japan's monetary policy is concerned, nothing has changed here: external influencers still hope for its tightening, domestic influencers say that the ultra-soft, dovish rate remains unchanged. Thus, on Friday, April 7, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), gently hinted that “it is appropriate to make the Bank of Japan's monetary policy more flexible.” And Japanese Finance Minister Shunichi Suzuki on Friday praised the efforts of the outgoing Governor of the Bank of Japan (BoJ) Haruhiko Kuroda and expressed the hope that under the new leadership, the Central Bank “will continue to support its adequate and expedient policy.”

We wrote in our previous review that Societe Generale economists expect that any steps to change the BoJ rate can be taken no earlier than June. The comments of their colleagues from ANZ Bank look similar. “In the near term, [BOJ] policy change looks unlikely,” they wrote. And if changes do occur, then, according to ANZ Bank forecasts, they can be expected only after Q2 of this year.

As for the immediate prospects for USD/JPY, at the moment 55% of experts vote for the further movement of the pair to the north, and 45% point in the opposite direction. Among the oscillators on D1, 25% point south, the same number look in the opposite direction, and 50% are neutral. For trend indicators, 40% point to the north, the remaining 60% point to the south. The nearest support level is located in the zone 131.85-132.00, then there are levels and zones 131.25, 130.50-130.60, 129.70-130.00, 128.00-128.15 and 127.20.  Resistance levels and zones are 132.80-133.00, 133.60-133.75, 134.35, 135.00-135.35, 135.90-136.00, 137.00, 137.50 and 137.90-138.00.

As for the release of any important statistics on the state of the Japanese economy, it is not expected this week.

CRYPTOCURRENCIES: $29,000 Resistance Has Never Been Taken

The beginning of the previous review sounded like this: “The crisis that crippled Silvergate, Silicon Valley Bank (SVB) and Signature and hit Credit Suisse has certainly helped the crypto market by reminding what decentralized finance was created for. However, investors' fears about a new wave of the banking crisis in the US and Europe are gradually fading away, which is clearly seen on the BTC/USD chart. If during the March 10-17 rally, digital gold gained almost 45% in weight, it has been unsuccessfully trying to storm the important $29,000 resistance for the last two weeks.  […] BTC is supported by the $26,500 level.”

This was written seven days ago, but even now everything said remains relevant. The only amendment is that the fluctuation range narrowed even more last week, and the local low was fixed at $27,190. Triggers are needed to break through this range in one direction or another, they have not yet been observed.

As already mentioned, the crypto market, especially bitcoin, was supported by the banking crisis and the worsening macroeconomic environment in general. However, the industry continues to be under regulatory pressure from US government agencies, which have now been joined by their UK colleagues. As a result, on the one hand, we are seeing a decrease in BTC liquidity to a 10-month low, and on the other, an increase in trading volumes.

According to a CNBC survey of industry influencers, the market remains bullish on the future of the first cryptocurrency at this stage. According to the analytical company Glassnode, its attractiveness continues to increase. Experts from this company note that a surge in trader activity was recorded in the second half of last year, when bitcoin fell to $15,000, and a similar trend is observed in 2023. Thus, the number of unique addresses on the bitcoin network with a balance of at least one coin has reached 992,243. The number of addresses controlling from 100 to 1000 BTC is 14,004. The four largest whales hold between 100,000 and 1 million BTC, including the Binance and Bitfinex exchanges, which control 248,597 and 178,010 bitcoins, respectively. At the same time, it is possible that one of these four whales is the US government. According to Dune analysts, the total stock of the first cryptocurrency in the US authorities is 205,515 BTC: more than 1% of the coin issue (mostly these assets were obtained during confiscation from criminals).

Representatives of the Derebit platform confirm the general bullish attitude. According to them, open interest in bitcoin derivatives continues to grow steadily. Derebit stressed that most of the positions are open to buy, as investors continue to believe in the potential of the crypto market's flagship.

In parallel with the growing attractiveness of digital assets for investors, their attractiveness for criminals is also growing. Cybercriminals have stolen $255.8 million in digital currencies since the beginning of the year. At the same time, "only" $8.8 million was stolen in January, 3.5 times more - $35.5 million in February, and the figure rose to $211.5 million in March.

A crypto analyst known as Stockmoney Lizards analyzed the dynamics of the flagship crypto asset. In his opinion, the asset's monthly chart looks promising and indicates the potential for further growth. The expert's assumptions are supported by the readings of the RSI indicator. Stockmoney Lizards believes that the current market situation is very similar to the period from 2017 to 2020, when a steady upward trend began to form, and that bitcoin will soon be able to reach the key $47,000 mark.

Another well-known analyst, Michael Van De Poppe, shares this view. According to the expert, buyers are still in control of the situation. If bitcoin quotes remain above $25,000 for some time, we can count on a potential increase up to the level of $40,000.

Charles Edwards, founder of hedge fund Capriole Investments, has noted a "familiar" bullish signal on the SLRV Ribbons metric. SLRV Ribbons is a tool to measure the potential return of bitcoin. It analyzes the interaction of two moving averages. When the short-term 30-day MA crosses the long-term 150-day MA, bitcoin is in the beginning of a bullish phase. This metric is “as simple as it gets,” Edwards tweeted. “It is currently repeating classic bullish behavior with a crossover in early 2023.” The specialist added that although SLRV Ribbons is a relatively new tool, tests have proven its reliability and ability to increase the return on investments in BTC.

SLRV is not the only metric that gave the founder of Capriole Investments a sense of déjà vu this month. The Bitcoin Yardstick tool shows a retracement of bitcoin's market value relative to hashrate, but still classifies BTC as "cheap" at current prices. “Bitcoin Yardstick is drawing a very familiar signature to the 2019 lows,” Edwards commented on the indicator readings. At the beginning of that year, after exiting the “cheap” zone, BTC/USD saw only one brief drop during the crisis caused by the start of the COVID-19 pandemic in March 2020. At the moment, according to indicators, price targets for BTC are fixed at $35,000.

Moving from short-term to long-term, Arthur Hayes, the former CEO of BitMEX crypto exchange, was the biggest optimist here, citing $1 million per coin as a target for bitcoin. He was prompted to do so by the news that the People's Bank of China lowered the required reserve ratios (RRR) for all banks by 0.25%. (For reference: The required reserve ratio is the statutory share of a commercial bank's liabilities on attracted deposits. When this rate is lowered, the amount of funds that commercial banks can provide for lending or investment increases.

At the time of this writing, Friday evening, April 07, BTC/USD is clearly still very far from reaching $1 million and is currently trading at $27,860. The total capitalization of the crypto market is $1.177 trillion ($1.185 trillion a week ago). The Crypto Fear & Greed Index has risen by just one point in seven days, from 63 to 64, and is still in the Greed zone.

And finally, a few words about the main altcoin, ethereum. The long-awaited Shanghai hard fork will take place on its network on April 12, which will allow validators to withdraw coins frozen for staking. At the moment, their volume is 18 million ETH, or 15% of the total supply.

To reduce potential pressure on the price and not overload the network, those wishing to exit staking will be forced to stand in line. The maximum daily outflow is limited to 2,200 transactions or 70k coins. Most likely, this queue will be quite long. And much of this is due to U.S. regulators, which put even more pressure on ethereum than bitcoin. Here are pre-trial proceedings with the Kraken and Coinbase crypto exchanges to refuse staking, and the SEC's desire to assign ETH the status of a security. All this, of course, despite the hard fork, reduces the attractiveness of this asset for investors, and makes the prospects for ethereum very vague. Well-known trader and analyst Benjamin Cowen believes that the best time to buy ethereum will be when ETH/BTC falls into the range from 0.03 to 0.04 (currently 0.067). The analyst assures that he will wait for these figures, and only then will he make an appropriate investment decision.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrency Forecast for April 03 - 07, 2023

EUR/USD: Why the Dollar Fell

Last week passed without sharp jumps. The dollar continued to fall in price, and EUR/USD returned by March 30 to where it was traded seven days before. The local maximum was fixed at 1.0925, and the five-day period finished at 1.0842.

The dollar continues to be pressured by the growth of investors' risk appetite: American and European stock indices have been going up since mid-March. Asian markets are not lagging behind: they were supported by statistics on business activity (PMI) in the manufacturing industry in China.

As for US macro statistics, it did not look good. The country's GDP growth for Q4 2022 was 2.6%, which is lower than both the forecast and the previous value (2.7%). But the number of initial applications for unemployment benefits, on the contrary, increased from 191K to 198K against the forecast of 196K. Both of these indicators indicate a slowdown in the US economy.

In addition, it has become obvious to market participants that the crisis, which knocked out American Silvergate Bank, Silicon Valley Bank, Signature Bank and European Credit Suisse, will cool the Fed's hawkish ardor and make it act much more cautiously. This opinion was confirmed on March 30 by the head of the Richmond Fed, Thomas Barkin, who said that the bankruptcy of Credit Suisse ruled out the option of further raising interest rates by 50 basis points (bp).

European macro statistics turned out to be quite diverse. On Thursday, March 30, the value of the Harmonized Consumer Price Index (HICP) in Germany became known, which rose in March by 7.8% y/y. This is less than a month ago (9.3%), but higher than the forecast (7.5%). As a result, looking at these figures, the market decided that the ECB would have to continue actively tightening monetary policy and raising euro rates in order to fight inflation. The yield of German government bonds outperformed the yield of similar US bills, and EUR/USD reached weekly highs. Friday's statistics, on the contrary, reassured bears on the dollar to a certain extent, as Eurostat reported that the Harmonized Consumer Price Index (HICP) fell in March in the euro area from 8.5% in February to 6.9% year-on-year (with a forecast of 7.1%).

The market reaction to this and other statistics on Friday (such as the US Personal Consumption Expenditure Index) was rather sluggish, as this day coincided with the last day of the Q1 2023, when many market participants have already recorded quarterly results in their reports.

Regarding the medium- and long-term prospects for EUR/USD, Bank of America (BoA) economists believe that “the market is again running ahead of the locomotive, incorporating early Fed rate cuts into prices, and reassessing these expectations is likely to put pressure on the pair in the short term.” According to the BoA forecast, “the EUR/USD rate will be 1.05 in the first half of the year, it will rise to 1.10 by the end of this year, and to 1.15 by the end of 2024, which is still below the long-term equilibrium value.” “We assume that the worst of the recent banking turmoil is behind us, but we remain concerned about two risks for the euro: the ongoing conflict over Ukraine and possible pressure on the Italian market from a hawkish ECB,” BoA explained.

If we talk about the outlook for the near term, at the time of writing, the evening of Friday, March 31, 55% of analysts expect further weakening of the dollar, 35% - its strengthening, and the remaining 10% have taken a neutral position. Of the oscillators on D1, 90% are colored green, and another 10% are colored red. Among trend indicators, 80% recommend buying, 20% - selling. The nearest support for the pair is located at 1.0800, then 1.0740-1.0760, 1.0680-1.0710, 1.0620 and 1.0500-1.0530. Bulls will meet resistance in the area of 1.0865, 1.0925, 1.0985-1.1030, 1.1110, 1.1230, 1.1280 and 1.1355-1.1390.

Of the upcoming week's events, the publication on Monday, April 03, of data on business activity (PMI) in the manufacturing sectors of Germany and the USA is of interest. This will be followed by a whole stream of information from the US labor market. This will be statistics on the number of open JOLTS vacancies on Tuesday, April 4, the change in the number of people employed in the non-agricultural sector from ADP on Wednesday, and the number of initial applications for unemployment benefits on Thursday. And on Friday, April 7, we will have data on the unemployment rate and the number of new jobs created outside the US agricultural sector (NFP). It must be borne in mind that April 07 is Good Friday in Europe, the USA and a number of other countries, a day off, so the reaction to these figures will follow next week, on Monday April 10.

GBP/USD: Will the Pair Continue to Grow?

The dollar weakened not only against the euro, but also against the British pound. GBP/USD has risen by more than 600 points since March 08, in just three weeks. Only the key resistance in the area of 1.2425-1.2450 could stop its growth. But does the pound have the strength to climb further?

On March 23, the Bank of England (BoE) raised its key interest rate by 25 bp. to 4.25% (for comparison, the current rate of the US Federal Reserve is 5.00%). At the same time, the situation with inflation in the country is not improving. The United Kingdom remains the only developed economy where inflation has hardly fallen throughout the year and remains at double-digit multi-year highs. The main Consumer Price Index (CPI) in March was 10.4%, and the basic CPI was 6.2%. Therefore, many analysts expect that the increase in interest rates will be one of the main steps taken by the BoE at the upcoming meetings. Moreover, the regulator will have to keep the rate at high values for a long time, even though this will stifle the country's economy. (GDP growth rates are now at near-zero levels. Thus, the data published on March 31 showed GDP growth in Q4 2022 by only 0.1%).

Pressure on the economy makes a number of analysts talk about the pound's limited potential. However, despite this, many strategists believe that a recession will be avoided, and the rate hike will continue to push the pound higher. Thus, ANZ Bank economists expect the pair to rise to 1.26 by the end of the year. The forecast of their colleagues from the French Societe Generale looks even bolder: in their opinion, GBP/USD will follow EUR/GBP and gradually move up to 1.30.

The pair closed last week at 1.2330. At the moment, 45% of experts side with the dollar, the same number (45%) side with the pound, the remaining 10% have taken a wait-and-see attitude. Among the oscillators on D1, the balance of power is as follows: 85% vote in favor of green and 15% have turned neutral gray. Among the trend indicators, the absolute advantage is on the side of the green ones, those are 100%. Support levels and zones for the pair are 1.2270, 1.2200, 1.2145, 1.2075-1.2085, 1.2000-1.2025, 1.1960, 1.1900-1.1920, 1.1800-1.1840. When the pair moves north, it will face resistance at levels 1.2390-1.2425, 1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

Statistics on the UK economy include the publication of the Business Activity Index (PMI) in the country's manufacturing sector on Monday, April 3. The values of PMI in the services sector, as well as the composite value of this Index, will become known on Wednesday. And we remind you that Friday is a day off in the Kingdom.

USD/JPY: Will BoJ Change Course in the Summer?

Unlike its DXY “colleagues”, the Japanese currency has shown absolutely the opposite trend against the dollar. While the euro and pound were strengthening their positions last week, the yen was losing them. There are two reasons for this, in our opinion. First, the yen was pressured by the fact that March 31 is not only the end of the quarter, but also the end of the fiscal year in Japan. The second one, which has been said many times already, is the ultra-soft policy of the Bank of Japan (BoJ).

Kazuo Ueda, the new head of the regulator, who takes office on April 09, has repeatedly spoken out in favor of continuing the dovish course of his predecessor Haruhiko Kuroda. And of course, such statements do not contribute to the attractiveness of the national currency.

Since November 2022, concerns about financial instability have led to a surge in purchases of the yen as a safe haven. However, as Societe Generale strategists write, even the "safe harbor" needs change. USD/JPY needs more action from the BoJ to justify its big decline. If the Central Bank does nothing, USD/JPY is likely to rise even more. Societe Generale expects that any moves to change the monetary policy of BoJ will be made in June, which could send the pair to the 125.00 level. A sharp easing of the US Federal Reserve's policy can also help the Japanese currency.

The comments of economists from ANZ Bank look similar. “In the short term, [BoJ] policy change looks unlikely,” they write. “If it does change, which we expect to happen after the second quarter of this year, the Japanese yen will rise on more favorable yield differentials. We expect USD/JPY to fall gradually to 124.00 by the end of the year.”

Here, however, one must take into account the statement of the Deputy Governor of the Bank of Japan, Shinichi Uchida, made on Wednesday, March 29. According to him, the adjustment of the regulator's monetary policy to control bond yields is possible only if economic conditions and price stability improve, which will justify a gradual reduction in monetary stimulus.

So, the fall of USD/JPY to the zone of 124.00-125.00 is still a big question. It finished the last week at the level of 132.80. And as for the immediate prospects, at the moment, 40% of experts vote for the further movement of the pair to the north, 30% point in the opposite direction, and another 30% have abstained from forecasts. Among the oscillators on D1, 15% point south, 40% look in the opposite direction, and 35% are neutral. For trend indicators, 40% point to the north, the remaining 60% point to the south. The nearest support level is located in the zone 131.25, then there are levels and zones 130.50, 129.70-130.00, 128.00-128.15 and 127.20.  Resistance levels and zones are 133.00, 133.60, 134.00-134.35, 135.00-135.35, 135.90-136.00, 137.00, 137.50 and 137.90-138.00.

No important macro data on the Japanese economy is expected to be released this week. The only thing that can be noted in the calendar is Monday, April 03, when the Tankan Major Producers Sentiment Index for Q1 2023 will be published.

CRYPTOCURRENCIES: What Will Happen to Binance?


The crisis that crippled Silvergate, Silicon Valley Bank (SVB) and Signature and hit Credit Suisse has certainly helped the crypto market by reminding what decentralized finance was created for. However, investors' fears about a new wave of the banking crisis in the US and Europe are gradually fading away, which is clearly seen on the BTC/USD chart. If during the March 10-17 rally, digital gold gained almost 45% in weight, it has been unsuccessfully trying to storm the important $29,000 resistance for the last two weeks. Bitcoin needs not only to rise, but to sustainably gain a foothold above this horizon. Then, according to a number of experts, starting from this, it will be able to reach the next goal of $35,000. In the meantime, BTC is supported by the $26,500 level.

This support survived even when the CFTC (U.S. Commodity Futures Trading Commission) filed a lawsuit against Binance on Monday, March 27, accusing the crypto exchange of conducting unregistered futures and options transactions, serving US customers bypassing restrictions, illegal operations (in including in favor of Hamas, recognized as a terrorist organization in many countries) and market manipulation.

In relation to the last accusation, analyst Cory Swan has theorized that it was the founder of the Binance Changpeng Zhao (CZ) crypto exchange who was all this time the bear who tried to crash bitcoin to $12,000. “CZ held a large short position against BTC, hoping for $12,000, and paying for his personal big trade with unsecured BUSD and unsecured altcoins,” Swann writes.

At the moment, opinions are divided regarding the future of Binance. Some believe that no one needs the funeral of such a giant, as this will be a collapse for the entire crypto industry. Others are confident that the CFTC will seek the most severe punishment for the exchange. Even in the event of a pre-trial settlement, she will face billions in fines and a ban on work in the United States. If the court nevertheless takes place and finds Binance and its management guilty, both many clients and financial counterparties around the world will immediately turn away from them.

According to a CNBC survey of industry influencers, the market remains bullish on the future of the first cryptocurrency at this stage. So Tether CTO Paolo Ardoino believes that bitcoin can “retest” the all-time high of $69,000. And Marshall Beard, strategic director of the Gemini crypto exchange, predicts that the coin may reach $100,000 this year. In his opinion, if the first cryptocurrency manages to overcome the previous maximum, it “would not take much time to rise even higher.” However, a new bullish rally requires powerful new triggers, both economic and news. But neither the first nor the second has yet been observed.

Bloomberg strategist Mike McGlone believes that gold and bitcoin will be the most popular instruments for investors in 2023. The precious metal will confirm the status of the safest asset. The cost of a troy ounce of gold will soon exceed $2,000. At the same time, the attractiveness of bitcoin, which is seen as an instrument independent of the traditional banking system, will increase. As the global economy worsens, the number of investors who prefer to keep their capital in BTC, gold, as well as in treasuries, will grow, according to a note prepared by McGlone.

The collapse of the banking sector is reminiscent of the crisis of 1929, so the Fed is tightening monetary policy. After the latest rate hike, investment in bitcoin has increased, although many observers expected its value to fall, Bloomberg strategist emphasized. In his opinion, the BTC rebound can be seen as a positive signal, as more traders continue to buy cryptocurrency even amid global uncertainty.

Place Holder partner and former head of Ark Invest crypto company Chris Burniske, like Mike McGlone, believes now is the time to buy bitcoin and ethereum, as they are created for precisely such crisis moments.

Venture capitalist and billionaire Tim Draper made similar recommendations. Draper wrote in a report aimed at entrepreneurs that companies "can no longer rely" on just one bank or regulator. “For the first time in many years, governments are taking over banks at the risk of becoming insolvent. Bitcoin is a hedge against the financial domino effect and over-control mismanagement.”

Draper suggested keeping short-term deposits for no more than six months in two separate accounts, at a local bank and an international bank. In his opinion, organizations should also transfer an amount equal to two salary funds into bitcoin or other digital assets. The billionaire stressed the importance of such a contingency cushion, as management is responsible for meeting payroll deadlines "even in times of crisis."

Of course, as always, the voices of "crypto gravediggers" are heard. Thus, the analyst under the nickname Grinding Poet believes that “a retest of the 2018 lows is inevitable” and “the new target is $3,150.” The well-known gold bug and bitcoin critic Peter Schiff continues to stand his ground. Back in 2017, Schiff promised that the coin would soon be completely worthless. Despite the past 6 years, the entrepreneur has not changed his position. And now, in March 2023, he stated that “bitcoin’s zero price hike just dragged on a bit.”

Steve Hanke, professor of applied economics at Johns Hopkins University, criticized bitcoin again, saying that the fundamental value of the first cryptocurrency is zero. He called BTC a highly speculative asset with no economic value or utility.

Cake Defi CEO Julian Hosp told Hanke that bitcoin is debatable, but it certainly has value. According to Hosp, there are undoubtedly people who need bitcoin, so the claim that the first cryptocurrency has zero value is fundamentally wrong.

We tend to agree with Hosp, because at the time of writing the review, on the evening of Friday, March 31, BTC definitely has value and is expressed in a very specific figure of $28,375 per coin. The total capitalization of the crypto market has grown slightly over the week, from $1.169 trillion to $1.185 trillion. The Crypto Fear & Greed Index also rose from 61 to 63 points in seven days and is still in the Greed zone.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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March 2023 Results: the Japanese Yen Helped NordFX Traders Enter the TOP-3

NordFX Brokerage company has summed up the performance of its clients' trade transactions in March 2023. The services of social trading, PAMM and CopyTrading, as well as the profit received by the company's IB-partners have also been assessed.

- The maximum monthly profit of 38,150 USD was received by a client from East Asia, account No. 286XX, on transactions with USD/CHF, USD/CAD and USD/JPY.
- This time, the second step was taken by their compatriot, account No. 1505XXX, who earned 26,955 USD trading the USD/JPY pair.
- And finally, a trader from South Asia, account No. 9605XXX, came in third place with a profit of 18,347 USD, their main trading instrument was the GBP/JPY pair.

The situation in NordFX passive investment services is as follows:

CopyTrading still pleases fans with a "veteran" signal, KennyFXPRO - Prismo 2K. It increased its profit to 355% in 697 days. Recall that despite the relative stability of the results, this supplier had a serious failure last November: the maximum drawdown on this signal approached 67% then. This can be called force majeure, but you should always keep in mind that trading in financial markets is a risky business, and can lead not only to impressive profits, but also to a complete loss of funds.
    
Another signal is Bull trader, which started on July 22, 2022, it has reached a profit of 183% over the past 248 days, with a drawdown of less than 23%. In addition, we drew the attention of algo trading fans a month ago to a startup called ATFOREXACADEMY ALGO 1. It celebrated a round date on March 31: it turned exactly 100 days old. It showed a very good profitability of 202% during this time, although its maximum drawdown turned out to be rather big, 38%.
    
In the PAMM service, two accounts continue to struggle in the financial markets, which we have repeatedly mentioned in previous reviews. These are KennyFXPRO-The Multi 3000 EA and TranquilityFX-The Genesis v3. They suffered serious losses in mid-November 2022: the drawdown at that moment approached 43%. However, PAMM managers managed to stabilize the situation, and profit on the first of these accounts reached 91% as of March 31, 2023, on the second - 58%, which is approximately the same as a year ago. |
    
This time, the Trade and earn account also attracted attention. It was opened more than a year ago, but was in a state of hibernation, waking up only in November. As a result, the yield on it has exceeded 55% over the past 5 months with a very small drawdown of less than 10%.

Among the IB partners of NordFX, the TOP-3 include representatives of East, South, and West Asia:
- the largest commission, 8,418 USD, was credited to a partner with account No.1259ХXХ;
- the next is the partner (account No. 1621ХХХ), who received 5,701 USD;
- and, finally, the partner with account No. 1618xxx, who received 4,536 USD as a reward, closes the top three.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for March 20 - 24, 2023

EUR/USD: ECB Not Fazed by Banking Crisis


The past week was marked by a large black candle when EUR/USD plummeted from 1.0759 to 1.0515. And this happened not on Thursday, March 16, when the ECB made a decision on the interest rate, but the day before. The reason for the weakening of the European currency was none other than the head of the National Bank of Saudi Arabia.

Here's what happened. Following the collapse of three banks in the United States, Silvergate, Silicon Valley, and Signature, the banking crisis spread to Europe, hitting Credit Suisse. This largest Swiss financial conglomerate has long been experiencing serious liquidity problems amid corruption scandals in Mozambique and rumors of dirty money from Bulgarian drug lords fueled by the media. And on Wednesday, March 15, it became known that the National Bank of Saudi Arabia, which is the largest shareholder of Credit Suisse, decided not to help the troubled Swiss with money anymore.

Credit Suisse's stocks fell more than 30%. But it didn't end there, and a wave of panic hit other major European banks. Societe Generale's shares fell by 12%, BNP Paribas - by 10%, Commerzbank - by 9%. In this situation, investors decided that the ECB would not dare to raise the rate by 50 basis points (bp), the likelihood of such a move dropped from 90% to 20%, which led to euro sales.

But as often happens, investors were wrong. Thursday came, and the European Central Bank did what it promised a month ago: raised the rate by 50 bp. In addition, concerns about the banking sector began to decline. The National Bank of Switzerland took on the salvation of Credit Suisse, and US authorities extended a helping hand to American banks, including the Treasury and the Federal Reserve. In addition, 11 more private banks joined the rescue operation, allocating $30 billion for these purposes. As a result, the storm subsided, EUR/USD returned to its comfortable zone of 1.0650, and market participants began discussing how much the US regulator would raise the interest rate on Wednesday.

Let's remind that the nearest FOMC (Federal Open Market Committee) meeting of the US Federal Reserve is scheduled for Wednesday, March 22. However, despite the hawkish statements of Jerome Powell and his colleagues, macroeconomic statistics suggest rather easing than further tightening of the Fed's monetary policy.

The data from the US labor market published on March 9 and 10 vividly demonstrate the slowdown of the country's economy. Thus, the number of initial jobless claims was 211K, exceeding the expected 195K and 190K a month earlier. This indicator exceeded the 200K mark for the first time and reached a maximum since December 2022. As for the number of new jobs created outside the agricultural sector (NFP), it was 311K, significantly less than in January - 503K. Together with the rise in unemployment to 3.6% (3.4% in January), the decrease in retail sales growth rates, and the banking crisis, these data may cool down the hawkish fervor of FOMC members. Currently, the likelihood of raising the federal funds rate by 25 basis points (from the current 4.75% to 5.00%) on March 22 is 80%. Moreover, derivatives predict a drop in the rate below 4% by the end of 2023, which is bad news for the dollar.

However, the European economy is not doing well either, which could prompt the ECB to take a less aggressive step. The swap market is almost 100% sure that on May 4, the euro regulator will raise the rate only by 25 basis points - from 3.00% to 3.25%.

EUR/USD closed the past five-day period at 1.0664. At the time of writing this review, on Friday evening, March 17, 40% of analysts expect the strengthening of the dollar, while the same percentage predicts its weakening, and the remaining 20% take a neutral position. Among the oscillators on D1, 75% are painted in green, another 10% are in red, and 15% are in neutral gray. Among the trend indicators, 90% recommend buying and 10% recommend selling. The nearest support for the pair is located in the area of 1.0590-1.0620, followed by levels and zones of 1.5000-1.0530, 1.0440, 1.0375-1.0400, 1.0300, and 1.0220-1.0255. Bulls will face resistance in the area of 1.0680-1.0700, 1.0740-1.0760, 1.0800, 1.0865, 1.0930, 1.0985-1.1030.

It is clear that the main event of the upcoming week will be the Fed meeting on March 22, the summary of forecasts, and the subsequent press conference of the organization's leadership. In addition, on Monday, March 20, the People's Bank of China will make its decision on the interest rate, which may affect the dynamics of the DXY dollar index. As for the end of the working week, on Thursday, March 23, another batch of data from the US labor market will be released, and on Friday, March 24, the indicators of business activity (PMI) in Germany and the Eurozone, as well as the volume of orders for capital goods and durable goods in the United States, will become known.

GBP/USD: UK Treasury Boosts the Pound

GBP/USD also marked a black candle on March 15, albeit slightly shorter at 170 pips. However, by the end of the week, the pound had fully recovered and even strengthened compared to the first ten days of March, finishing at 1.2175. This was due to increased optimism about the prospects of the British economy. The UK Chancellor of the Exchequer, Jeremy Hunt, presented the budget for the current year, the main goal of which, he said, was to stabilize the country's economy. It is expected that the UK GDP will decrease by only 0.2% this year, rather than 1.5% as previously expected, thus avoiding a technical recession. In addition, the inflation rate should decrease to 2.9% by the end of 2023, which is almost 3.5 times less than the peak value of 10.1%. Furthermore, the Chancellor announced a package of measures and benefits for individuals to help compensate for the shortage of labor.

Following the Federal Reserve's decision on interest rates next week, the Bank of England (BoE) will announce its own decision just 18 hours later. It should be noted that the head of the BoE, Andrew Bailey, speaking on Wednesday, March 1, was vague, stating that a final decision regarding the prospects of the monetary policy of the British central bank had not yet been made, and that the bank should be flexible in the coming months to avoid alarming the markets. Now, the regulator's caution will be further exacerbated by the banking crisis initiated primarily by the aggressive actions of colleagues on the other side of the Atlantic. And if previously, market participants were confident in raising interest rates by at least 25 basis points from the current 4.00% (and perhaps even by 50 basis points), now they have doubts – what if the BoE decides to take a pause to assess the situation and avoid making any mistakes?

At the moment, the majority of experts (50%) are on the side of the dollar, with only 10% voting for the rise of the British currency, while the remaining 40% remain in a wait-and-see position. Among the oscillators on D1, the balance of power is as follows: 85% voted in favor of the greenback (a quarter of them are in the overbought zone) and 15% in favor of the red. Among the trend indicators, the absolute advantage is on the side of the greenback, with 100%. The support levels and zones for the pair are 1.2145, 1.2075-1.2085, 1.2000-1,2025, 1.1960, 1.1900-1.1920, 1.1800-1.1840, 1.1720, and 1.1600. If the pair moves north, it will encounter resistance at levels 1.2200-1.2210, 1.2270, 1.2335, 1.2390-1.2400, 1.2430-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750, and 1.2940.

As for events related to the UK economy, in addition to the BoE meeting, the next week's calendar includes Friday, March 24, when data on retail sales and business activity in the country's service sector will be released.

USD/JPY: Will the Interest Rate Go Even Lower?

The yen is the currency that is absolutely unaffected by the banking crisis in the US and Europe, on the contrary, it adds attractiveness to the Japanese currency as a quiet harbor capable of protecting against financial storms. Not even the statement by the departing governor of the Bank of Japan (BoJ), Haruhiko Kuroda, about the possible further reduction of the interest rate, which is already negative at -0.1%, has discouraged investors. As a result, USD/JPY ended the trading session where it had already been in early February, at the level of 131.80.

As for the nearest prospects, currently, 50% of experts have voted for the pair to move north, 25% have pointed in the opposite direction, and another 25% have refrained from making any forecasts. Among the oscillators on D1, 90% are pointing south (a third of them are signaling oversold), while 10% are looking in the opposite direction. All trend indicators are pointing south. The nearest support level is located in the zone of 131.25, followed by levels and zones of 130.50, 129.70-130.00, 128.00-128.15, and 127.20. Resistance levels and zones are at 132.80-133.20, 134.00-134.35, 135.00-135.35, 135.90-136.00, 137.00, 137.50, and 137.90-138.00.

No significant macro statistics related to Japan's economy are expected to be released next week. However, traders should keep in mind that Tuesday, March 21is a holiday in Japan: the Spring Equinox Day. And, of course, it should not be forgotten that the FOMC meeting of the US Federal Reserve is scheduled for March 22.

CRYPTOCURRENCIES: What's Bad for Banks Is Good for Bitcoin

In our last review, we listed a number of factors that negatively affect the crypto market. Among them are crypto repressions by US authorities, including the Treasury Department, SEC, Federal Reserve, Attorney General, Senate, and even the Biden administration. However, problems with altcoins and even upcoming changes in tax legislation pale in comparison to the crisis in the American banking sector. On March 8, the crypto bank Silvergate announced voluntary liquidation, followed by Silicon Valley Bank (SVB) and Signature Bank, which were actively used by crypto companies as fiat gateways. And last week, European banks were added to the list, as discussed above.

Silvergate suffered due to the debts of the collapsed crypto exchange FTX, while SVB and Signature were sunk by the Federal Reserve's monetary policy, including aggressive interest rate hikes and balance sheet reductions. "The 18th largest bank [SVB] has collapsed. We learned how the record sale of US Treasury bonds led to billions of dollars in unrealized losses in the banking sector. Thus, we received another example that a partial reserve system has creditors, not depositors," commented The Bitcoin Layer on the event. According to FDIC data, just in the last year, unrealized losses of US banks increased from $3 billion to $652 billion.

So, regulators first sent banks to the bottom, and then set about saving them. SVB and Signature have come under the control of the Federal Deposit Insurance Corporation. The latter, along with the Treasury and the Federal Reserve, stated that SVB and Signature Bank depositors will have access to all funds in full. In addition, the Federal Reserve announced the creation of the Bank Term Funding Facility (BTFP) to provide emergency financing to banks that may face similar problems, with $25 billion allocated for this purpose.

Against this background, the author of the bestseller Rich Dad Poor Dad and entrepreneur Robert Kiyosaki once again called for investment in gold, silver, and bitcoin. In his opinion, to save the "sick economy," regulators will print "even more fake money." "Take care of yourself. An emergency landing is ahead," Kiyosaki wrote.

Market analyst Tedtalksmacro called this move by the Fed the beginning of unofficial quantitative easing. And former CEO of BitMEX, Arthur Hayes, was even more categorical: "Get ready for a rapid rally in risky assets. The money printer is on! - he wrote. - Helping depositors of failed banks means injecting money into an economy from which liquidity has only been withdrawn over the course of a year. This is excellent fuel for risky assets."

Recall that at the beginning of March, we saw active outflows from institutional investors, who were scared off by regulators. In just one week, outflows from bitcoin funds amounted to a record $244 million. And now everything has changed: the BTC rate has jumped by more than 30%, and the overall cryptocurrency market capitalization has once again risen above $1 trillion. Market participants have remembered the potential of cryptocurrency as a capital protection tool and that Bitcoin was created precisely to withstand such shocks. Observers draw parallels with the Cypriot crisis of 2013, which highlighted the shortcomings of the fractional reserve system and drew attention to decentralized hedging in opposition to centralized banking.

According to some experts, what happened has been excellent advertising for bitcoin, whose price is expected to soar. However, there are skeptical voices as well. For example, CNBC's Mad Money host Jim Cramer continued to criticize the crypto industry, calling bitcoin a "strange animal." In his opinion, large financial institutions and wealthy investors manipulate cryptocurrencies in secret. "Please don't think everything is happening on its own," Cramer warned the audience, adding that he never believed in bitcoin.

The forecast given by well-known macro analyst and trader Henrik Zeberg also looks bleak. He evaluated the correlation between the level of unemployment in the US, the NAHB housing index, the stock market index, and cryptocurrencies, and noted the scary similarity of the current scenario to the 1929 crisis. According to the expert, all markets were "extremely overheated" and are now approaching an economic collapse that will last for several years. The impending recession may be much more severe than in 2007-2009. According to the analyst, the cryptocurrency market will also suffer greatly, and many digital coins will not withstand the pressure.

Zeberg presented a forecast for the macroeconomic recession based on Elliott wave theory. According to the research, wave 4 may reach its maximum level in early 2024. After that, major financial markets will be doomed to collapse. The specialist emphasized that all attention should be focused on the economic indicators of the third and fourth quarters of 2023, which may become the last "bullish" period of this market cycle.

As of the writing of this review on the evening of March 17, BTC/USD is trading around $27,500. The total market capitalization of the crypto market rose from $0.937 trillion to $1.155 trillion over the week. The Bitcoin fear and greed index increased from 34 to 51 points in seven days and moved from the Fear zone to the Neutral zone.
 

NordFX Analytical Group
 

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NordFX Broker Awarded for Outstanding Performance in Latin America and Asia

Over its 15 years in the financial markets, brokerage firm NordFX has accumulated more than 70 professional awards. In March this year, the company added two prestigious accolades from International Business Magazine to its collection. NordFX was honored as the "Most Reliable Forex Broker LATAM 2023" and the "Best CFD Broker Asia 2023".

International Business Magazine is a respected publication based in the United Arab Emirates, with global recognition and a substantial readership comprising professionals from various industries and regions. In 2019, the magazine was nominated for the esteemed European Digital Media Awards in the "Best News Publication" category. Receiving awards from such a renowned publication reaffirms NordFX's dominant position in areas like Latin America and Asia. The company offers its clients In these regions a comprehensive range of services, adhering to the highest industry standards in the Forex and CFD markets.
 

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Forex and Cryptocurrency Forecast for March 13 - 17, 2023

EUR/USD: USA Labor Market Stops USD

Jerome Powell played on the dollar side last week. Of course, the Fed Chairman knew that markets expected an interest rate increase of 25 basis points (bps) from the next FOMC (Federal Open Market Committee) meeting. But he did not rule out that his organization could take a more decisive step in an effort to curb inflation and raise it by 50 bp on March 22 at once. Moreover, it had been earlier expected that the rate would reach 5.00-5.25% at the peak. Now Powell and his colleagues do not rule out that its maximum value will be 5.50%. (According to Commerzbank strategists, even an increase to 6.00% is possible).

And so, to avoid a shock, the head of the Fed decided to prepare the markets for this in advance. His speech to the US Congress on Tuesday, March 7, was extremely hawkish, as a result of which the DXY Dollar Index updated its 2023 highs, soaring to 105.86, and EUR/USD lost more than 170 points, finding a local bottom at 1.0523. The probability of a 50bp rate hike in March rose to 70% (it was 23-30% a week ago, and the markets estimated it at only 9% a month ago).

However, the dollar could not build on its success, and EUR/USD turned north in the middle of the week. Data from the US labor market helped to lose ground. The number of initial applications for unemployment benefits published on Thursday March 09 amounted to 211K against the expected 195K and 190K a month earlier. This indicator exceeded the 200K mark for the first time since the first half of January and reached its maximum since the end of December 2022. In addition, short-term speculators began to take profits on the USD ahead of the report on the US labor market for February, published on Friday, March 10. And they did the right thing, as the dollar continued to retreat. The report showed that the number of new jobs created outside the agricultural sector (NFP) was 311K, which is more than the forecast of 205K, but significantly less than in January - 503K. Together with an increase in unemployment by 3.6% (forecast 3.4% and 3.4% in January), these data indicate a cooling of the country's economy, which in turn may cool down the hawkish ardor of FOMC members. This was confirmed by the dynamics of EUR/USD, which soared to a height of 1.0700 just a few hours after the publication of the report.

As for the euro area, the macro data looked neutral last week. Thus, the Consumer Price Index (CPI) in Germany, the locomotive of the European economy, remained at the same level and fully met the forecasts - 8.7% in annual terms.

The last chord of the week sounded at 1.0638. And despite the fall of the dollar at the end of the week, 80% of analysts expect it to strengthen in the near future, the remaining 20% have taken a neutral position, not a single vote has been cast for the growth of the euro. Among the oscillators on D1, 25% are red, another 25% are green, and 50% are neutral gray. Among trend indicators, 80% recommend buying, 20% - selling. The nearest support for the pair is located at 1.0600-1.0620, then there are levels and zones 1.5000-1.0530, 1.0440, 1.0375-1.0400, 1.0300 and 1.0220-1.0255. Bulls will meet resistance in the area of 1.0650, 1.0700, 1.0740-1.0760, 1.0800, 1.0865, 1.0930, 1.0985-1.1030.

There will be quite a lot of economic statistics next week. Moreover, it will certainly play a very important role in the decisions of both the Fed and the ECB. Thus, data on consumer inflation (CPI) in the US will be received on Tuesday, March 14. Data on retail sales in this country, as well as the US Producer Price Index (PPI), will be released the next day. The European Central Bank will decide on the euro interest rate on Thursday, March 16, which is expected to be raised by 50 bp., from 2.50% to 3.00%. Of course, the subsequent comments of the ECB management on monetary policy are also of absolute interest to market participants. And finally, the value of CPI in the Eurozone will become known at the very end of the working week, on March 17.

GBP/USD: Volatility Is High, the Result Is Zero


The result of the past five days for GBP/USD, despite the volatility of 310 points, ended up being close to zero. The pair finished the working week at the level of 1.2025, returning to the central zone of the side channel 1.1920-1.2145. The reason for this dynamics is the same as for EUR/USD, since both pairs were actively reacting to what was happening in the US. There were no important macro statistics from the United Kingdom all week until Friday, March 10, when the data on GDP and industrial production for January were released.

The first indicator showed an increase from -0.5% to +0.3% with a forecast of +0.1%, the second one, on the contrary, fell. UK manufacturing output fell from 0.0% to -0.4% in January against the forecast of -0.1%, while total industrial output was -0.3% m/m versus -0.2% and +0.3% expected in December. Thus, the data on GDP added optimism to the bulls on the pound, while the data on industrial production reduced it slightly.

According to Commerzbank economists, the Bank of England (BoE) is unlikely to help the British currency. Recall that the head of the Bank of England (BoE), Andrew Bailey, speaking on Wednesday, March 01, further fogged the issue, saying that the final decision on the prospects for the monetary policy of the British Central Bank has not yet been made, and that the regulator should be flexible in the coming months so as not to scare the markets. And as long as this regulator sticks to its rather cautious stance, unlike the Fed and the ECB, the pound is likely to remain under downward pressure. The Bank of England, instead of actively fighting high inflation, is likely to act as a catch-up, which will lead GBP/USD to further decline.

Experts' median forecast for the near term is similar to the forecast for EUR/USD: 75% of experts vote for the strengthening of the dollar and the fall of GBP/USD, the remaining 25% prefer to abstain from forecasts. Among the oscillators on D1, the balance of power is as follows: 35% vote in favor of greens, another 35% in favor of reds, and 30% in favor of neutral grays. Among the trend indicators, a clear advantage is on the side of the greens: 75% to 25% in their favor. Support levels and zones for the pair are 1.1985-1.2000, 1.1960, 1.1900-1.1925, 1.1840, 1.1800, 1.1720 and 1.1600. When the pair moves north, it will face resistance at the levels 1.2055, 1.2075-1.2085, 1.2145, 1.2185-1.2210, 1.2270, 1.2335, 1.2390-1.2400, 1.2430-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

As for the release of British macro statistics, next week's calendar includes Tuesday, March 14, when data on the unemployment rate and wages in the United Kingdom will be received.

USD/JPY: The Dollar Decides Everything

The meeting of the Bank of Japan (BOJ) was held at the very end of last week, on Friday, March 10, which was chaired for the last time by the former head, Haruhiko Kuroda. It went exactly as expected: the Japanese Central Bank did not change the parameters of its ultra-stimulating monetary policy, the interest rate again remained at the previous negative level of -0.1%.

Haruhiko Kuroda, speaking at his last press conference and commenting on the results of the last meeting of the Central Bank, said that the positive effect of monetary policy easing has significantly exceeded its side effects. At the same time, he noted that the regulator "will not hesitate to continue easing monetary policy if necessary" and that "it is important to continue to ease it in order to stimulate companies to raise wages." Kazuo Uedu, the new CEO of BoJ, is likely to follow his predecessor's precepts. At least, one should not expect any sharp steps from him.

At the moment, the American currency is decisive in this, as in other dollar pairs. After the release of data on the US labor market, the dollar fell to new lows around the world, while futures for US stock indices turned positive. If USD/JPY was trading at 137.90 on Wednesday, March 08, it found the bottom at 134.10 on March 10, and ended the week after a correction at 135.05.

As for the immediate prospects, 75% of experts vote for the pair's movement to the south at the moment, 25% point in the opposite direction. Among the oscillators on D1, 25% point north, 40% look in the opposite direction, and the remaining 35% look east. For trend indicators, 40% point north, and 60% look south. The nearest support level is located at 134.75 zone, followed by levels and zones 134.00-134.35, 133.60, 132.80-133.20, 131.85-132.00, 131.25 130.50, 129.70-130.00.  Levels and resistance zones are 135.15, 136.00-136.30, 136.70-137.10, 137.50, 139.00-139.35, 140.60, 143.75.

Among the events of the upcoming week, we can mention the publication of the Report on the last meeting of the Bank of Japan on Wednesday, March 15. Although, this document is unlikely to make a serious impression on market participants.

CRYPTOCURRENCIES: It's Really Bad. Will it get worse?

Bitcoin continues to be under pressure from an avalanche of bad news. A record $94 million in bullish positions for 2023 was liquidated on Thursday, March 10 alone. Analysts at Santiment are recording massive negative sentiment towards cryptocurrencies. The gloomy mood of players and investors has been influenced by:

1. Liquidation of Silvergate crypto bank. After the close of trading on the New York Stock Exchange on March 8, Silvergate Capital Corp., the American company that manages this bank, announced its intention to curtail its activities and voluntarily liquidate it. Given Silvergate's impressive customer base, this could cause a domino effect similar to last year's.

2. Potential U.S. government sale of $1 billion in bitcoin.

3. Possible tightening of the Fed's monetary policy, which has collapsed the quotes of all risky assets, including stocks and cryptocurrencies.

4. Continued crackdown on crypto exchanges. On March 09, the New York prosecutor's office filed a lawsuit against KuCoin, due to the lack of registration of this exchange in the United States as a securities broker. The fact is that Attorney General Letitia James, as well as SEC Chairman Gary Gensler, consider altcoins to be securities.

5. And finally, as icing on the cake, the proposals of the US President Biden's administration to ban crypto companies from tax maneuvers and to establish a 30% electricity tax for miners. A tax maneuver is a financial transaction when a company, with an unrecorded loss, first sells crypto assets and immediately buys them again, which reduces the amount of tax. The introduction of a 30% tax on electricity can deal a crushing blow not only to American miners, but also to the industry as a whole.

In our opinion, there is plenty of bad news for one week. Now let's try to add at least a few tablespoons of honey to this barrel of tar. According to Credible Crypto experts, at the moment, about 73% of all BTC coins are concentrated in the hands of experienced holders who are used to taking a hit and able to withstand the most severe crypto frosts. And Santiment reminds that such a total negative led earlier to a noticeable upward rebound in prices.

Eight Global CEO Michael Van De Poppe noted the importance of the next few weeks for bitcoin. “Capitalization could drop to $860 million, dragging the entire market down with it,” he warned. According to the expert's forecast, the price of bitcoin may fall to $19,700. Recall that he said just recently that in the worst case, the bottom could be even lower, at the level of $18,000, after which the coin will go up and could reach $40,000 this year.

Felix Zulauf, founder of hedge fund Zulauf Consulting, has suggested that bitcoin will head into a clear bull run sometime in late spring. The expert does not rule out that the asset could reach $100,000 on a sharp uptrend. Despite the bearish dynamics, Credible Crypto experts also remain optimistic about the medium-term prospects for the flagship crypto asset. They agree with Felix Zulauf that bitcoin may reach its all-time high this year. However, before a sustainable bull trend begins, the asset, in their opinion, will face several obstacles. (We have already listed five of them above)

Arthur Hayes, former CEO and co-founder of the BitMEX crypto exchange, believes that the bitcoin rally will start at a time when the global economy is in an oil crisis. In his opinion, a sharp increase in hydrocarbon prices will create conditions for the growth of digital assets and, first of all, bitcoin.

Hayes's logic is as follows: against the background of geopolitical tensions in the world, demand for energy resources will increase, as oil exporters are likely to reduce production. In this situation, the United States, as a leading economic power, will have to increase its own oil production. The Fed will need to ease the monetary rate to stimulate business activity in the energy sector. As soon as the regulator starts lowering interest rates, capital will return to risky assets, including cryptocurrencies. In addition, the former head of BitMEX recalled that the limited supply of BTC will also contribute to its growth, as the US dollar will lose ground.

It is appropriate here to cite data from the analytical platform WooBull, according to which the inflation rate of bitcoin is now at least three times lower than that of the US dollar. This allows BTC to act as a possible hedge against capital depreciation and economic uncertainty. Statistics show that the inflation rate of the first cryptocurrency has been steadily declining since its inception in 2009 and amounted to 1.79% as of March 04. At the same time, the same indicator for USD reached 6.4% in 2023, which is 3.57 times higher than that of BTC.

The decrease in bitcoin inflation is due to the asset's deflationary model, supported by halvings, which reduce the speed of coin mining and halve miners' rewards. Experts also believe that this indicator remains low due to the decentralization of BTC, which avoids most of the political and economic risks typical of the US dollar, whose inflation rate, on the contrary, will increase. This is primarily due to an excessive increase in the money supply, a decrease in demand and/or a reduction in production.

In the meantime, at the time of writing the review (March 10, 23:00 NordFX server time), BTC/USD is trading in the $20,070 zone. (the report on employment in the US has slightly supported the quotes). The total capitalization of the crypto market for the week fell below the psychologically important level of $1 trillion and is $0.937 trillion ($1.024 trillion a week ago). The Crypto Fear & Greed Index fell from 50 to 34 points in a week and moved from the Neutral zone to the Fear zone.

The forecast made by well-known cryptanalyst and host of DataDash YouTube channel Nicholas Merten causes fear as well. He did not rule out a new major drop in ethereum. According to the specialist, if we take into account previous bear markets when forecasting, ETH could fall by more than 90% from its historical high, that is, find itself at the level of several hundred dollars. “ETH/USD has a long way to go. “We're only 67% from the record,” Merten says. “And if we see again what we had in previous bear markets, say, a 92 percent correction or a 94 percent correction, the price of ETH will drop to several hundred dollars. The difference is huge, from $870 to about $500.”

We usually try to end our review on an optimistic note. But what if after a long crypto winter, instead of spring, we'll get another harsh winter? Although, let's still hope that the crypto calendar will be directly correlated with the regular calendar. And it is now the first month of spring, which should be followed by a warm sunny summer.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for March 06 - 10, 2023

EUR/USD: Pause in the 1.0600 Zone


On Thursday, March 02, the DXY dollar index broke again through the bar at 105.00 points but could not stay there. As usual, the dollar was supported by an increase in US government bond yields. The yield on 10-year securities rose to its high since November 10 at 4.09%, the yield on 2-year securities rose to 4.91% and updated its maximum since 2007. The revision of US labor market statistics in Q4 2022 and the ISM Manufacturing Business Activity Index (PMI) in the country's manufacturing sector also supported the US currency. On the other hand, the dollar was pressured by the yuan, which is getting stronger against the backdrop of macro-economic statistics from China. The PMI manufacturing index in China was the highest since 2012. Activity in the service sector has also increased, and the Chinese real estate market has stabilized.

However, the main factor determining the dynamics of the USD is still the expectation of the Fed's further actions in an attempt to curb inflation. Since the Consumer Price Index (CPI) rose more than expected in January, reaching 6.4%, market participants started talking about the fact that the regulator may raise the rate not by 25 basis points (bp) in March, but immediately by 50. (At the moment, CME's FedWatch tool estimates the probability of such a move at 23%).

This forecast was supported by hawkish comments by some FOMC (Federal Open Market Committee) members. The head of the Atlanta Fed, Rafael Bostic, said that the key interest rate should eventually be raised to 5.00-5.25% and kept at this level until 2024. Minneapolis Fed chief Neil Kashkari has yet to decide whether he will vote for a 25bp or 50bp rate hike in March, but hinted that the Fed's own dot plot could be raised. At the same time, both officials stressed the need to fight inflation, emphasizing that a strong labor market and the US economy are able to withstand the pressure caused by the aggressive monetary policy of the Central Bank. However, Rafael Bostic then softened his hawkish mood and said that the regulator may suspend the rate hike cycle in the summer. After that, the dollar slightly retreated from its gains.

Some analysts do not rule out that the peak USD rate will reach 5.5% in September, and maybe even 6.0%. There is no question of reducing it at the end of the year at all. And these expectations play on the side of the US currency, which is confirmed by the futures market. But when talking about EUR/USD, one cannot focus only on the actions of the Fed. They don't sleep on the other side of the Atlantic either. Inflation data for a number of European countries suggest that the ECB will also be forced to maintain a hawkish position for longer than previously expected. The opening of the Chinese economy could put pressure not only on the US, but also on Europe, making it difficult for both regulators to curb inflation. Therefore, market participants expect further tightening of monetary policy on the part of the European Central Bank, which currently keeps the pair in the 1.0600 area.

Last week's finish was at 1.0632. At the time of writing this review (the evening of March 03), the analysts' forecast looks as uncertain as the flat quotes of EUR/USD: 50% of them have taken a neutral position, 30% of experts are counting on further strengthening of the dollar, and the remaining 20% side with the euro. Among the oscillators on D1, 50% are colored red, 15% are green and 35% are neutral gray. Among trend indicators, 35% recommend selling, 65% - buying. The nearest support for the pair is located at 1.0575-1.0605, then there are levels and zones 1.5000-1.0530, 1.0440, 1.0375-1.0400, 1.0300 and 1.0220-1.0255. Bulls will meet resistance in the area of 1.0680-1.0710, 1.0740-1.0760, 1.0800, 1.0865, 1.0930, 1.0985-1.1030.

There will be quite a lot of economic statistics and events in the coming week. Data on retail sales in the Eurozone will be released on Monday, March 06. Fed Chairman Jerome Powell will address the US Congress on Tuesday and Wednesday. Also, there will be data on retail sales in Germany, Eurozone GDP and employment in the US on Wednesday, March 08. The number of initial claims for unemployment benefits in the US and the inflation rate (CPI) in China will be known on Thursday. Friday 10 March will show what is happening with consumer prices in Germany. We are traditionally waiting for a portion of important statistics from the US labor market on the same day, including the unemployment rate and the number of new jobs created outside the agricultural sector (NFP). 

GBP/USD: Sentiment Color Is Red

GBP/USD has been in a sideways channel for the second week in a row, although it has demonstrated rather high volatility. The range of its fluctuations (1.1942-1.2147) exceeded 200 points, and the last chord of the week was placed in the middle of this channel, at the level of 1.2040. We described above what gives strength to the dollar. The British currency received some support from information received last week that an agreement was reached between the UK and the EU on the Northern Ireland Protocol. Trade disputes have now been resolved, and while this is positive for the UK economy as a whole, many experts believe that the positive effect of this agreement for the pound will be short-term.

Quotes of the pair are still determined by the actions of the Central Banks. And the head of the Bank of England (BoE), Andrew Bailey, speaking on Wednesday, March 01, further fogged the issue., saying that the final decision on the prospects for the monetary policy of the British Central Bank has not yet been made, and that the regulator should be flexible in the coming months so as not to scare the markets.

Experts' median forecast for the near future is as follows: 70% of experts vote for the further weakening of the pound and the fall of GBP/USD, only 10% expect the pair to grow, and 20% prefer to refrain from forecasts. Among the trend indicators on D1, the balance of power is 65% to 35% in favor of the greens. The picture is different among oscillators. The reds have a convincing advantage here, 70%, 10% side with the greens, and 20% have taken a neutral position. Support levels and zones for the pair are 1.1985-1.2025, 1.1960, 1.1900-1.1925, 1.1840, 1.1800, 1.1720 and 1.1600. When the pair moves north, it will face resistance at the levels 1.2055, 1.2075-1.2085, 1.2145, 1.2185-1.2210, 1.2270, 1.2335, 1.2390-1.2400, 1.2430-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

As for next week's economic calendar, no important macro data from the UK is expected until Friday March 10, when UK GDP and industrial production data for January are released.

USD/JPY: Patience and Only Patience

USD/JPY rose to 137.10 on Thursday, March 02 after the release of US economic data. This is the highest level since December 20, 2022. The yen was opposed by the divergence between Fed and BoJ politicians, as well as the yield spread between 10-year US and Japanese bonds, which rose to its highs in March since November 2022.

Another blow to the Japanese currency was dealt by Kazuo Ueda, who was elected as the new head of the Bank of Japan (BoJ). His position only exacerbated the disappointment of those who hoped for major changes in the regulator's monetary policy. Investors have failed to pick up a clear "hawkish" signal in his speeches, which would have spurred the resumption of speculative demand for the yen, which was already weakening against the background of the growth of DXY and the rise in yields of 10-year treasuries.

USD/JPY met the beginning of February at the level of 130.08, and now it ends at 135.84 on March 03. However, a number of experts do not lose hope that the Japanese currency will strengthen. “Since the dollar peaked at the end of September, the yen became the second best-performing G10 currency by the end of January,” economists at MUFG Bank wrote. - Some backtracking in this context is quite understandable. But we believe that inflation will decline and yields around the world are close to peaks, which indicates a recovery in the yen, especially since the policy of the Bank of Japan will also change.”

Strategists from HSBC, the largest financial conglomerate, echo their colleagues. “We will remain yen bulls in the medium term,” their forecast sounds, "but we suspect that it will take some patience for the currency to gain independent strength thanks to the Bank of Japan. For now, USD/JPY is likely to remain influenced by developments in the US, where we see the balance of risk tilting towards a weaker dollar.”

The next meeting of the Bank of Japan will take place on Friday March 10. It will last be chaired by the former head, Haruhiko Kuroda, after which he will hand the reins over to Kazuo Ueda. Analysts at JPMorgan (like most others) do not expect BoJ policy to change or signal correction at this meeting. It is unlikely that Kuroda will slam the door loudly when he leaves; most likely, the interest rate will remain at the same negative level of -0.1%. Therefore, yen supporters can only follow HSBC's advice and be patient.

So, as already mentioned, a number of experts expect a serious strengthening of the Japanese currency in the future. In addition to MUFG Bank and HSBC strategists listed above, BNP Paribas Research has a similar position, while Danske Bank economists predict that USD/JPY rate will fall to the level of 125.00 in three months. In their opinion, in the event of a tightening of monetary policy, positive yields in Japan could stimulate the repatriation of funds by local investors, as a result of which USD/JPY will be around 121.00 by the end of 2023. But these are still rather shaky assumptions, although 60% of analysts agree with them. As for the immediate prospects, only 10% of experts are counting on the movement of the pair to the south at the moment, 45% are looking in the opposite direction, and the remaining 45% stay neutral. 

Among the oscillators on D1, 85% point north, the remaining 15% look in the opposite direction. For trend indicators, 65% look north and 35% look south. The nearest support level is located in the zone 134.90-135.20, followed by the levels and zones 134.40, 134.00, 133.60, 132.80-133.20, 131.85-132.00, 131.25 130.50, 129.70-130.00.  Levels and resistance zones are 136.00-136.30, 136.70-137.10, 137.50, 139.00-139.35, 140.60, 143.75.

Among the events of the coming week, in addition to the above-mentioned meeting of the Bank of Japan, the calendar includes Thursday, March 9, when the country's GDP data for Q4 2022 will be published.

CRYPTOCURRENCIES: Bitcoin Awaiting a New Catalyst

The first sentence of the previous review was: “Bitcoin is under pressure, but it is holding up”. Starting the current review, we can only repeat: bitcoin is under pressure, but it is holding up. Let's talk about global news now. The good news is that the leading regulators will not completely ban cryptocurrencies. The bad news is that regulatory pressure on the industry will continue to grow.

The regulation of the crypto market was one of the topics that finance ministers and central bank representatives discussed at the G20 meeting. As a result, US Treasury Secretary Janet Yellen said that regulation of the crypto industry is important, while Washington is not considering a complete ban. “It is very important to create a reliable regulatory framework. And we are working [on this] with other governments,” she said in an interview with Reuters. IMF Managing Director Kristalina Georgieva agrees with her colleague: her organization also advocates for adequate regulation of digital assets and against their complete ban.

It should be noted here that the increase in regulatory control, while forcing a number of players out of their comfort zone, could ultimately have a positive impact on the industry, relieving shocks like the collapse of FTX. In addition, clear rules will attract a significant number of new institutional investors, raising the capitalization of the crypto market to unprecedented heights.

But this is in the future. In the present, the “herd” of whales (more than 1,000 BTC) continues to decline, reaching a three-year low of 1,663 individuals. There were almost 2,500 of them at its peak in February 2021. And this despite the fact that the crypto market showed a much better result at the beginning of 2023 than most of its participants and experts expected. These are the findings of Bank of America researchers.

At the moment, bitcoin quotes are supported mainly by small and medium-sized investors. According to analytics company Glassnode, the number of wallets with a volume of 1 BTC is constantly updating highs, approaching 1 million. The 30-day capital inflow to the market exceeded the outflow for the first time in 9 months and returned to the "green" zone. The cumulative net realized market value position also turned positive for the first time since April 2022 (the metric has been negative for the past nine months). Long-term holders have also updated their four-month high in savings.

By the way, according to Glassnode analysts, the drop in the number of whale wallets can be considered a positive factor. This means that the asset has become more distributed and less concentrated among a handful of large holders. This option is preferable for the entire ecosystem, as it eliminates the possibility of market manipulation by several players.

Another positive factor, according to some experts, is the weakening of the correlation of cryptocurrencies with US stocks and macroeconomic indicators. The flagship cryptocurrency was moving in a narrow range of $23,000-24,000 for almost the entire past week, and it sank a little only on Friday, March 03. Perhaps this was facilitated by the news that another representative of the crypto industry, Silvergate Bank from California (USA), was on the verge of bankruptcy.

According to analysts at the investment company Bernstein, the correlation of the first cryptocurrency with the Nasdaq Composite index has fallen from 0.94 to 0.58 since early February. According to them, the market is balancing between bulls and bears, "waiting for further catalysts", and its susceptibility to events in the world of traditional finance "is not the same as before."

We could also observe a weakening and then strengthening of the correlation with the stock market last August-September. And it is quite possible that the current “decoupling” of BTC from stock indices is a temporary phenomenon. It is clear that the main concerns for all risky assets are related to the continued increase in the key rate by the US Federal Reserve, which could become a catalyst for the resumption of the bearish trend of BTC/USD.

The Eight CEO Michael van de Poppe, a well-known trader, believes that bitcoin is currently the most undervalued asset. He has released a video review in which he predicts the growth of the coin to $40,000 this year. At the same time, both worsening macroeconomic data and the forecast for the Fed's rate failed to dampen Van de Poppe's optimism. From his point of view, a pronounced bullish divergence on the weekly chart indicates that we have already reached the bottom. What is happening now is just a bounce off the 200-week moving average and consolidating. According to the trader, a sideways movement is most likely at this stage. In the worst-case scenario, BTC/USD will fall to the low of the $18,000 range, and this fall will be a great investment opportunity.

According to Van de Poppe, there is no recession at the moment, but it may begin due to the collapse of the debt market and the real estate market. But before that happens, bitcoin could rise to $40,000, as the crisis usually unfolds 6-12 months after the Fed's significant rate hike. The signal for the start of a new bull rally could be either the lifting of the mining ban in China, or the adoption of cryptocurrency in Hong Kong.

Global financial disaster is also predicted by Robert Kiyosaki, author of a number of books on investing, including the bestseller Rich Dad Poor Dad. He has long been a critic of the Fed's monetary policy and has expressed concern about the devaluation of the dollar. And now the economics writer has made a bold statement that, in his opinion, the fake dollar is leading to the decline of the American empire. This stance of Kiyosaki has drawn approval from the crypto community as it shows the benefits of bitcoin. Experts note that digital assets such as BTC, unlike fiat currencies, are not subject to inflationary pressure, since their supply is limited and predetermined by appropriate algorithms.

Recall that Kiyosaki has recently predicted that the bitcoin rate will rise to $500,000 by 2025. “A giant crash is coming. Depression is possible. The Fed has been forced to print billions in counterfeit money. Gold at $5,000, silver at $500, and bitcoin at $500,000 by 2025,” he wrote. And he added that gold and silver are the money of the gods, and bitcoin is like a dollar for ordinary people.

Matt Hougan, chief investment officer at Bitwise, said in a recent interview that he is “epically optimistic for the next three years.” In his opinion, there will be a massive adoption of cryptocurrency in 2023-2025 and its prices will grow. “This bull market cycle is going to be the biggest cycle in terms of user adoption, in terms of the cumulative increase in market capitalization, in terms of just about every other thing we care about,” the financier says. “But it won’t happen perfectly up and to the right.” Also, “I'm actually optimistic about regulation,” Matt Hougan added.

Apple co-founder Steve Wozniak was also bullish last week. In his opinion, the main cryptocurrency has a huge potential and will increase in value in the coming years, reaching $100,000.

In the meantime, at the time of writing this review (Friday evening, March 03), BTC/USD is trading in the $22,250 zone. The total capitalization of the crypto market is $1.024 trillion ($1.059 trillion a week ago). The Crypto Fear & Greed Index fell from 53 to 50 points in a week and is in the very center of the Neutral zone.

And finally, news that can be attributed to our crypto life hacks section. It concerns those who do not like the regulatory press, which we talked about at the beginning of the review. So, it became known that the government of Ras Al Khaimah (RAK), one of the UAE's emirates, plans to create a free zone for companies in the digital asset industry. According to the announcement, RAK Digital Assets Oasis will become a hub for unregulated industry activity, with applications open as early as Q2 2023.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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February 2023 Results: Euro and Gold Bring Tens of Thousands of Dollars in Profits to NordFX Traders

The brokerage firm NordFX has released the results of its clients' trading performance for February 2023. In addition, the company evaluated its social trading services, PAMM and CopyTrading, as well as the profits obtained by its IB partners.

The top spot in the ranking of the most successful traders was taken by a client from East Asia, account number 1677XXX, who earned a profit of 49,130 USD on trades, with the majority conducted on EUR/USD and USD/CHF pairs. The second place belongs to the owner of account number 1597XXX from South Asia, who earned 37,244 USD in a month, with the source of their earnings coming from operations with gold (XAU/USD).

The XAU/USD currency pair allows NordFX traders to occupy positions in the top three more often than any other pair. This time, thanks to this precious metal, not only the second but also the third position on the podium of honour went to a client from South Asia, account number 1678XXX, whose profit in February was 23,994 USD. It is worth noting that this trader also showed an impressive result on their other account (number 1624XXX), earning almost 18,000 USD in profit. Therefore, in total, they may well switch places with their compatriot in second and third place in the top three.

In passive investment services:

- In CopyTrading, the signal provider KennyFXPRO - Prismo 2K continues to increase profits and delight fans. In 665 days, it has increased profits by 310%. However, despite its relative stability, it should be noted that this provider suffered a serious setback last November, with the maximum drawdown on this signal approaching 67%. This can be considered an extraordinary situation, but it is always necessary to keep in mind that trading in financial markets is a risky activity, and no one is immune to such events.
Fans of algorithmic trading may be interested in a startup called ATFOREXACADEMY ALGO 1. In just 68 days, this signal showed a return of 171%, although its drawdown was not small, 38%.
- In the PAMM service, the two leading accounts, which suffered significant losses last November, continue to recover. To the credit of both managers, they did not allow their deposits to be completely wiped out, closed losing positions, and now, albeit very cautiously, are moving forward again. The profit for KennyFXPRO-The Multi 3000 EA at the moment is 81%, and for TranquilityFX-The Genesis v3 it is 50%. The drawdown, except for that fateful November, looks quite moderate and does not exceed 20%.

Among NordFX's IB partners, representatives from Asian regions made it into the top three as well:
- The largest commission of 5,827 USD was credited to a partner from South Asia with account number 434XXX.
- Next is a partner from West Asia with account number 1645XXX, who received 5,684 USD.
- Finally, another partner from West Asia with account number 1652XXX closes the top three leaders, receiving 5,337 USD as compensation.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Mega Super Lottery: NordFX to Give Away Another $100,000 to Traders in 2023

On March 1 of this year, broker company NordFX launched another Mega Super Lottery for its clients. The lottery will run until the end of 2023 and will offer a variety of cash prizes ranging from $250 to $5000, with a total prize pool of $100,000.

The slogan "Your 202+3 Chances to Win in 2023" was chosen for the lottery because winners will receive 202 prizes, including three super prizes of $5000 each, in addition to smaller prizes. The total prize pool of $100,000 will be divided into three parts: $40,000 will be given away in the first and second draws, and $60,000 in the third, New Year's draw.

In 2021 and 2022, NordFX clients had already won $200,000 through the lottery, and the participation terms lottery remain the same for the 2023. To become a participant, clients simply need a NordFX Pro account (or to register and open a new account), deposit at least $200, and start trading.

Clients who trade just two lots in Forex currency pairs or gold (or four lots in silver) will receive a virtual lottery ticket. There is no limit to the number of tickets each participant can receive. The more deposits and the more actively clients trade, the more lottery tickets they will have and the greater their chances of winning a prize.

The chances of winning also depend on the date of receiving the lottery ticket. Tickets awarded from March 1 to June 30 will be entered into the first draw, tickets awarded from March 1 to September 30 will be entered into the second draw, and tickets awarded from March 1 to December 31, 2023, will be entered into the third, New Year's draw. Tickets received earlier will have a chance to participate in all three draws, which increases the probability of winning.

It's worth noting that trading experience and success do not affect a client's chances of winning. The draw is conducted with a random numbers’ generator, so both professional traders and beginners have an equal chance of winning.

Each draw is conducted online and recorded, and anyone with internet access can monitor it from anywhere in the world. The correctness of ticket awards can be checked on NordFX's official website, where clients can also read the detailed rules for the 2023 Lottery.

Finally, it's important to note that lottery winners receive their winnings as real money, which they can use for trading or withdraw without restrictions.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for February 27 - March 3, 2023

EUR/USD: FOMC Protocol Strengthens the Dollar


Macroeconomic statistics in both the US and the Eurozone look mixed. In both regions, inflation is slowing down (which is good), but GDP growth is also decreasing (which is bad for the economy). According to the US Department of Commerce, the pace of consumer spending growth in the country for Q4 was +1.4% after +2.3% in Q3 (forecasted at +2.1%). The US GDP growth rate on an annual basis, according to preliminary estimates, will be lower than expected, +2.7% (forecast and previous value +2.9%). However, despite this, labour market statistics look positive enough. The number of initial claims for unemployment benefits, forecasted at 200K, actually decreased from 195K to 192K. According to final data from Eurostat, inflation in the Eurozone slowed down to +8.6% YoY in January (+9.2% a month earlier). Things are becoming more difficult in Germany, the main locomotive of the European economy. According to January data, the annual inflation rate was +9.2% compared to +9.6% in December, but at the same time, the country's GDP also went down, with a decline of -0.4% (forecast and previous value -0.2%). The very fresh February CPI data did not please either, showing an increase from +8.1% to +8.7%.

Against this backdrop, market sentiment remains in favour of the US dollar. This is primarily due to the Federal Open Market Committee's (FOMC) meeting minutes, which were published on Wednesday, February 22 by the US Federal Reserve. The minutes did not bring any surprises. However, market participants saw once again that the regulator is not going to stop its fight against inflation.

United Overseas Bank (UOB) summarized the main conclusions from the minutes as follows: 1) Despite progress in the fight against inflation, it remains significantly above the target level of 2%. 2) All Committee members agreed that achieving inflation targets will require more interest rate hikes and keeping it at a high level until the Fed is confident that inflation is sustainably going down. 3) Although the FOMC voted in February to raise the rate by 25 basis points (bps), several participants wanted it to be increased by 50 bps. 4) The Fed is still more concerned about inflation than slowing economic growth.

US Treasury Secretary Janet Yellen confirmed these conclusions. She stated at the G20 finance ministers and central bank governors meeting on Friday, February 24 that "inflation is coming down, measured on a 12-month basis, but core inflation is still above 2%". According to Janet Yellen, a "soft landing" for the economy without a recession is possible thanks to the strong labour market and strong US balances.

All of the above has led to the US dollar index, DXY, continuing its rise, reaching a local high of 105.26 points, while EUR/USD ended the workweek at the level of 1.0546 (week low at 1.0535).

Most likely, the main factor determining the dynamics of the dollar until the next FOMC meeting on March 21-22 will be speculations on how far the regulator is willing to go in its "crusade" against inflation. According to UOB's forecast, the rate may be raised by 25 bps in March and May, ultimately reaching 5.25%, and remain at this level until the end of the year. According to some other estimates, the peak federal funds rate by July could be 5.38%.

According to specialists at ING, the largest banking group in the Netherlands, February and March are seasonally strong months for the dollar, and the rate of 4.50% for overnight deposits may still slightly support the dollar. However, according to their colleagues at Commerzbank, it will become increasingly difficult for the US currency to strengthen against the euro. Much has already been priced in, and there are no strong new drivers in sight. Especially since the ECB is not standing still in tightening its monetary policy. The final data on consumer prices in the Eurozone, which were revised upwards to 5.3% in the core index, published on February 23, will be the next stimulus for such QT.

At the time of writing this review (evening of February 24), 40% of analysts expect further strengthening of the dollar (half as many as a week ago), 50% expect a correction of EUR/USD to the north, and the remaining 10% have taken a neutral position.

All 100% of D1 oscillators are painted red, although a quarter of them are signalling the pair is oversold. Among trend indicators, 75% recommend selling and 25% buying. The nearest support for the pair is located in the zone of 1.5000-1.0525, then come levels and zones of 1.0440 and 1.0370-1.0400, 1.0300, 1.0220-1.0255. Bulls will encounter resistance in the region of 1.0560-1.0575, 1.0600-1.0620, 1.0680-1.0710, 1.0745-1.0760, 1.0800, 1.0865.

Events of the upcoming week include the publication of data on orders for capital goods and durable goods in the US on Monday, February 27. Wednesday, the first day of March, will bring a large volume of macro statistics from Germany. This includes the Harmonized Consumer Prices Index (CPI), the Purchasing Managers' Index (PMI) in the manufacturing sector, as well as the change in the number of unemployed in the country. In addition, the value of the PMI in the US manufacturing sector will be announced on this day. We are expecting the February CPI for the Eurozone, the ECB's statement on monetary policy, and data on unemployment in the US on Thursday, March 2. And there will be another portion of American statistics, including the Purchasing Managers' Index (PMI) in the service sector, at the very end of the workweek.

GBP/USD: Business Activity Grows, but the Pound Falls

The British pound is struggling to resist the advance of the dollar. Despite regular counterattacks, it is retreating step by step. Starting the week at 1.2040, GBP/USD reached a local peak at 1.2147, but then went down and ended the five-day period at 1.1942.

It is worth noting that the UK economy managed to avoid a recession at the end of 2022, and the data on business activity in the United Kingdom, published on Tuesday, February 21, is quite optimistic. The Composite PMI Index, with a forecast of 49.0, should grow from 48.5 to 53.0 points over the month. However, these are only preliminary data, with the final ones becoming available on March 1 and 3. At the same time, the confidence of British consumers is lower than during the financial crisis, the COVID-19 pandemic, and the recessions of the 1980s and 1990s.

Although inflation in the country is decreasing, it remains in double digits and is five times higher than the Bank of England's target rate. (CPI fell to +10.1% in January, with a forecast of +10.3%, and +10.5% in December). Inflation is being kept high in part due to the labour market, and there is currently no reason to believe that wage growth in the UK is slowing down.

The market expects that the Bank of England, like the Federal Reserve, will raise the key interest rate twice by 25 basis points in March and April, bringing it to a peak of 4.5%. However, many in the BoE leadership are very concerned that a significant increase in rates could overly slow down the economy. Therefore, the regulator's monetary policy, which is already ambiguous, could be adjusted at any time.

As for the median forecast of experts, 45% of them vote for further weakening of the pound, 25% expect GBP/USD to rise, and 30% prefer to refrain from making predictions. Among the trend indicators on D1, the balance of power is 85% to 15% in favour of the red. Among the oscillators, the red has a 100% advantage, 15% of which are in the oversold zone. The support levels and zones for the pair are 1.1900-1.1915, 1.1840, 1.1800, 1.1720, and 1.1600. If the pair moves north, it will face resistance at levels 1.1960, 1.1990-1.2025, 1.2075-1.2085, 1.2145, 1.2185-1.2210, 1.2270, 1.2335, 1.2390-1.2400, 1.2430-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750, and 1.2940.

As for the economy of the United Kingdom, in addition to the final data on business activity (PMI) in the UK, which will be released on March 1 and 3, we can note the speech of the Governor of the Bank of England, Andrew Bailey, scheduled for Wednesday, March 1.

USD/JPY: Hopes for QT Are Weakening, but Still Remain

"It seems that the appointment of academic Kadsuo Wada as the new head of the Bank of Japan (BoJ) has not benefited the Japanese currency," we wrote in our previous review. And now, looking at the USD/JPY chart, we can only confirm this statement. In addition to the strengthening dollar, another blow to the yen was dealt by Kadsuo Wada himself. His speech on Friday, February 24, helped the pair to rise from the level of 134.04 to a height of 136.41. The comments of the future head of the central bank, who spoke in the lower house of the Japanese Parliament, in general corresponded to the current BoJ policy, and only exacerbated the disappointment of those who hoped for significant changes in the regulator's monetary policy. Investors could not discern in these comments a clear "hawkish" signal that would boost the resumption of speculative demand for the yen, which was already weakening against the backdrop of the rise of the DXY and the increase in the yield of 10-year treasuries. It should be reminded that there is a direct correlation between USD/JPY and U.S. Treasury bills. If the yield of securities rises, then the dollar rises against the Japanese yen.

We already wrote a week ago that some experts expect a serious strengthening of the Japanese currency in the future. For example, economists at Danske Bank predict that the USD/JPY rate will fall and reach the level of 125.00 in three months. BNP Paribas Research strategists hold a similar position. According to their forecasts, in the event of a tightening of monetary policy, positive yields in Japan may stimulate the repatriation of funds by local investors, resulting in USD/JPY falling to 121.00 by the end of 2023. But all of these are still quite shaky assumptions, although 75% of analysts share them. As for the near-term prospects, currently only 35% of experts expect a southward movement of the pair, while an equal number look in the opposite direction, and the remaining 20% remain neutral. Among the oscillators on the D1 chart, 100% indicate a northward movement (15% of which are in the overbought zone). Among the trend indicators, 75% point to the north and 25% to the south. The nearest support level is located in the 135.90 zone, followed by levels and zones of 134.90-135.15, 134.40, 134.00, 133.60, 132.80-133.20, 131.85-132.00, 131.25, 130.50, 129.70-130.00. Resistance levels and zones are at 136.70, 136.00, 137.50, 139.00-139.35, 140.60, 143.75.

No important macroeconomic statistics regarding the state of the Japanese economy are expected next week. However, Kadsuo Wada will give another speech on Monday, February 27, but it is unlikely to contain anything new and revolutionary.

CRYPTOCURRENCIES: Bitcoin Is Under Pressure, but It Doesn't Give Up. Not yet

Regarding the past week, we can say this: bitcoin is under pressure, but it is holding up. Among the main pressure factors, we can name the financial report of the Coinbase exchange for Q4 2022 and the strengthening of the dollar. Coinbase's revenue plummeted by 75% in the last quarter of last year, which was unusually difficult for the cryptocurrency market. The reason for such a collapse is clear: customer outflows due to a series of scandals and bankruptcies of major and not-so-major industry players. As a result, Coinbase's losses amounted to $2.46 per share. (For comparison, the profit per share of this crypto giant was $3.32 a year ago). It is unknown whether Coinbase will explode like FTX. But in any case, investors should not forget about the risks associated with this market.
As for the second pressure factor, it's all about the Federal Reserve System (FRS) of the United States, as always. Increased market expectations regarding the interest rate have strengthened the quoted currency in BTC/USD and, accordingly, weakened its base part. And it should be noted that bitcoin has shown itself to be a stronger asset in this situation than stock indices, with which it usually correlates. Thus, the S&P500 returned to mid-January values, and the Dow Jones even fell to December values, while the flagship cryptocurrency has grown by 40% since January 1, 2023.

Debate over the future of digital assets continues. Vice Chairman of legendary holding company Berkshire Hathaway and Warren Buffet's right-hand man, Charlie Munger, still calls on US authorities to completely ban cryptocurrencies. The 99-year-old billionaire called anyone who disagrees with him "idiots" and added, "I'm not proud of my country for allowing this filth. It's just ridiculous that anyone buys this [digital assets]. It's no good. It's crazy. It only does harm." Kevin O’Leary, investor, journalist, and host of the popular show Shark Tank recalled this as well. He said that "American financial regulators are tired" of watching waves of bankruptcies in the cryptocurrency industry. "These guys in Washington are very angry. The FTX collapse woke up the bear. It woke up in a rage. Senators are really tired of having to gather every six months when another major cryptocurrency firm collapses. They're tired of the industry being unregulated and anyone being able to issue their absolutely useless tokens," said the Canadian entrepreneur. His conclusion was much softer than Charles Munger's choking calls. O'Leary called on all industry participants to cooperate with the SEC and other government agencies and said that regulated companies would attract significantly more investment than their unregulated competitors.

Bitcoin quotes are mainly supported by small and medium investors at the moment. According to the analytics company Glassnode, the number of wallets with a volume of at least 1 BTC is constantly reaching new highs. Their number has increased by 20% over the past year, approaching 982,000. As for addresses with a balance of 1000 BTC or more, it has fallen from its peak in February 2021 (about 2,500) to levels in August 2019. And now (as of 20.02.2023) there are only 2,024 such whales. However, the number of addresses with a balance of 10,000 BTC or more (worth $240 million at current prices) has consistently remained near peak levels, corresponding to November 2022 and October 2018 values. Currently, there are 115 such "mega-whale" wallets.

According to co-founder of the Gemini crypto exchange Cameron Winklevoss, Asian investors may push bitcoin prices up. Winklevoss believes that the next phase of price growth will occur in the East, and the US will have to adapt to the new conditions. According to Chainalysis, the Asia-Pacific region already ranks third in the world in terms of cryptocurrency investment volume.

Several experts believe that it is crucial for the market for bitcoin to maintain levels above the intermediate resistance at $24,500. This will allow the coin to rise to $25,000 first and then to the $29,000-30,000 range. According to analysts at Matrix, the rise to $29,000 is possible by the summer, and BTC could reach $45,000 by the end of this year. However, they note that this will happen only if the pace of consumer inflation in the US continues to slow. Matrix analysts also point out that the cryptocurrency's price has already risen above $25,000 several times in recent days, despite negative news about tightening cryptocurrency regulations in the US and Europe, which they see as a positive sign.

Speaking of their forecast, Matrix also refers to the "January effect": a price success in the first month often determines the movement of the main cryptocurrency price for the entire year. In addition, experts note that historically, 12-15 months before the next halving, bitcoin's price tests its minimums. This time, such a period fell on December 2022 - March 2023.

Well-known analyst Plan B also suggests a possible rally, estimating that bitcoin may test the $42,000 level in March. As of the time of writing (Friday evening, February 24), BTC/USD is trading around $23,100. The total market capitalization of the crypto market is $1.059 trillion ($1.106 trillion a week ago). The Crypto Fear & Greed Index fell from 61 to 53 points over the week and returned from the Greed zone to the Neutral zone.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for February 20 - 24, 2023

EUR/USD: The Fed Doesn't Hinder the US Economy

January data released on Tuesday, February 14 showed that the US Federal Reserve's victory over inflation is still very, very far away. The core Consumer Price Index (CPI) remained unchanged on a monthly basis at +0.4%. At the same time, although the annual data were slightly lower than the previous value: +6.4% against +6.5%, they exceeded the forecast of +6.2%. Another portion of American statistics came out the next day, February 15.  After two months of decline, retail sales in the US showed the highest growth rate in almost 2 years, jumping from -1.1% in December to +3.0% in January (against the forecast of +1.8%).

The initial reaction to this was the strengthening of the dollar (the DXY index reached 104.1 points, the maximum since January 09), and a sharp drop in stock indices. Market participants decided that such macro statistics will force the Fed to further tighten monetary policy actively. If the peak value of the interest rate was predicted at 4.9% in early February with a subsequent decrease by 50 basis points (bp) by the end of the year, the peak is seen now at 5.25%, and a possible decrease only by 25 b.p. in 2023. At the same time, the probability that the rate will be increased three more times, in March, May and June, is 50%.

As already mentioned, the strengthening of the dollar and the sharp fall in stock indices was the first reaction of the market. But then there was an equally sharp reversal and the return of investor risk appetite. Stock indices went up. The market decided that if the US economy coped with the most aggressive interest rate hike in decades quite easily, it would cope with it in the future. Not only retail sales, but also other economic indicators show a convincing rise at the moment. Thus, employment grew by an impressive 517K new jobs, and the country's GDP, according to the leading indicator from the Atlanta Fed, may grow not by 2.2%, but by 2.4% in Q1 2023.

Then the market sentiment changed again. Another piece of statistics showed that the number of Americans who filed new applications for unemployment benefits fell unexpectedly, while producer prices (PPI) rose to a 7-month high in January. In this situation, market expectations regarding the further cycle of monetary restriction have again increased. S&P500, Dow Jones, and Nasdaq headed south together, while DXY headed north to a six-week high of 104.58. After that, on the eve of a long weekend in the US, the Dollar Index fell again to 103.85 points.

EUR/USD reacted accordingly to the volatile DXY fluctuations. As a result, having started last week at 1.0679, it ended it at 1.0694, that is, with almost zero results. At the time of writing the review (evening of February 17), 80% of analysts expect further strengthening of the dollar, 10% expect the strengthening of the euro, and the remaining 10% have taken a neutral position.

This time, the readings of the oscillators on D1 coincide with the opinion of analysts almost completely. 80% of them are colored red (20% signal that the pair is oversold), the remaining 20% are colored gray neutral. Among trend indicators, 60% recommend selling, 40% - buying. The nearest support for the pair is located in the zone 1.0600-1.0620, then there are levels and zones, 1.0560, 1.0500, 1.0440 and 1.0370-1.0400. The bulls will meet resistance in the area of 1.0700-1.0710, 1.0745-1.0760, 1.0800, 1.0865, 1.0895-1.0925, 1.0985-1.1030, 1.1110, after which they will try to gain a foothold in the 1.1260-1.1360 echelon.

The events of the coming week include the publication of business activity indicators (PMI) in Germany and the Eurozone on Tuesday, February 21. The value of the German Harmonized Consumer Price Index (CPI) will become known on Wednesday, February 22. Also on this day, the minutes of the last FOMC (Federal Open Market Committee) meeting will be published late in the evening. Volatility will be provided by data on inflation (CPI) of the Eurozone, as well as on unemployment and US GDP, on Thursday, February 23. We will find out German GDP indicators and statistics on consumer spending by American citizens at the very end of the working week, on Friday, February 24. Traders also need to keep in mind that Monday, February 20 is a day off in the US: the country celebrates President's Day.   

GBP/USD: BoE Could Crash the Pound

The pound tried to win back part of its losses at the beginning of last week. GBP/USD, having bounced off the level of 1.2030 on February 13, reached a two-week high of 1.2270 the next day. Then, along with other currencies included in the DXY Index, the pound began to retreat against the dollar. As a result, the local minimum was fixed at 1.1915. This was followed by a return to the initial positions and GBP/USD ended the week at 1.2040.

Neither Inflation data nor data on unemployment in the UK helped the British currency (CPI fell to +10.1% in January against the forecast of +10.3% and +10.5% in December). The market also ignored retail sales statistics, although they rose by +0.5% in January against the forecast of -0.3% and the previous result of -1.2%. The news that the UK and the EU have achieved good results in the protracted Brexit negotiations did not have a noticeable effect on the dynamics of the pound either.

Much more important for the quotes of the British currency was macro statistics from the US, as well as expectations that the Bank of England (BoE) may soon reach the end of the rate hike cycle. “The Bank of England is clearly concerned that a significant rate hike could slow down the economy too much,” Commerzbank economists wrote, explaining their bearish view of GBP's prospects, and colleagues from Singapore's United Overseas Bank agreed, according to them GBP/USD may retest the 1.1900 level in the near future.

If we talk about the median forecast of experts, 70% of them vote for the further weakening of the pound, 10% prefer to refrain from forecasts. Only 20% of analysts vote for the strengthening of the pound and the growth of the pair. Among the trend indicators on D1, the balance of power is 85% to 15% in favor of the reds. Reds have a 100% advantage among oscillators. Support levels and zones for the pair are 1.1990-1.2025, 1.1960, 1.1900-1.1915, 1.1840, 1.1800, 1.1720 and 1.1600. When the pair moves north, it will face resistance at the levels 1.2085, 1.2145, 1.2185-1.2210, 1.2270, 1.2335, 1.2390-1.2400, 1.2430-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

As far as the UK economy is concerned, Tuesday February 21 is of interest on the calendar for the upcoming week, when the country's business activity statistics (PMI) are released.

USD/JPY: Hopes for QT Remain

“The Japanese government has chosen Academician Kazuo Ueda as the new head of the Central Bank based on expectations of a stable inflation target along with a structural increase in wages,” said Finance Minister Shunichi Suzuki. And it doesn't seem that this choice went in favor of the Japanese currency. Having started the week at 131.39, USD/JPY fixed a local high at 135.15, and set the last chord of the five-day period at 134.17.

Recall that 71-year-old Kazuo Ueda, a former professor at the University of Tokyo, joined the board of governors of BOJ a quarter of a century ago, in April 1998, and remained there until April 2005. Back in 2000, Ueda spoke out against the Central Bank's abandonment of the zero-rate policy. It seems that even now he will not rush to curtail the ultra-soft monetary policy. This is confirmed by Ueda himself, who stated on February 10 that the current policy of the regulator is adequate, and that it is necessary to continue to adhere to it.

Despite such statements, the question of what this policy will be like under the new leader remains open at the moment. The majority of experts (60%) have taken a wait-and-see attitude.  15% are counting on the growth of USD/JPY in the near future, and 25% expect it to fall.  If we talk about a three-month perspective, only 10% of analysts talk about a further weakening of the Japanese currency, 25% are still neutral, but 65% are waiting for tightening monetary policy (QT) and strengthening the yen, contrary to the statements of Kazuo Ueda.

For example, Danske Bank economists predict that the USD/JPY rate will fall and reach 125.00 in three months. A similar position is shared by strategists at BNP Paribas Research. “We expect the strength of the US dollar to end up short-lived,” they say. “We believe that the US dollar has entered a multi-year bearish trend, and portfolio flows are becoming increasingly negative for the currency.” BNP Paribas predicts that positive yields in Japan could encourage the repatriation of funds by local investors, as a result of which USD/JPY will fall to 121.00 by the end of 2023.

Among the oscillators on D1, 100% points north (15% of them are in the overbought zone). For trend indicators, 75% look north, and 25% look in the opposite direction. The nearest level of support is located in zone 134.00, followed by levels and zones 133.60, 132.80-133.20, 131.85-132.00, 131.25 130.50, 129.70-130.00, 128.90-129.00, 128.50, 127.75-128.10, 127.00-127.25 and 125.00. Levels and resistance zones are 134.40, 134.75-135.10, 135.60, 136.00, 137.50, 139.35, 140.60, 143.75.

No important macro data on the state of the Japanese economy is expected this week. In addition, it must be borne in mind that Thursday, February 23, is a day off in Japan, the country celebrates the Emperor's Birthday.

CRYPTOCURRENCIES: Five Reasons for BTC's Growth


The topic of regulating the cryptocurrency market has been getting louder and louder since last spring. Many influencers argue that one can count on a massive influx of funds from institutional investors only if a clear regulatory framework is in place. Here is just one of the latest statements by MicroStrategy co-founder Michael Saylor. “What is really needed,” he said, “is oversight. [...] Clear guidance from Congress is needed. We need clear rules of conduct from the SEC (Securities and Exchange Commission) of the United States.” And it must be said that such calls from representatives of big capital respond to the minds and actions of government officials.  For example, Senator Elizabeth Warren is already actively recruiting conservative Republicans in the US Senate to support her bills, which significantly tighten the regulation of the crypto industry.

We note that the tragic events of 2022, caused by the collapse of a number of leading representatives of the industry, caused a sharp surge in the activity of US supervisory authorities. And the regulators began to work with redoubled energy this year. To begin with, they attacked the Kraken crypto exchange, which was actually banned from providing staking services. But the truck did not stop there and ran into the infrastructure company Paxos, which is responsible for issuing USDP, PAXG and Binance BUSD stablecoin. This is an investigation launched by the New York State Department of Financial Services (NYDFS) against this company. The regulator later ordered the firm to stop issuing the BUSD stablecoin. The SEC also announced its readiness to sue Paxos.

This situation led to a massive outflow of funds from the stablecoin. Many users have started exchanging BUSD for USDT. But it's still half the trouble. Some frightened users simply decided to leave Binance. On February 14 alone, the net outflow of funds from this exchange amounted to $831 million, a record since the collapse of FTX.

Binance CEO Changpeng Zhao responded to pressure from the US authorities by calling on industry participants to consider moving to another country. He considers Dubai (UAE), Bahrain and France to be jurisdictions with favorable regulation. The CEO of Binance was supported by Uniswap founder Hayden Adams. “It's a shame to watch the US efforts in the cryptosphere,” he wrote. “Innovative companies get an additional incentive to go abroad. It’s as if the government banned the development of the Internet 30 years ago.”

Surprisingly, against this frankly negative background, the price of bitcoin went up, reaching $25.241 on February 16. The last time BTC/USD climbed this high was in mid-August 2022. There have been several reasons for the current rally.

The first of these, paradoxically, is the mentioned attack by the NYFDS and SEC on Kraken and Paxos. US regulators treat PoS coins as toxic assets due to passive income from staking (expectation of profit). Based on this, such coins can receive the status of a security, with all the ensuing legal consequences. Bitcoin, on the other hand, is still the result of the work of miners, which allows it to avoid (at least for now) a similar fate. The network hashrate continues to set records.

Another driver for the growth (and subsequent fall) of digital “gold” quotes is its correlation with the stock market ( S&P500, Dow Jones and Nasdaq).

The third reason is that the main cryptocurrency was oversold in 2022, which caused the average production cost to fall below the market price. And most of the miners were forced to sell off BTC stocks in order to cover operating costs and ensure payments on accounts payable.

The next reason is the Ordinals protocol launched at the end of January, which allows not only to conduct financial transactions in the bitcoin network, but also to transfer any digital objects, including images, audio and video files. The launch of this protocol also resulted in an increase in network activity. The number of non-zero wallets set a new record, and miners received $876,000 in additional income in the form of commissions in less than a month.

The beginning of the BTC rally forced short-term speculators to close short positions, which further stimulated the growth of bitcoin. And that was reason number five.

According to Glassnode specialists, the current fair value of the flagship cryptocurrency is $33,000. This is the figure bitcoin should aim for. A similar figure of $30,000 is cited by Kaleo, a popular analyst with 563,000 Twitter followers. His forecast for the leading altcoin was also quite optimistic. According to Kaleo calculations, the target level for ETH/USD is located in the $3,000 area. Former Goldman Sachs CEO Raoul Pal also gave his forecast for ethereum, setting a target price of this coin around $10,000. Although, such growth will take more time of course.

If we talk about a three-year horizon, according to well-known analyst Willy Woo, the number of users of the first cryptocurrency will grow from the current over 300 million to 1 billion during this time. This will approximately correspond to 12% of the world's population. Willy Woo recalled that it took six months for bitcoin to form an audience of the first 1,000 users. It took five years for that number to rise to 1 million. The network achieved its current figures of more than 300 million, 13.8 years after the formation of the genesis block.

SkyBridge Capital hedge fund founder Anthony Scaramucci called 2023 a “recovery year” for bitcoin. However, his forecast looks rather modest. In his opinion, the value of BTC may “only” double over the next two to three years, up to $50,000.

As for another influencer, best-selling author of Rich Dad Poor Dad, Robert Kiyosaki, he claims that bitcoin will rise to a fantastic $500,000 by 2025. “A giant crash is coming. Depression is possible. The Fed has been forced to print billions in counterfeit money. Gold will be at $5,000, silver at $500, and bitcoin at $500,000 by 2025,” Kiyosaki wrote. And he added that gold and silver are the money of the gods, and bitcoin is like a dollar for ordinary people.

Risky assets sank sharply down in the last days of the past week. Following the stock indices, the quotes of crypto-currencies also fell, but then recovered quite quickly. At the time of writing this review (Friday evening, February 16), BTC/USD is trading in the $24,600 zone. The total capitalization of the crypto market is $1.106 trillion ($1.010 trillion a week ago). The Crypto Fear & Greed Index rose from 48 to 61 points in a week and moved from the Neutral zone to the Greed zone.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for February 13 - 17, 2023

EUR/USD: The Fed's Doves Have Turned into Hawks Again

After the US Federal Reserve and ECB meetings, the DXY Dollar Index fell to a new 9-month low of 100.80 on February 02. This happened after the dovish hints of the head of the Fed, Jerome Powell, who, during a press conference following the meeting, admitted for the first time that "the deflationary process has begun." The market has decided that this is the beginning of the end, and that the end of the bullish wave is near.

But hints aren't specific promises. Especially from the heads of the US Central Bank. And now, speaking at the Washington Economic Club, Jerome Powell is saying that interest rates must continue to rise in order to control inflation. And he makes a hawkish hint that the peak rates may be higher than the markets expect. And even higher than the Fed's own forecasts, announced in December.

Powell's hawkish attitude was supported by New York Federal Reserve Bank (FRB) President John Williams, Fed Board of Governors Christopher Waller, and Minneapolis Fed Chairman Neil Kashkari. The latter said that the Fed still has a lot of work to do to curb inflation. This could mean that the interest rate could be raised from the current 4.75% all the way up to 5.40% or higher and stay at that high for quite some time.

This time, the market decided that it was not worth waiting for an early easing of monetary policy, and the dollar began to gain strength. The DXY index reached a five-week high at 103.96 points on Tuesday, February 07. However, it could not rise higher, as it met several fairly strong resistance levels at once: 1) the 50-day SMA, 2) the former trend line from 2021, 3) the upper limit of the descending channel, which began in November 2022, as well as horizontal resistance in the 104.00 zone.

The past five days were stingy with macro statistics, but rich in statements by both American and European officials (the EU leaders summit took place on February 09-10). The next week promises to be richer in economic data. January data on US consumer inflation (CPI) will be published on Tuesday, February 14. The forecast assumes that prices rose by 0.4-0.5% in January (0.1% in December). At the same time, annual data may turn out to be lower than the previous value (6.2% vs. 6.5%). If the CPI shows that inflation is stable, this will confirm the latest hawkish statements by Fed officials and support the dollar. (Scotiabank economists believe that EUR/USD may fall to 1.0500-1.0600). If there is a steady decline in inflation, the US currency will be under serious pressure.

Having reached a high of 1.1032 on February 02 (the highest since April 2022), EUR/USD reversed and ended the week at 1.0679. 35% of analysts expect a further strengthening of the dollar at the time of writing the review (on the evening of February 10), 20% expect the euro to strengthen, and the remaining 45% have taken a neutral position. The picture is different among the indicators on D1. 85% of the oscillators are colored red (a third are in the oversold zone), while the remaining 15% are green. Among trend indicators, 40% recommend buying, 60% - selling. The nearest support for the pair is in the zone 1.0670, then there are levels and zones 1.0620, 1.0560, 1.0500, 1.0440 and 1.0370-1.0400. The bulls will meet resistance in the area of 1.0700-1.0710, 1.0745-1.0760, 1.0800, 1.0865, 1.0895-1.0925, 1.0985-1.1030, 1.1110, after which they will try to gain a foothold in the 1.1260-1.1360 echelon.

Among the events of the upcoming week, in addition to the release of the inflation data mentioned above, we can note the publication of preliminary data on Eurozone GDP on Tuesday, February 14. (And of course, we must not forget that February 14 is St. Valentine's Day, the most romantic holiday celebrated in most countries of the world. People confess their love to each other on this day, for more than one and a half thousand years). Retail sales in the US will become known on Wednesday, February 15, and data on US unemployment will come on Thursday, February 16. The January US Producer Price Index (PPI) will also be released on February 16.

GBP/USD: Coming Week: Volatility Guaranteed

The pound tried to win back part of its losses last week. GBP/USD, having rebounded on February 07 from the level of 1.1961 (the lowest level since January 06), reached a weekly high of 1.2193 on February 09. Then, the pound began to gradually retreat against the dollar along with other currencies included in the DXY Index. As a result, GBP/USD ended the week at 1.2055, that is, almost where it started (1.2050).

The news background still looks vague and uncertain. Economic problems continue to put pressure on the British currency. Recall that in the fight against inflation, the Bank of England (BoE) raised the key rate by 50 bp on February 2 to 4.00%, but at the same time softened its message noticeably. This pushed the British currency down from its highest values since mid-June 2022 (1.2450) by more than 250 points.

Market participants believe that the BoE may be afraid of further sharp rate hikes. It is another question how its growth will affect inflation. But it may well provoke a crisis in the economy and, above all, in the construction sector. January data on the index of business activity in the construction sector of the country were published on Monday, January 06, having shown a drop in this indicator from 48.8 to 48.4 points. The Office for National Statistics of the United Kingdom reported on Friday, February 10 that the entire economy of the country in December, with a forecast of minus -0.3%, actually shrank by -0.5% (there was an increase of +0.1% in November). GDP stagnated at 0% in Q4, after falling by -0.2% a quarter earlier. GDP fell from +1.9% to +0.4% in annual terms.

Against this background, the triumphant reports and optimistic forecasts from the UK Treasury Secretary Jeremy Hunt sounded somewhat strange. The high official said that "the UK was the fastest growing economy in the G7 last year and avoided a recession as well". This shows that "the economy has proven to be more resilient than many feared." And “if we stick to our plan to cut inflation by half this year,” continued Jeremy Hunt, “we can be sure that we will have some of the best growth prospects of any country in Europe.”

Unlike Mr. Hunt, Commerzbank strategists believe that uncertainty about future inflation in the UK remains high. The dynamics and values of the Consumer Price Index, which will be published on Wednesday, February 15, can bring some clarity. It is the CPI that is the key indicator that determines the future monetary policy of the Bank of England. Of course, data on the state of the labor market, which will be released the day before, on Tuesday, February 14, and on retail sales in the UK, which will become known on February 17, will also be important.

All these macroeconomic statistics are sure to cause increased volatility in GBP/USD. In the meantime, 40% of analysts expect further weakening of the pound, the same number prefer to refrain from forecasts and wait for the release of specific indicators. Only 20% of experts vote for the strengthening of the pound and the growth of the pair. Among the trend indicators on D1, the balance of power is 75% to 25% in favor of the reds. Among the oscillators, the red ones have a 100% advantage, however, 10% of them give signals that the pair is oversold. Support levels and zones for the pair are 1.2025, 1.1960, 1.1900, 1.1800-1.1840. When the pair moves north, it will face resistance at the levels 1.2085, 1.2145, 1.2185-1.2210, 1.2270, 1.2335, 1.2390-1.2400, 1.2430-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

USD/JPY: The Head of BOJ Is New, the Policy Is Old.

The Japanese yen, like its DXY counterparts, reacted both to the hawkish statements of the US Federal Reserve and to fluctuations in US Treasury yields last week. However, the biggest surge in volatility was the news that the Cabinet of Ministers intends to nominate 71-year-old Kazuo Ueda as the new governor of the Bank of Japan (BOJ).

This former professor at the University of Tokyo is a well-known monetary policy expert. He joined the Board of Governors of BOJ a quarter of a century ago, in April 1998 and remained there until April 2005. Ueda spoke out against the Central Bank's abandonment of the policy of zero rates in 2000, and the choice of his candidacy was probably due to the desire of the authorities to see a person at the head of the Bank of Japan who would not rush to curtail the ultra-soft monetary policy. This is confirmed by Ueda himself, who stated on February 10 that the current policy of the regulator is adequate, and that it is necessary to continue to adhere to it.

USD/JPY ended last week at 131.39, where it has been many times since December 20, 2022. According to the majority of analysts (55%), the yen may strengthen somewhat in the three-month period, but the range of targets here is quite large. Some believe that the Fed will finally return to the doves' camp, and then USD/JPY will be able to reach the 120.00 zone, while others consider the range of 127.00-128.00 to be the limit of the fall.

As for the short term, only 20% of experts vote for the pair to go down, 30% vote for its growth, and 50% have decided not to make any predictions at all. Among the oscillators on D1, 80% point north, 10% look south, and 10% point east. For trend indicators, 40% look north, and 60% look in the opposite direction. The nearest support level is located at 131.25 zone, followed by levels and zones 130.50, 129.70-130.00, 128.90-129.00, 128.50, 127.75-128.10, 127.00-127.25 and 125.00. Levels and resistance zones are 131.85-132.00, 132.80-133.00, 133.60, 134.40 and then 137.50.

Japan's preliminary GDP data will be released next week, on Tuesday, February 14. It is expected that the country's economy will grow +0.5% in Q4 2022 (down -+0.2% a quarter earlier). The data already published also look positive. Bank lending in January was higher than expected (+2.6%) and actually increased by +3.1% (+2.7% in December). The Eco Watchers Current Situation Index also increased, rising from 47.9 to 48.5 points by the end of January.

CRYPTOCURRENCIES: Should Bitcoin “Take a Break”?


Bitcoin's correlation with the stock market (S&P500, Dow Jones, Nasdaq) and other risky assets is nothing new. But digital gold unexpectedly showed not an inverse, but a direct correlation with the US currency last week. This is clearly seen if we compare the BTC/USD and EUR/USD charts. Both assets were getting heavier or lighter, at the same time. Drawing an analogy with a balance scale, we observed a physical paradox where both bowls go up and fall down at the same time. It was only at the end of the working week that the laws of physics began to work again: the dollar strengthened a little, bitcoin weakened.

The upward momentum that raised the main cryptocurrency from a low of $16,272 in November 2022 to $24,244 in the first days of February 2023 has gradually faded away. BTC/USD has returned to where it was in the second half of January, and the result of the last three and a half weeks can be considered close to zero.

As noted by well-known trader and investor Tone Vays, bitcoin has “grown very fast and very high” and is now facing serious resistance as it approaches the $25,000 level. The specialist believes that the asset will eventually break through this resistance zone, but it probably "should take a break now." Vays clarified that he expects either the consolidation of the rate in a narrow range, or a small pullback.

This expert is not alone in his assessment. According to statistics, the media forecast of crypto community members accurately predicted the value of bitcoin by the end of each month, over the past six months with a probability of up to 75%. Finbold experts released the results of the latest survey of more than 15 thousand traders and predictions of machine learning algorithms. Real people expect BTC quotes to fall to $20,250 by February 28, 2023, artificial intelligence points to $24,342.

Such a small (by bitcoin standards) range of fluctuations corresponds quite accurately to Vays’ prediction of a “breather”. The market situation is quite uncertain at the moment, and while short-term holders have returned to the profitable zone, long-term holders (holding for six months) still remain in the red zone. It took 291 days for all the metrics to turn green in the last bearish phase, only 268 have passed now.

Most investors went into the red at the end of last year. Thus, MicroStrategy recorded a balance sheet (unrealized) loss of $1.3 billion for 2022, due to its long-term investments in bitcoin. (As of December 31, 2022, MicroStrategy held a total of 132,500 BTC worth $1.84 billion). At the same time, the company's management does not plan to stop operations with a digital asset. Commenting on last year's turmoil, MicroStrategy co-founder Michael Saylor said he sees this as a kind of Darwinian theory: weak and bad players have left the market, and this should push the industry forward in the long run. At the same time, according to Saylor, cryptocurrencies need a clear regulatory framework for companies to comply with certain standards and protect customers. “What is really needed is supervision. Clear guidance from Congress is needed for the industry to have its own Goldman Sachs, Morgan Stanley and BlackRock. We need clear rules of conduct from the SEC (Securities and Exchange Commission) of the United States.”

However, David Marcus, former Meta blockchain executive and former PayPal president, for example, doubts that legislatures will be able to develop such rules anytime soon. Based on this, he believes that crypto companies will continue to operate in a "vacuum" in 2023, at their own peril and risk, and the crypto winter will end only by 2025, when the market recovers from last year's shocks.

Surprisingly, not only supporters of cryptocurrencies, but also their fierce opponents advocate increased regulatory pressure. Thus, Charlie Munger, an associate of Warren Buffett, vice president of the Berkshire Hathaway holding company, called on the US authorities to destroy bitcoin, which the billionaire compares investing in to gambling. He said in an interview with the Wall Street Journal that the cryptocurrency industry is undermining the stability of the global financial sector. And that BTC cannot be considered an asset class as it has no value.

Munger has been expressing this point of view over the past few years. And now he calls on the US authorities to deal a devastating blow to the crypto market. In his opinion, it is necessary to drive it into such a strict framework of regulation that will finally strangle this industry.

Note that Charlie Munger is 99 years old, which, perhaps, explains his radical conservatism. The younger generation of businessmen is more loyal to digital innovations. Suffice it to recall the results of a survey conducted by the financial consulting company deVere Group. They showed that despite the challenges of 2022, 82% of millionaires were considering investing in digital assets. According to Nigel Green, CEO of the deVere Group, the momentum for such interest will increase as conditions in the traditional financial system change.

Morgan Creek investment company CEO Mark W. Yusko believes that favorable macroeconomic conditions will lead to the fact that the next bull market could begin as early as Q2 2023. According to the top manager, the US Federal Reserve is unlikely to cut the key rate in the near future. However, even a slowdown or pause in this process will be perceived as a positive signal for risky assets, which include cryptocurrencies. The CEO of Morgan Creek pointed to the expectations of the next bitcoin halving, which will tentatively take place on April 19-21, 2024, as an additional reason for the growth of the crypto market. According to Yusko's calculations, the recovery of the digital asset market usually begins nine months before this event, which means that the rally will start at the end of the summer of 2023 this time.

Cathie Wood, the head of ARK Invest, is even more optimistic about the future, she still considers the first cryptocurrency to be the best form of protection against financial losses. In her opinion, all segments of the population, both the poor and the wealthy, will benefit from the use of digital gold. In confirmation of the words of their manager, Ark Invest analysts make just a cosmic forecast. Their pessimistic scenario assumes that the BTC price will rise to $259,000, and the optimistic one - up to $1.5 million per coin. (we wonder what Charlie Munger would say about this?)

At the time of writing this review (Friday evening, February 10), BTC/USD is trading in the $21,600 zone. The total capitalization of the crypto market is $1.010 trillion ($1.082 trillion a week ago). The Crypto Fear & Greed Index fell from 60 to 48 points over the week, and ended up in the Neutral zone, almost in the very center of the scale. The situation is uncertain, and perhaps traders, like bitcoin, “should take a break”?


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for February 06 - 10, 2023

EUR/USD: Three Weeks of Uncertainty

The meetings of the Central Banks were held strictly according to plan last week. As expected, the key rate was raised by 25 bps (basis points) at the US Federal Reserve meeting and reached 4.75%, and by 50 bps at the European Central Bank meeting, up to 3.00%. Since the decisions themselves did not bring surprises, market participants focused on the regulators' plans for the future.

The next meeting of the FOMC (Federal Open Market Committee) of the US Federal Reserve will not be held soon: on March 22, that is, in almost two months. Markets are likely to expect that it will announce another rate hike by 25 bps to 5.00%, after which it will hold it at this level.

The DXY Dollar Index fell to a new 9-month low of 100.80 on Thursday, February 02. This happened after the Federal Reserve made it clear that the end of the wave of rate hikes was near. Statistics show that the regulator's efforts to solve economic problems are yielding results: the inflation rate was 9.1% (the highest figure in 40 years) in June, and it fell to 6.5% in December. This makes it possible to put the brake on quantitative tightening (QT). Investors understood the dovish hints of the head of the Fed, Jerome Powell, who, during the press conference following the meeting, admitted for the first time that "the deflationary process has begun." He also assumed that the peak rate would not exceed 5.00% and reiterated that the US Central Bank can achieve a slowdown in inflation without causing significant damage to the economy.

As for the Eurozone, inflation, as shown by data for January, has been falling for the third month in a row. But the basic price increase remains at the same level, despite the fall in energy prices. According to forecasts, inflation in the Eurozone is expected to reach 5.9% in 2023, to fall to 2.7% in 2024, and to fall even lower to 2.1% in 2025. Unemployment growth is also projected to decline further, while GDP growth expectations remain at the same level. According to preliminary data published on Wednesday, February 01, the growth of the European economy will be 1.9% in 2022, which is lower than the previous value (2.3%), but higher than the forecast (1.8%).

Following the last meeting, ECB President Christine Lagarde said that the risks to both economic growth and inflation in the Eurozone have become more balanced. And that the ECB will assess economic development after the next rate hike in March. (It is also expected to be 50 bps). When asked about the possibility of further rate hikes after March 16, Ms Lagarde refrained from making any commitments. This put downward pressure on the euro, and EUR/USD turned around and went down without rising above 1.1031.

The dollar received an additional boost of strength after the publication of impressive data from the US labor market on Friday, February 03. Data released by the Bureau of Labor Statistics (BLS) showed that the country's unemployment rate, instead of the expected increase to 3.6%, fell from 3.5% to 3.4%, and the number of jobs created outside the agricultural sector (NFP) in January increased by 517K, which is 2.8 times higher than the 185K forecast, and almost twice higher than December's 260K growth.

As a result, EUR/USD finished at 1.0794. Recall that it ended the week at 1.0833 on Friday, January 13, at 1.0855 on January 20, and at 1.0875 on January 27. This proximity of all these values (within 100 points) suggests that the market has not received clear signals about where it should aim in the foreseeable future. Although, at the time of writing the review (Friday evening, February 03), the US currency has a certain advantage.

Economists at Singapore's financial UOB Group suggest that the euro is not yet ready to move towards the resistance of 1.1120, and the pair may trade in the range of 1.0820-1.1020 for the next 1-3 weeks. As for the median forecast, 45% of analysts expect further strengthening of the euro, the same number (45%) expect the dollar to strengthen, and the remaining 10% have taken a neutral position. The picture is different among the indicators on D1. 35% of the oscillators are colored red (one third of them are in the oversold zone), 25% are looking up and 40% are colored gray neutral. As for trend indicators, 50% recommend buying, 50% selling. The nearest support for the pair is in the zone 1.0740-1.0775, then there are levels and zones, 1.0700-1.0710, 1.0620-1.0680, 1.0560 and 1.0480-1.0500. The bulls will meet resistance at the levels of 1.0800, 1.0835-1.0850, 1.0895-1.0925, 1.0985-1.1030, 1.1120, after which they will try to gain a foothold in the 1.1260-1.1360 echelon.

Next week's calendar may mark Monday February 06, when preliminary data on consumer prices in Germany and final data on January retail sales in the Eurozone will be published. Fed Chairman Jerome Powell is expected to speak on Tuesday. The final data on inflation (CPI) in Germany and unemployment in the US will arrive on Thursday, February 09.  And the value of the Consumer Confidence Index from the University of Michigan USA will be known on Friday, February 10. 

GBP/USD: Riddles from BoE

The famous London fog continues to haze the monetary policy of the Bank of England (BoE). Like the ECB, this regulator raised the key rate by 50 bp. to 4.00% on Thursday, February 02, but at the same time it softened its message noticeably. This pushed the British currency back from its highs since mid-June 2022. values (1.2450) down, to the level of 1.2100. At the week's low, after the publication of the US NFP, the GBP/USD pair traded even lower at 1.2046, and ended the five-day period almost there, at 1.2050.

As already mentioned, the future of the UK's finances is vague and uncertain. We have tried to make sense of what the chief economist said BoE Hugh Pill, giving an interview for Times Radio on Friday February 03. Here are just a few quotes. “We must admit that we have already achieved a lot” - “There are many more steps in the pipeline.” “A number of news stories have improved recently” - “We must be prepared for shocks.” "We have a fairly high degree of confidence that inflation will fall this year" - "The focus is on whether inflation will fall further." And like the icing on the cake, Hugh Pill's remark that it's important for the Bank of England not to do "too much" in monetary policy.

To be honest, we were unable to determine from this statement where the line between "little", "much" and "too much" is drawn. Therefore, here is the opinion of Commerzbank strategists. “It has become clear that the Bank of England is nearing the end of its rate hike cycle,” they conclude. And they continue: “While the Bank of England has left the door open for further rate hikes, a more assertive approach would be desirable from a currency market perspective due to high uncertainty. Against this background, it is not surprising that the sterling has weakened, and its further decline seems likely to us.”

This point of view of Commerzbank economists has been supported by 55% of analysts, who also "thought probable" a further fall in GBP/USD. The opposite view is held by 45% of experts. Among the trend indicators on D1, the balance of power is 75% to 25% in favor of the reds. Among the oscillators, the reds win as well: their advantage is 85% versus 15%. However, among the reds, 20% signals that the pair is oversold. Support levels and zones for the pair are 1.2025, 1.1960, 1.1900, 1.1800-1.1840. When the pair moves north, it will face resistance at the levels 1.2085, 1.2145, 1.2185-1.2210, 1.2270, 1.2335, 1.2390-1.2400, 1.2430-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

Among the developments regarding the UK economy in the coming week, Friday 10 February will attract attention with the release of UK GDP data for the past 2022. It is expected that, despite some growth in Q4 (from -0.3% to 0.0%), the annual rate will show a drop from 1.9% to 0.4%.

USD/JPY: Non-Farm Payrolls Knocks the Yen Down


In general, the Japanese yen moved in the same way as its counterparts against the dollar last week, the euro and the British pound. However, its volatility was practically not affected by the decisions of the ECB and the Bank of England. In this case, the determining factor was the difference between interest rates on the dollar (+4.75%) and the yen (-0.1%). As a result, having found a local bottom at 128.08, USD/JPY moved sideways after the Fed meeting, and data from the US labor market (NFP) sent it on a space flight on Friday, with a length of almost 300 points, to the height of 131.18. The flight of investors from the dollar to the safe haven of Japan has stopped, and they have again decided to choose the American currency as a safe haven. USD/JPY set the last chord of the week at the level of 131.12.

Markets will now wait for March 10 for the current Bank of Japan (BoJ) Governor Haruhiko Kuroda to hold his last meeting. His powers will end on April 8, and the meeting of the BoJ on April 28 will be held by the new head of the Central Bank. It is with this event that the markets associate a possible change in the monetary policy of the regulator. Although, until that moment, interventions from the BoJ, similar to those that the regulator undertook in October-November 2022, cannot be ruled out to stop the fall of the national currency.

So far, analysts' forecasts do not provide any clear guidelines: 40% of them side with the bulls, 40% with the bears, and 20% have decided not to make predictions at all.

Among the oscillators on D1, 75% point north (15% are in the oversold zone), 15% look south and 10% look east. For trend indicators, 50% look north, exactly the same number in the opposite direction. The nearest support level is located at -130.85 zone, followed by the levels and zones of 130.50, 129.70-130.00, 128.90-129.00, 128.50, 127.75-128.10, 127.00-127.25 and 125.00. Levels and resistance zones are 131.25, 131.65, 132.00, 132.80, 133.60, 134.40 and then 137.50.

No important events regarding the Japanese economy are expected this week.

CRYPTOCURRENCIES: BTC Has Become a Risk Protective Asset

The past week proved once again that the top cryptocurrencies, and primarily bitcoin, have long ceased to be independent. Their quotes, as well as risky assets in general, are firmly tied to the decisions of the US Federal Reserve: the US dollar is on the opposite side of the scale in BTC/USD. If it weakens, bitcoin gets heavier, and vice versa. Of course, decisions by other regulators, such as the ECB or the People's Bank of China, also influence the price of virtual assets, and internal crises such as the FTX collapse may also shake it up. But the Fed is still the main trend creator of BTC/USD.

Bitcoin is still an amazing asset. It managed, as they say, to sit on two chairs last year. On the one hand, its correlation with the stock market and stock indices S&P500, Dow Jones and Nasdaq allows it to be classified as a risky asset. But on the other hand, analysts at the crypto media site CryptoSlate draw attention to the correlation of cryptocurrency with... gold, which has been considered insurance against inflation and other financial risks since ancient times. The coincidence in movement between the two assets has reached, according to CryptoSlate, an absolute maximum,­ 83% since February 2022. It turns out that bitcoin is both a risky and protective asset at the same time. As they say, a friend among strangers and a stranger among friends.

According to Goldman Sachs economists, even after adjusting for risk, bitcoin has already significantly outperformed gold, stock markets and the real estate sector in terms of profitability and continues to do so. The main cryptocurrency is now showing its best start to the year since January 2013. Its rate rose by 51% then, the growth was 40% last month. It happened against the backdrop of the weakness of the US dollar. “At the same time, 85% of the contribution to the rally is associated with investors from the United States,” says Markus Thielen, head of research at crypto services provider Matrixport. The bullish stance of US companies is also confirmed by the renewed premium in bitcoin futures listed on the Chicago Mercantile Exchange.  Open interest in BTC futures on the Chicago Mercantile Exchange (CME) is significantly outperforming the price, with a 77% month-on-month rise to $2.3 billion. “We interpret this as a sign that faster institutional traders and hedge funds are actively buying back the recent fall in the cryptocurrency markets,” Thielen said.

Deutsche Digital Assets made a similar observation earlier, on January 20, drawing attention to the increase in Coinbase's premium as evidence of increased buying interest from sophisticated US institutional­ investors.

A survey by financial advisory firm deVere Group showed that despite the challenges of 2022, 82% of millionaires were considering investing in digital assets. 8 out of 10 surveyed clients of the company, with assets to invest from $1.2 to $6.1 million, turned to financial advisers for cryptocurrency advice.

Nigel Green, CEO and Founder of the deVere Group, believes that while the group surveyed is “generally more conservative,” its interest stems from the core values of bitcoin: “digital, global, borderless, decentralized, and secure from unauthorized access". Green also notes a growing interest in crypto services from older financial institutions such as Fidelity, BlackRock and JPMorgan, and considers this a good sign for the industry. He predicts that the momentum of interest will build as the “crypto winter” of 2022 thaws due to changing conditions in the traditional financial system. (For reference, a June 2022 Pricewaterhouse-Coopers report showed that roughly a third of the 89 traditional hedge funds surveyed had already invested in digital assets.)

Similar results were obtained by analysts from Pureprofile. Their study involved 200 institutional investors and asset managers from the US, the EU, Singapore, the UAE and Brazil. The total amount of funds managed by respondents was $2.85 trillion. Nine out of ten investors in the survey were in favor of the growth of the flagship cryptocurrency in 2023, and 23% believe that the value of BTC will exceed $30,000 by the end of the year.  In the longer term, 65% of respondents agree that the coin will break the $100,000 mark.

Not only whales, but also smaller investors remain optimistic, despite the dramatic events of the last year. According to statistics, the total number of digital wallets with a balance of $1,000 or more in bitcoin or ethereum increased by 27% in 2022. According to the survey, more than 88% of Binance crypto exchange customers plan to continue investing in cryptocurrencies, and only 3.3% do not consider this possibility. Bitcoin is still the dominant asset, owned by 21.7% of those surveyed.

Over 40% of respondents bought digital assets last year for investment purposes. Other motives were the decline in the value of bitcoin and the general bearish trend. Almost 8% cited the geopolitical situation in the world as a reason for the purchase, and 11.5% expressed distrust of the traditional financial system. 40.8% do not use traditional investment opportunities (buying shares, investing in real estate, mutual funds), while 32.4% do use them. At the same time, 79.7% are sure that cryptocurrencies are necessary for the development of the global economy, and 59.4% of respondents believe that deposits in cryptocurrencies will be able to replace bank deposits over time.

Galaxy Digital Holdings Ltd founder billionaire Mike Novogratz, having weathered a challenging 2022, is now committed to long-term investment in bitcoin mining with a $65 million acquisition of a Helios mining facility in Texas, USA. And according to estimates by a popular analyst aka Plan B, known for his “Stock-to-Flow” model, the price of bitcoin will reach $1 million by 2025, which will more than recoup Mike Novogratz's costs. As for this year, Plan B expects it to rise above $100,000. The analyst also said that the January bitcoin pump confirms that the asset's 4-year cyclical price bottom is over.

According to historical observations by Matrixport experts, while January bitcoin quotes were in the “green” zone on the chart (and they were there), the price rally usually continued in the following months of the year. Based on this, they predict that the flagship cryptocurrency could reach $45,000 by Christmas 2023.

And the well-known cryptocurrency trader Peter Brand considers the bulls' joy a little premature and sticks to the bearish forecast for the near future. As the expert noted, many traders and investors are now waiting for a certain pullback in order to enter the market at better prices. The specialist believes that the flagship of the crypto market may reach the level of $25,000 in the near future, after which there will be a correction closer to $19,000. However, in the medium term, Brand is still optimistic and predicts bitcoin to rise to $65,000 in the middle of this year.

Crypto analyst Benjamin Cowen, who said that bitcoin has a “long year” ahead of time, also warns against premature glee. According to the expert, it may appear that BTC has significant strength, while in fact the asset is likely to be in the process of forming a wide sideways range as a base. Cowen explained that sideways movement is not always an indicator of the growth of the first cryptocurrency and may also signal a fall in quotes.

The analyst reminded traders that a bearish cycle is usually followed by a year of sideways movement. Thus, there were three upward impulses in 2015, and only the last one turned into a real rally. There were also periods of growth in quotes in 2019, then their active fall followed, and a cycle that brought the crypto market to new highs started only after that. Cowen noted that 2023 can be seen as a year of accumulation and that investors can take advantage of this period to increase their holdings of BTC. In addition, he believes that the US Federal Reserve should ease monetary policy for cryptocurrency prices to grow. (The last meeting of the regulator gives hope for this).

At the time of writing this review (Friday evening, February 03), BTC/USD is trading in the $23,400 zone. The total capitalization of the crypto market is $1.082 trillion ($1.060 trillion a week ago). The Crypto Fear & Greed Index, a metric showing the general attitude of the community towards bitcoin, entered the Greed zone for the first time since March 30, 2022, reaching 60 points (55 a week ago). It is clear that this is due to the growth of the coin rate in the first month of the year and the general revival of the market. It is worth noting, however, that the increased confidence among crypto investors should not be directly viewed as a catalyst for the resumption of bullish growth in the bitcoin price. In fact, a Fear or Extreme Fear metric could indicate a good buying opportunity, and too high a Greed reading could mean the market is headed for a downward correction.

And at the end of the review, our half-joking column of crypto life hacks. This time we want to draw the attention of BTC holders to Nigeria. It turns out that this is where you could earn. News releases say that the price of bitcoin on the popular NairaEX exchange in this country, in terms of local currency, jumped to almost $40,000, which is about 70% higher than the global market quotes. As it turned out, the discrepancy is due to the limit imposed by the Central Bank of Nigeria on withdrawing funds from ATMs. So, ladies and gentlemen, do not forget about arbitrage deals, they can also bring good profits. The main thing is to know what, where, when and at what price to buy and then sell.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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NordFX Was Recognized Not Only as Most Reliable Forex Broker, But Also as Best CFD Broker Asia in 2022

According to Forex-Awards expert council, NordFX won a convincing victory in the Best CFD Broker Asia 2022 nomination.

The past year was very fruitful for NordFX, as a result of which the company was awarded several prestigious professional awards recognizing its achievements both in specific regions and its success in general. THE BIZZ Business Excellence Award from the World Confederation of Businesses, Best Execution Broker LATAM from International Business Magazine Awards, Best Crypto Broker from AllForexRating Awards, Most Reliable Forex Broker Asia from Finance Derivative Awards, Best Broker Middle East from Forexing Awards were added to NordFX titles in 2022. NordFX is now also named Best CFD Broker Asia by Forex-Awards.

This honorary title was awarded to the company by the Forex-Awards Expert Council based on the opinions of both independent experts and the trading community. A unique team of expert professionals headquartered in Hong Kong honor the most remarkable solution and innovation in almost 30 nominations since 2010, reward market participants featuring breakthrough initiatives and excellent results in the Forex industry.

The Forex-Awards Expert Council has previously noted the merits of NordFX. This time, the Best CFD Broker Asia award is due to the company's achievements in online CFD trading, including an impressive range of trading instruments, instant order execution, as well as the lowest spreads and commissions, which have allowed clients from the Asian region to achieve outstanding success. Suffice it to say that the total earnings of traders from the TOP-3 NordFX in 2022 amounted to almost $1,500,000, and most of these traders are from Asia.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Gold and Yen Became Most Profitable Instruments for NordFX Top Traders in January

NordFX Brokerage company has summed up the performance of its clients' trade transactions in January 2023. The services of social trading, CopyTrading and PAMM, as well as the profit received by the company's IB-partners have also been assessed.

- The best result among traders was shown in January by a client from West Asia (account [You must be registered and logged in to see this link.]), whose profit amounted to 71,280 USD and was received mainly due to transactions with gold (XAU/USD) and Japanese yen (USD/JPY).
- The second place in the top three NordFX top performing clients belongs to the holder of account No.1543XXX from East Asia, who earned 19,983 USD. In addition to gold (XAU/USD) and yen (USD/JPY), this trader's arsenal has been supplemented with such an exotic pair as USD/ZAR (American dollar/South African rand),
- Finally, another representative of the West Asian region (account No. 1672XXX) took the third place on the January podium with a profit of 17,059 USD, whose trading instruments, in addition to gold (XAU/USD) and the Japanese yen (USD/JPY), also included the European currency (EUR/USD).

The passive investment services:

- In CopyTrading, the "veteran" signal - KennyFXPRO - Prismo 2K continues to increase profits. It increased its profit to 307% in 637 days. But given the relative stability, it should be borne in mind that this supplier's trade failed seriously last November, when the maximum drawdown on this signal was close to 67%. Bull trader is another interesting signal. True, it is much younger, it is only 183 days old. It has increased the deposit by 183% during this time, since July 25, 2022, while the maximum drawdown has not exceeded 23%.

Fans of algorithmic trading can look out for a startup called ATFOREXACADEMY ALGO 1. This signal has shown a profitability of 93% in just 41 days, although its drawdown was not small, 38%. Here, as usual, it is appropriate to recall that, in addition to a short life span, aggressive trading is a serious risk factor, which carries increased risks. Therefore, we urge you to be extremely cautious when working on financial markets.

- However, as practice shows, a long lifespan and good trading performance in the past do not guarantee against future losses. Thus, two leading accounts in the PAMM service suffered significant losses last November.

The KennyFXPRO-The Multi 3000 EA account has existed since January 2021, and the maximum drawdown on it did not exceed 20% for a long time. However, the situation became more complicated in mid-November 2022, the drawdown exceeded 42%, and the account manager decided to close unprofitable positions. As a result, profits fell from 170% to 70%. The TranquilityFX-The Genesis v3 account found itself in a similar situation: its maximum drawdown doubled as well, while profits fell from 130% to 44%. It should be noted to the credit of both managers that they did not allow a complete zeroing of deposits, and now they are moving forward again, although very cautiously. The yield on the first signal rose to 80% by January 31, 2023, and to 50% on the second one.

Among the NordFX IB partners, December TOP-3 is as follows:
- the largest commission, 8,141 USD, was credited to a partner from South Asia, account No.1618ХXХ;
- the next is their colleague from Southeast Asia (account No. 1656XXX), who received 6,196 USD during the month;
- and, finally, their colleague from Western Asia (account No. 1645XXX) closes the top three, earning 4,526 USD in commissions in January.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for January 30 - February 03, 2023

EUR/USD: Next week: Five Days of Storms and Tsunamis


It seems that the whole world celebrated the Chinese New Year last week. There was some volatility in all major currency pairs of course, but we got an almost perfect sideways trend in the end. We will not deny the importance of the New Year holidays, but the reason for the lull, of course, is not in this, but in the key events that are coming next week.

On February 1, when it will be late at night in Europe and dawn in Asia, the US Federal Reserve will announce its key interest rate decision, and the regulator's management will tell (or at least give a hint) about its future monetary policy. The European Central Bank will make its decision on the rate a few hours later, on Thursday, February 02.

But, before giving forecasts, let's turn to the events of the past five days. Data released on Thursday, January 26 showed that the US economy is doing better than expected. The country's GDP, according to preliminary estimates, grew by 2.9% y/y in Q4 against the forecast of 2.6%. At the same time, initial claims for unemployment benefits for the week to January 21 fell to 186K (forecast 205K, the previous value of 192K). This is the lowest weekly figure since April 2022. Underlying durable goods orders also beat estimates, dropping by -0.1% instead of the expected -0.2%. New home sales are also doing well, with sales up to 616K in December from 602K in November.

Looking at these figures, we can conclude that not everything is so bad and there is no recession in the United States. And that the Fed's 2022 aggressive monetary policy (QT) has not had a suffocating effect on the economy. Therefore, it is possible to move on to its easing (QE). However, some economists point out that consumer demand is losing its momentum (2.1% in Q4 against the forecast of 2.9% and 2.3% a quarter earlier). Based on this, they conclude that the chances of a mild recession remain.

For now, the market believes the Fed will raise rates by 25 basis points (bps) at its February meeting. It is currently 4.50%, and the market consensus indicates its peak value at the level of 4.90-5.00% in 2023. The probability that the rate will be raised by another 25 bp in March is estimated at 85%. Although some analysts believe that the peak value will stop at around 4.75%. Moreover, the rate may even be lowered to 4.25-4.50% by the end of 2023. Such dynamics will obviously not benefit the dollar, but it will push up the competing currencies from the DXY basket and risky assets.

As for the common European currency, the market is sure that the ECB will raise the rate by 50 bp on February 02. But, according to analysts, the difference in the rises in USD and EUR rates has already been taken into account by the market in the pair's quotes, which is why it keeps in the range of 1.0845-1.0925. And its foreseeable future will depend on the comments and signals that the leaders of the Fed and the ECB will give at the end of their meetings.

Starting at 1.0855 on Monday, January 23, the pair ended last week at 1.0875. At the time of writing the forecast (Friday evening, January 27), the votes of supporters of bulls and bears are divided almost equally. 50% of analysts expect further strengthening of the euro and the growth of the pair. 45% expect that the US currency will be able to win back part of the losses. The remaining 5% of experts, in anticipation of the meetings of the Central Banks, prefer not to make forecasts at all. Among the indicators on D1, the picture is different: 90% of the oscillators are colored green, 5% indicate that the pair is overbought, and 5% are colored gray neutral. Among trend indicators, 80% recommend buying, 20% recommend selling. The nearest support for the pair is in the zone 1.0835-1.0845, then there are levels and zones 1.0800, 1.0740-1.0775, 1.0700-1.0710, 1.0620-1.0680, 1.0560 and 1.0480-1.0500. The bulls will meet resistance at the levels of 1.0895-1.0935, 1.0985-1.1010, 1.1130, after which they will try to gain a foothold in the 1.1260-1.1360 echelon.

The coming week will undoubtedly be stormy and filled with events. In addition to these Fed and ECB meetings, it should be noted that data on GDP were published on January 30, on the unemployment rate and inflation rate (CPI) on January 31, and on business activity (PMI) in the German manufacturing sector on February 01. We will find out what is the situation with consumer prices ( CPI ) in the Eurozone and what is happening with business activity (PMI) in the USA also on Wednesday, February 01. In addition, we are traditionally waiting for an impressive portion of statistics from the US labor market on February 01, 02 and 03, including the unemployment rate and the number of new jobs created outside the agricultural sector (NFP).

GBP/USD: The Future of the Pound Is in a Thick Fog

The Bank of England (BoE) will also make its decision on the interest rate on Thursday, February 02. And if the probability that the Fed and the ECB will raise their rates is close to 100%, everything is not so simple with the pound. According to some analysts, the BoE may surprise the markets by pausing and slowing down the tightening of its monetary policy.

Although there may not be a pause, we will see a new round of QT instead of QE. British Chancellor of the Exchequer Jeremy Hunt said on Friday, February 27 that “the weak recovery in the public sector after the pandemic reinforces the need for reforms” and that “the best tax cut right now is lower inflation.” And the best (if not the only) cure for inflation, as the experience of overseas colleagues shows, is to raise interest rates.

Pound bulls hope that the Bank of England will raise the pound rate by 50 bp, and it will rise to at least 4.50% from the current 3.50% by the summer. As for the bears, they believe that the threat of an economic downturn and recession will prevent the Central Bank from raising it by more than 25 bps now, and it will do so for the last time, and then be forced to ease monetary policy despite high inflation.

In general, the future is shrouded in fog. But the fact that the country's economy has big problems is very clear. This is evidenced by the fall in the Composite Business Activity Index (PMI) from 49.0 to 47.8 points, instead of the expected increase to 49.3.

Bank of England Governor Andrew Bailey has recently said that the British economy after Brexit has faced a shortage of more than 300,000 workers due to the cessation of the free movement of labor from the EU. Such a deficit has become an obstacle to the fight against inflation, as it entails an increase in wages. In addition, the country's economy continues to be pressured by high energy prices and supply disruptions, as well as other problems related to sanctions against Russia due to its invasion of Ukraine.

The quotes of GBP/USD have not changed much over the past five days: starting from 1.2395, it set the final chord there. The median forecast for the near future also looks vague: 35% of experts believe that it is time for the pair to turn south, just as many point to the north, and the remaining 30% look east. Among the oscillators on D1, 85% are colored green, 15% signal that the pair is overbought. Trend indicators are 100% on the green side. Support levels and zones for the pair are1.2360, 1.2300-1.2330, 1.2250-1.2270, 1.2200-1.2210, 1.2145, 1.2085-1.2115, 1.2025, 1.1960, 1.1900, 1.1800-1.1840. When the pair moves north, it will face resistance at levels 1.2430-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

Among the events related to the economy of the United Kingdom in the coming week, apart from the meeting of the Bank of England, one can note February 01 and 03, when fresh January data on business activity (PMI) in the country will be published.

USD/JPY: The Future of the Pair Depends on the Fed

Unlike its counterparts, the Bank of Japan (BoJ) left its key rate unchanged at a negative level of -0.1% at its meeting on January 18. The next meeting is not soon, on March 10. The current head of BoJ chapter Haruhiko Kuroda will preside over it for the last time. His powers will end on April 08, and the meeting of the BoJ on April 28 will be held by the new head of the Central Bank. It is with this event that markets associate a possible change in monetary policy in the country. In the meantime, the views of market participants are focused on the US Federal Reserve.

As with the previous pairs, USD/JPY was not much active last week, starting at 129.57 and finishing at 129.85. Analysts' forecasts do not give any guidance until the next Fed meeting: 50% of them side with the bulls, 40% with the bears, and 10% have decided not to make predictions at all. Among the oscillators on D1, 10% point north, 35% look south, and 55% point east. For trend indicators, 15% look north, 85% look in the opposite direction. The nearest support level is located at 129.50 zone, followed by levels and zones 128.90-129.00, 127.75-128.10, 127.00-127.25, 126.35-126.55, 125.00, 121.65-121.85. Levels and resistance zones are 130.50, 131.25, 132.00, 132.80, 133.60, 134.40 and then 137.50.

No important events regarding the Japanese economy are expected this week.

CRYPTOCURRENCIES: New Trading Strategy: Chinese New Year

Bitcoin behaves even more calmly than the S&P500, Dow Jones and Nasdaq stock indices on the eve of the Fed meeting on February 01. Of course, a certain correlation between them remains, but the volatility of the main cryptocurrency has become noticeably less. Although, it is quite possible that this is just the calm before the storm. Which, as usual, will be arranged by the American regulator with its monetary policy and the key rate for USD.

According to Ark Invest CEO Cathy Wood, the cryptocurrency market will enter a new phase in 2023. The rise in bitcoin and other virtual currencies will be the result of the Fed's monetary easing in the second half of this year. It is this move that will become a trigger for investors testing stock markets and digital currencies. (Bloomberg strategist Mike McGlone expressed a similar point of view earlier, pointing out the possibility of BTC rising to $30,000).

Adam Farthing, Chief Risk Officer at crypto company B2C2, noted that the first cryptocurrency needs to overcome the key level at around $25,000 in order to continue the rally. “It will be a tough nut to crack,” the expert shared his opinion. According to him, after passing the designated milestone, interest will resume from outsiders who want to return to the market.

However, analysts at the brokerage company Bernstein are convinced that such a rally is unlikely to continue at the moment, as there are no signs of “any new injections” into the industry. However, in their opinion, institutional capital will still begin to show more interest in cryptocurrency this year, as it becomes an increasingly regulated asset class. (We have also repeatedly raised the topic of regulation and its conflict with the main idea of cryptocurrencies in our reviews).

And DataDash analyst and channel creator Nicholas Merten also believes that while cryptocurrencies have a bright future, many underestimate the current global environment. In his opinion, the damage caused by FTX, Celsius, Three Arrows Capital and Terraform Labs has left an indelible mark on the industry. In addition, it is necessary to take into account the macroeconomic component, since many countries are struggling with rapid inflation, and supply chains have not fully recovered after the coronavirus pandemic. According to the expert, investors need to understand that the long-term bullish trend is over. Unfortunately, the digital asset industry needs to prepare for new challenges, and the current bullish trend in the market is only a local correction within the overall bearish trend.

Jim Cramer of CNBC agrees with Nicholas Merten. The “Mad Money” TV presenter has also focused on the risks in light of the FTX crash. He noted that a similar situation could happen at any time with any other large crypto company. In his opinion, no one knows what the big players in the industry are really hiding. And there are no guarantees that they are actually honest with their customers. Any new scandal, according to him, will cause a sharp drop in bitcoin quotes, which means that investors' assets are at risk. Citing Carley Garner, senior commodity strategist & broker at DeCarley Trading, he recommended staying away from virtual currencies and opting for physical gold instead as a hedge against rising inflation and economic chaos.

Such an authority as Jamie Dimon, the head of the American banking giant JPMorgan, has also gone with a heavy roller on digital gold. He doubted on the air of CNBC that the supply of bitcoin is really limited to 21 million coins. "How do you know? Maybe it will go up to 21 million, and Satoshi's photo will pop up and laugh at all of you,” he suggested. This top manager already publicly expressed skepticism in October 2022 regarding the code embedded in the algorithm of the first cryptocurrency. “Have you all read the algorithms? Guys, do you believe in all this? ”Dimon grinned at the time.

For your information. Given the programmed halvings, the bar of 21 million should be reached by 2141. At the same time, experts say that the limit on bitcoin emissions is provided by only five lines of the code. It is open for study, and anyone can verify this.

And here the question arises: what if Jamie Dimon's raids on bitcoin are connected with the desire to eliminate this successful competitor? After all, thanks to the recent bullish rally, the capitalization of the flagship cryptocurrency has exceeded $443 billion, and has surpassed all key traditional financial institutions, including global world banks, in this indicator. For example, the capitalization of the American banking giant JPMorgan Chase is $406.42 billion, while Bank of America has a capitalization of $277.56 billion. In addition, BTC is ahead of companies such as Alibaba ($317.01 billion), Samsung ($335.37 billion), Mastercard ($365.09 billion) and Walmart ($385.15 billion). However, it has slightly lost to Tesla ($454.72 billion).

According to CompaniesMarketCap, bitcoin is the 16th most valuable asset in the world. The leaders of the rating are gold ($12.77 trillion), Apple ($2.25 trillion) and Saudi Aramco ($1.94 trillion).

At the time of writing this review (Friday evening, January 27th), BTC/USD is trading in the $23,070 zone. The total capitalization of the crypto market is $1.060 trillion ($1.038 trillion a week ago). The Crypto Fear & Greed Index has grown from 51 to 55 points over the week and has moved from the Neutral zone to the Greed zone, where, according to the creators of the index, it is already dangerous to open short positions.

And at the end of the review, our half-forgotten half-joking column of crypto life hacks. This time we will talk about one interesting observation. Of course, if you decide to adopt it, the whole responsibility will fall on you. But if you can earn money thanks to it, be sure to tell us about it. And don't forget to say thank you.

So, it turns out that buying bitcoin at the end of the first day of the Chinese New Year and selling it after ten trading days guarantees an average profit of more than 9%. This was found out by Matrixport Research and Strategy Director Markus Thielen. According to his observations, the scheme has generated income in 100% of cases for the last eight years, from 2015 to 2022. Such an operation would bring the greatest profit in 2017: 15%. Even in 2018, against the backdrop of the previous crypto winter, the investor received income, although only 1%.

To implement the scheme In 2023, it was necessary to buy digital gold on January 22, and sell the assets 10 days later, on February 1. Bitcoin was trading near the $22,900 mark on the day of the proposed purchase. Thielen believes its price should approach $25,000 by the beginning of February. We will soon find out whether the phenomenon will be justified this time. And if anyone decides to follow Thielen's recommendations in the future, we would like to inform you that the next Chinese New Year begins on Saturday, February 10, 2024.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for January 23 - 27, 2023

EUR/USD: The Calm Before the Storm


The DXY Dollar Index (the ratio of the USD to a basket of six other major foreign currencies) has been moving in a fairly narrow sideways channel since January 12. A small surge in volatility was caused by the publication of data on retail sales in the US on Wednesday, January 18. However, everything returned to normal quickly, and DXY continued its eastward journey, sandwiched in the 102.00-102.50 range. EUR/USD behaved similarly, which, having started on Monday at 1.0833, completed the five-day period at 1.0855.

This behavior suggests that the market has already taken into account everything that is possible in quotes. This includes a slowdown in inflation, a possible recession, and prospects for changes in the US Federal Reserve's monetary policy. A trigger is needed In order for a jump to occur, which, most likely, will be the FOMC (Federal Open Market Committee) meeting on February 01 and the comments of the Fed management following it. Only US GDP data will be released until then as for important macro statistics. This indicator will be announced on February 26, and it is very likely to show a slowdown in the country's economic growth (the forecast is 2.6-2.8% against 3.2% a quarter earlier). 

Market participants continue to wonder how much the interest rate will be raised at the February FOMC meeting. There are two options: either by 25 or 50 basis points (bp). Michelle Bowman, member of the Board of Governors, Mary Dehli, Chairman of the Federal Reserve Bank (FRB) of San Francisco, and Patrick Harker, Chairman of the Federal Reserve Bank of Philadelphia, spoke about 25 bp. Fed Vice Chair Lael Brainard did not express a clear preference for either of these options on Thursday, January 19. She did not say what peak rate she expects to see in 2023 either. However, she said the regulator's policy should remain restrictive to ensure a return to the 2.0% inflation target.

Her words coincide with the opinion of Fed Chairman Jerome Powell, who said a month ago that the regulator will keep rates at their peak until they are sure that the decline in inflation has become a sustainable trend. In his opinion, the base rate can be increased in 2023 to 5.1% and stay that high until 2024.

The market consensus forecast in December indicated the same value, 5.10%. However, the market has now stopped trusting the Federal Reserve, and expectations have fallen to 4.90%. And some analysts believe that the peak value of the rate will not rise above 4.75% at all. Moreover, it can even be lowered to 4.50% by the end of 2023. Given that the rate has already reached 4.50% at the moment, such a slight increase will clearly not benefit the dollar, but it will push up the competing currencies from the DXY basket and risky assets.

As for the common European currency, the swap market believes at the moment that with a probability close to 100%, the ECB rate will be increased by 50 bp on February 02, and the probability of the same rise in March is estimated at 70%.

Christine Lagarde, the head of the European regulator, speaking on Thursday, January 19 at the World Economic Forum in Davos (Switzerland), stressed that inflation remains too high, so the ECB will not relax its efforts to bring inflation under control. Ms Lagarde's colleague, ECB Governing Board member and Dutch Central Bank Governor Klaas Knot said on Thursday that the inflation situation remains unsatisfactory and that the market is wrong to expect only one 50bp rate hike in the future. There will be several such increases, according to Klaas Knot.

Such statements give euro bulls some hope. However, there are also those among European officials who take a more cautious position. Thus, Francois Villeroy, the head of the Bank of France, said in Davos that it is too early to talk about raising rates in March. And his words fell into rumors that the ECB is ready to move to 25 bps.

It is clear that the future of EUR/USD will be decided on February 01-02. In the meantime, 40% of analysts are counting on further strengthening of the euro, and the growth of the pair in the coming days. 50% expect that the US currency will be able to win back part of the losses. The remaining 10% of experts take a break in anticipation of the meetings of the Fed and the ECB. Among the indicators on D1, the picture is different: all 100% of the trend indicators are colored green. Among the oscillators, those are 65% of them, 20% signal that the pair is overbought, and the remaining 15% are painted in neutral gray. The nearest support for the pair is at 1.0800, then there are levels and zones 1.0740-1.0775, 1.0700, 1.0620-1.0680, 1.0560 and 1.0480-1.0500. The bulls will meet resistance at the levels of 1.0865, 1.0935, 1.0985-1.1010, 1.1130, after which they will try to gain a foothold in the 1.1260-1.1360 echelon.

China is celebrating the New Year next week, so we are happy to congratulate Chinese traders. As for the US and the Eurozone, the following events can be noted on the calendar. The ECB President Christine Lagarde will deliver a speech on Monday, January 23. Business activity indices (PMI and S&P Global) in the manufacturing sectors of Germany and the Eurozone as a whole will be published the next day. We will find out the value of the Business Climate Index (IFO) in Germany on Wednesday, January 25. As already mentioned, the value of the US GDP will become known on Thursday, in addition, a number of data from the consumer market and the labor market of this country will also come the same day. And the value of the Basic index of US household spending on personal consumption will be published at the very end of the working week, on Friday, January 27.

GBP/USD: Pound Counts on the Best

As in the US, retail sales in the UK also went down. They fell­ -1.0% (mom) in December, which is significantly lower than the forecast +0.5%. Analysts note that real spending in the country was significantly ahead of GDP in 2020-2022, but the rise in inflation led to a sharp halt in this process. And it is predicted that 2023 will be a period of retribution for this waste.

However, according to economists at HSBC, one of the world's largest financial conglomerates, things are not so bad. “With UK inflation likely to have peaked and could potentially slow more than the consensus forecast,” they write, “a less aggressive tone of tightening from the BoE now could mean a less dramatic reversal later in the year. And this may eventually become a minor positive factor for the British pound in the coming months. The shift towards better-than-expected domestic data should also be positive for the British pound." Economic performance is improving rapidly, experts say, thanks to a combination of a cheaper currency and higher interest rates. Suffice it to say that the UK trade balance for Q3 of last year showed the lowest deficit since December 2021. HSBC also believes that the growth of global market risk appetite will benefit the British currency as well.

In contrast to the EUR/USD flat trend, the British currency showed growth last week: GBP/USD approached the local December highs on January 18, reaching a height of 1.2435. Pound bulls are inspired by expectations that the Bank of England (BoE), in contrast to the fading activity of the Fed, on the contrary, will continue to vigorously tighten its monetary policy. It is predicted that from the current 3.50%, the rate may rise to 4.50 by summer. And an important day on this path may be February 02, when the next meeting of the BoE will take place.

The last chord of the week sounded at 1.2395. The median forecast for GBP/USD in the near future looks like this: 50% of experts believe that it is time for the pound to slow down its growth and are waiting for a correction to the south. Only 15% of experts side with the bulls, and 35% have taken a neutral position. Among the oscillators on D1, 85% are colored green, 15% signal that the pair is overbought. Trend indicators have 100% on the green side. Support levels and zones for the pair are 1.2330, 1.2250-1.2270, 1.2200-1.2210, 1.2145, 1.2085-1.2115, 1.2025, 1.1960, 1.1900, 1.1800-1.1840. When the pair moves north, it will face resistance at levels 1.2435-1.2450, 1.2510, 1.2575-1.2610, 1.2700, 1.2750 and 1.2940.

Highlights for the UK economy in the coming week include Tuesday January 24, when a pool of UK business activity (PMI) data will be released.

USD/JPY: Yen Outlook Is Positive as Well

Despite the fact that the Bank of Japan left its key rate unchanged at a negative level of -0.1% at its meeting on January 18, the yen is still among the favorites among the DXY currencies. USD/JPY fixed a low at 127.21 on Monday. It hasn't dropped this low since last May. Recall that this happened against the backdrop of a fall in the dollar and a decrease in the yield of US bonds (the US/Japan spread is at the lows of August-September 2022).

However, the pair corrected to the north and finished at 129.57 at the end of the week. However, according to many experts, data on the acceleration of inflation in the country will still force the Bank of Japan (BoJ) to tighten its monetary policy.

In general, inflation in the country in December amounted to 4.0% (y/y), accelerating from 3.8% in November. These rates are the highest since January 1991. Consumer prices in Japan excluding fresh food (a key indicator monitored by the country's central bank) rose 4.0% last month compared to the same month of the previous year. And this is the highest rate since December 1981. The indicator has remained above the BoJ's 2% target for 9 consecutive months.

Markets expect serious changes in monetary policy after April 08. It is on this day that Haruhiko Kuroda, the head of the Bank of Japan, will end his term, and he may be replaced by a new candidate with a tougher position. Prime Minister Fumio Kishida is likely to nominate this candidate in February. Kuroda will hold his last meeting on March 10, and the next BoJ meeting on April 28 will be held by the new head of the Central Bank.

Factors that could lead to further appreciation of the yen, in addition to a change in the BoJ, include improving Japan's balance of payments due to the devaluation of the yen and the resumption of tourism, as well as the revival of the safe-haven status of the yen and currency hedging by resident investors of their foreign investments. Economists at Danske Bank expect USD/JPY to fall towards 125.00 in the coming months. And according to the strategists of the international financial group Nordea, it may fall below 120.00 by the end of 2023.

Analysts' median forecast is also in line with Danske Bank and Nordea's forecasts. Their opinion on the near future of USD/JPY is distributed as follows: 75% of them vote for the pair to fall further. The remaining 25% have taken a neutral position. Not a single vote was given for the pair's growth this time. Among the oscillators on D1, 10% point north, 75% look south, and 15% point east. For trend indicators, 15% look north, 85% look in the opposite direction. The nearest support level is located at 129.30 zone, followed by levels and zones 128.90, 127.75-128.00, 127.00-127.25, 126.35-126.55, 125.00, 121.65-121.85. Levels and resistance zones are 130.45, 131.25, 132.00, 132.80, 133.60, 134.40 and then 137.50.

Among the events of the coming week, the report on the Meeting of the Monetary Policy Committee of the Bank of Japan, which will be published on Monday, January 23, is of interest.

CRYPTOCURRENCIES: Bitcoin Victory Over Artificial Intelligence

If you look at last week's chart, you can clearly see that the explosive growth of bullish optimism has almost come to naught. Recall that bitcoin received a powerful boost from January 09 to January 14 amid the publication of data on lower US inflation (CPI). Another contribution to the bulls' piggy bank was the news that FTX liquidators found liquid assets worth $5 billion. According to a number of bitcoin enthusiasts, this should allow crypto markets not to worry too much about the macroeconomic picture, which is still bearish.

But most likely, the last statement is wrong, and we should still worry. The growth of digital assets has been the result of an increase in the general global appetite of investors for risky assets. This can be seen if we compare the quotes of BTC/USD and stock indices S&P500, Dow Jones and Nasdaq. And while bitcoin has become the main beneficiary in this case, it was due of its increased volatility. And as we have repeatedly noted, the main factor determining the dynamics of both the stock and crypto markets in this situation is the monetary policy of the US Federal Reserve, including the change in the dollar interest rate.

Bitcoin has risen in price by more than 37% from January 01 to 18 2023, reaching a high of $22,715. The total market capitalization has exceeded $1 trillion for the first time in a long time. The enthusiasm of market participants has led to an increase in BTC trading volume twice in a week: the figure rose to $11 billion in the spot market. But, according to analyst Craig Erlam, there are no specific fundamental reasons for the further development of the bullish trend now.

Market growth in the first half of January came as a surprise to the bears. According to the statistics, they have lost about $1.2 billion in the last week alone. And this is only in BTC. The volume of liquidated short positions exceeded long positions by six times at some points. But all this happened at the expense of small and medium-sized investors. The number of bitcoin addresses that hold up to 1,000 BTC has increased dramatically. But institutional whales (more than 1000 BTC) practically did not react to what was happening and watched the bustle of shrimp with their characteristic grandeur and calmness. Suffice it to say that the inflow into bitcoin funds has been only about $10 million since January 10, and the number of wallets owned by whales continues to fall.

We have already written that many institutional investors are deterred from the crypto market by the lack of sufficient regulation. And now the US Congress has even created a new special subcommittee to solve this problem. However, Kevin O'Leary, CEO of venture capital firm O'Leary and host of the Shark Tank TV show, believes that adopting a strong regulatory framework will not solve the industry's problems or change the scale of fraud. The expert believes that even more crypto companies and exchanges will collapse this year. The reason for this, in his opinion, is people's ignorance.

Now let's talk about forecasts expressed in numbers. Ben Armstrong, a popular cryptocurrency YouTuber, believes that the price of the flagship cryptocurrency will jump to $30,000 by the end of February. And this will happen despite the fact that miners have been actively selling their assets lately in order to fix profits.

Legendary stock trader and analyst Peter Brandt, who, among other things, predicted the 2018 BTC correction accurately, also gave a fresh forecast for bitcoin’s movement. According to the specialist, BTC will be able to realize growth to levels near $25,000 in the near future. After that, a correction is not ruled out by the end of spring, that will give the cryptocurrency strength for a new rally. As a result, the coin will reach its previous highs near $68,000 in the second half of 2023. After that, another correction and a subsequent update of the absolute high are possible. In the longer term, Peter Brandt does not rule out bitcoin rising to $150,000 by early 2025. However, he warns that this is nothing more than his guess. Nobody knows how the main cryptocurrency will actually behave, according to the eminent trader.

The value of bitcoin could increase to $50,000-100,000 over the next two to three years. This opinion was expressed in an interview with CNBC by the founder of the hedge fund SkyBridge Capital Anthony Scaramucci. The businessman called 2023 a “recovery year” for the main cryptocurrency. Of course, the decisions of the US Federal Reserve will influence the digital gold rate. And if the financial regulator takes measures to stimulate the economy in the middle of the year, this will be a good impetus for the rise in the bitcoin price. Will it take the measures?

Bloomberg Intelligence senior strategist Mike McGlone agrees that the bottom in the cryptocurrency market has already been passed. But his opinion on the Fed's monetary policy is very different. McGlone has noted that the charts are reminiscent of the 2018 dynamics, when the price of the first cryptocurrency rebounded from $5,000. However, the macroeconomic situation is now completely different, which is why the bitcoin growth may stop at current values. Thus, the NASDAQ index may continue to fall, and the correlation between bitcoin and the stock market has been quite significant in recent years. “We are still pulling liquidity from global markets, and there are reasons for this. And even if equities and other risky assets rise, liquidity will remain limited by central banks. The big difference from 2018 is that the Fed had already begun to ease its policy then, and we do not see any easing today,” the Bloomberg strategist explained.

“Look at the NASDAQ, the chart breaks through the 200-week SMA. This has only happened 3 times in history, and the Fed has always eased its monetary policy. But the US Central Bank is tightening it now. The overall picture is optimistic for bitcoin, but the situation is unprecedented now, so anything can happen,” McGlone said.

Peter Brand admitted Above that it is almost impossible to accurately predict the behavior of bitcoin. The artificial intelligence (AI) of the ChatGPT test platform supported him in this opinion. This platform has become popular due to its ability to solve a wide range of tasks with high accuracy, including asset trading.

Experts from Finbold asked the artificial intelligence what the bitcoin price will be in 2030. Finbold suggested that ChatGPT would be able to provide a fairly accurate forecast based on historical BTC price data, market data, technical and fundamental analysis, and other indicators. But the AI didn't live up to expectations. It was never able to predict the exact rate and admitted that it is hard to name the price of the coin in the long term. The AI cited high market volatility and unclear regulatory rules as the reasons. However, the AI, like Peter Brandt, believes that the flagship cryptocurrency has potential for growth in the coming years. This will be possible due to the development of technology, the maturation of the cryptocurrency market and their mass distribution.

The future of the digital market is indeed vague. However, we can tell exactly what is happening in the present. So, at the time of writing the review (Friday evening, January 20), BTC/USD is trading in the $22,700 zone. The total capitalization of the crypto market is $1.038 trillion ($0.968 trillion a week ago). The Crypto Fear & Greed Index has left the Fear Zone and is now in a Neutral state at 51 points (46 a week ago).


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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NordFX Efforts in the Middle East Are Recognized by Forexing Award

10 years ago, back in 2013, NordFX won the Best Forex Arabic Platform award at the MENA 12th Forex Show. In 2020, the Forex Awards Ratings Expert Committee also recognized the company's efforts in this region. And now, following a vote by traders and visitors to Forexing site, NordFX has been named “Best Broker Middle East 2022”.

Forexing is a popular global financial news portal delivering up-to-date Forex & Other Financial market news and analysis to Newbie and Professional Traders. In addition, the portal pages contain educational and other useful materials, the purpose of which is to help visitors improve the efficiency of their trading.

Forexing presents Forex Awards to Brokers across the Globe for their best approach to clients for the particular year. The portal team reviews, evaluates and nominates the best companies in the industry. Throughout the voting time, all the retail traders are welcome to vote for their favorite company for a particular service. The awards are given to the retail international and regional Forex brokers that receive the most votes. One of the winners in 2022 was NordFX, which confidently outperformed its competitors in the Best Broker Middle East nomination.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for January 16 - 20, 2023

EUR/USD: Low Inflation Has Dropped the Dollar

The main event of the past week, which dealt another blow to the dollar, was the publication on Thursday, January 12, of data on consumer inflation in the US. The actual figures were fully in line with market expectations. The consumer price index (CPI) in annual terms fell to its lowest level since October 2021 in December: from 7.1% to 6.5%, and excluding food products and energy, from 6.0% to 5.7%. Thus, the US inflation rate has been slowing down for 6 months in a row, and core inflation has been slowing down for 3 consecutive months, which is a strong catalyst for easing the Fed's current monetary policy.

Market participants are firmly convinced that the interest rate will be increased by no more than 25 basis points (bp) at the February meeting of the FOMC (Federal Open Market Committee). In particular, Michelle Bowman, a member of the Board of Governors, and Mary Deli, Chairman of the Federal Reserve Bank (FRB) of San Francisco, spoke about this. The head of the Philadelphia Fed, Patrick Harker, left the camp of the hawks as well, also saying that the rate should be raised only by 25 bp.

Fed chief Jerome Powell noted a month ago that the regulator would keep rates at their peak until they were sure that the decline in inflation has become a sustainable trend.  According to him, the base rate may be increased to 5.1% in 2023 and stay that high until 2024. However, the latest macro statistics, including data on inflation, business activity and the labor market, suggests that the peak value of the rate will be 4.75%. Moreover, it can even be lowered to 4.50% by the end of 2023.

As a result of these forecasts, the US currency depreciated against all G10 currencies. The DXY dollar index updated the June 2022 low, falling to 102.08 (it climbed above 114.00 at the end of September). The 10-year Treasury yield dropped to a monthly low of 3.42%, while EUR/USD jumped to 1.0867, the highest since last April.

The yield spread between 10-year US and German bonds is at its lowest level since April 2020, with smaller European countries narrowing their spreads. This dynamic indicates a decrease in the likelihood of the EU economy falling into a deep recession. Moreover, the winter in Europe turned out to be quite warm and energy prices went down, despite problems with their supply from Russia. And this put pressure on the US currency as well.

China could help the dollar. According to various estimates, China's GDP growth may reach 4.8-5.0%, or even higher in 2023. Such economic activity will add 1.0-1.2% to global inflation, which will give Fed hawks certain advantages in maintaining tight monetary policy. But all this is in the future. The market is currently waiting for the next meeting of the FOMC on February 01 and for the statements that will be made by the US Federal Reserve officials on its results.

EUR/USD closed last week at 1.0833. 20% of analysts expect further strengthening of the euro and the growth of the pair in the coming days, 50% expect that the US currency will be able to win back part of the losses. The remaining 30% of experts do not expect either the first or the second from the pair. The picture among the indicators on D1 is different: all 100% are colored green, but 25% of the oscillators are in the overbought zone. The nearest support for the pair is at 1.0800, then there are levels and zones 1.0740-1.0775, 1.0700, 1.0620-1.0680, 1.0560 and 1.0480-1.0500. The bulls will meet resistance at the levels of 1.0865, 1.0935, 1.0985-1.1010, 1.1130, after which they will try to gain a foothold in the 1.1260-1.1360 echelon.

Next week, traders should take into account that Monday is a holiday in the US, Martin Luther King Day. The calendar can highlight Tuesday, January 17, when the values of the Consumer Price Indices (CPI) and Economic Sentiment (ZEW) in Germany will become known. Data on Eurozone consumer prices and US retail sales will be released on Wednesday, January 18. The December value of the American Producer Price Index (PPI) will also become known the same day.

GBP/USD: Surprise from UK GDP

GBP/USD took advantage of broad pressure on the dollar on Thursday, January 12 to rise to its highest level since December 15, reaching 1.2246. The UK GDP gave the pound bulls a pleasant surprise the next day, on Friday, December 13: it suddenly turned out that the country's economy expanded by 0.1% over the month against expectations of its fall by 0.3%. However, in annual terms, GDP was significantly lower than the previous value: 0.2% against 1.5% a month earlier. As a result, the pair ended the five-day period a little lower than the local high, at the level of 1.2234.

An important day for the pound may be February 02, when the next meeting of the Bank of England (BoE) will take place. And while investors expect the Fed to slow down the rate of interest rate hikes, the Bank of England, on the contrary, will further tighten monetary policy. It is predicted that the rate may rise from the current 3.50% to the level of 4.50% by the summer, which will serve as a certain support for the British currency.

As for the short term, here the median forecast for GBP/USD looks as uncertain as possible: 10% of experts side with the bulls, 25% side with the bears, and the vast majority (65%) have taken a neutral position. Among the oscillators on D1, 90% are colored green, of which a third gives signals that the pair is overbought, the color of the remaining 10% is neutral gray. Trend indicators are 100% on the green side. Support levels and zones for the pair are 1.2200-1.2210, 1.2145, 1.2085-1.2115, 1.2025, 1.1960, 1.1900, 1.1800-1.1840. When the pair moves north, it will face resistance at levels 1.2250-1.2270, 1.2330-1.2345, 1.2425-1.2450 and 1.2575-1.2610, 1.2700 and 1.2750.

As for the developments regarding the UK economy in the coming week, we can highlight Tuesday January 17, when we find out what is happening in the country's labor market. The value of such an important inflation indicator as the Consumer Price Index (CPI) will be published the same day, which will certainly have an impact on the BoE's decision on the interest rate. Data on December retail sales in the UK will also be published at the very end of the working week, on Friday, January 20. It is expected that they will rise by 0.4% compared to the fall of 0.4% in November thanks to the pre-Christmas hype.

USD/JPY: Should We Expect Surprises from the Bank of Japan

The yen turned out to be the favorite of the week, and even on Friday, January 13, it continued to put pressure on the dollar, fixing a local low at 127.45. It put the last chord of the week a little higher, at the level of 127.85.

Why did this happen? First, the yen strengthened against the background of a falling dollar and a decrease in US bond yields (the US/Japan spread fell to its lowest level since August 2022). Being the most sensitive to the dynamics of treasuries, it managed to win back 2.5% from the dollar. And second, the press seriously helped it. Japanese newspaper Yomiuri Shimbun, citing confidential sources, reported that Bank of Japan (BoJ) officials plan to discuss the implications of their ultra-dove approach to monetary policy and consider adjusting their bond-buying program to "reduce its negative effects" on January 17-18. Other adjustments in the actions of the regulator are not ruled out.

The Bank of Japan is the latest major central bank to keep interest rates at a negative level of -0.1%. We wrote Earlier that a radical change in monetary policy can be expected only after April 8. It is on this day that Haruhiko Kuroda, the head of the Bank of Japan, will end hs term, and he may be replaced by a new candidate with a tougher position. And now, almost all experts interviewed by Bloomberg believe that the Japanese Central Bank will not change the main parameters of its policy next week but will limit itself to discussing them. At the same time, 38% of respondents expect real changes either in April or June.

Of course, it will be possible to give more accurate forecasts after the January meeting of the Bank of Japan. So far, the opinion of analysts regarding the near future is distributed as follows: 50% of analysts vote for the correction of the pair to the north, and 50% simply decline to comment. The number of votes cast for the continuation of the downtrend turns out to be 0 this time. For indicators on D1, the picture mirrors the readings for GBP/USD. Among the oscillators, 90% are colored red, of which a third gives signals that the pair is oversold, the color of the remaining 10% is neutral gray. Trend indicators have 100% on the red side. The nearest support level is located in the zone 127.00-127.45, followed by the levels and zones 126.35-126.55, 125.00, 121.65-121.85. Levels and resistance zones are 128.00-128.25, 129.60-130.00, 131.25-131.70, 132.85, 133.60, 134.40 and then 137.50.

From the events of the coming week, in addition to the mentioned meeting of the Bank of Japan and its interest rate decision, the market's attention will be drawn to the subsequent press conferences and comments from the regulator's officials regarding its monetary policy.

CRYPTOCURRENCIES: Thaw or Crypto Spring?


BTC/USD has once again returned to the $18,500-20,000 area. This zone acted as support since last June, and it turned into resistance in November. The pair traded there in December 2017 as well, after which a protracted crypto winter followed. Bitcoin was able to return to these values only three years later, at the end of November-December 2020. This rise marked the beginning of a powerful bullish rally then: the coin rose in price by 3.5 times in less than six months, reaching $64,750 in April 2021. This was followed by another collapse.

How will bitcoin behave this time: will it collapse like in 2017, or will it take off like in 2020? Is this the onset of crypto spring or just a small thaw? There is no consensus on this matter. It is possible that the pair's current rise is due not to the growing strength of digital gold, but to the dollar, which has been weakening for 16 consecutive weeks. Bitcoin received a powerful boost after the publication of the US CPI. Against this background, the voices of bitcoin optimists sound more confident and louder. Moreover, the liquidators of the FTX exchange found liquid assets worth $5 billion, which will be used to pay off part of the debts to creditors. According to some analysts, along with the decline in CPI, this makes it possible for crypto markets not to worry too much about the macroeconomic picture, which is still bearish.

Dante Disparte, Head of Strategic Development at Circle, believes that despite the 2022 Ice Age, digital assets and blockchain will continue to be integral tools of the economy. Major banks and financial institutions will continue to introduce cryptocurrencies into their product lines. As for the bankruptcy of several crypto-lenders and the collapse of the FTX exchange, these events, according to Dispart, can be a boon for the industry, as they lay the foundation for more responsible and affordable investments.

Increasing regulatory pressure can help restore investor interest and confidence in the industry. The long-awaited MiCA (Markets in Crypto Assets Regulation) is expected to come into force this year. The SEC is highly likely to take a number of important steps in this direction as well.

Another expert with a positive outlook is University of Sussex finance professor Carol Alexander. She had been prone to BTC falling to $10,000 in 2022 in her previous forecast. This did not happen, although the forecast almost came true. However, the financier predicts now that the first cryptocurrency can reach $50,000 in 2023. The professor believes that the catalyst will be the influx of more “dominoes” that fell apart after the collapse of the FTX exchange. “2023 will be a managed bull market, not a bubble,” she writes. - We will not see a jump in the rate, as before. But we will see a month or two of stable trending prices interspersed with periods of limited range, and perhaps a couple of short-term crashes.”

Bill Miller, an American investor, and fund manager, also defended bitcoin. He believes it is wrong to link BTC to the bankruptcy of crypto companies such as FTX and Celsius, since these are centralized entities that should not be confused with the decentralized bitcoin network. Miller has once again confirmed his belief in the main cryptocurrency and said that its price will definitely increase by the end of the year.

According to Alistair Milne, Chief Information Officer of the Altana Digital Currency Fund, “we should see bitcoin at least at $45,000 by the end of 2023.” However, the specialist warns that “if central banks decide to allow a higher inflation target […] to avoid a recession, hard assets could become fashionable again.” As for the longer-term outlook, Milne believes that BTC should reach $150,000-300,000 by the end of 2024, “and this is probably the peak of opportunities for the bulls.”

Tim Draper, a third-generation venture capitalist and co-founder of Draper Fisher Jurvetson, is also hoping for 2024. He believes that the halving planned for this year will have a big impact on the price of the main cryptocurrency, which will eventually reach $250,000.

Another expert who joined the bull train was analyst Dave the Wave, known for predicting the 2021 bitcoin crash. He believes that the coin is now on its way to breaking through its “long-term resistance diagonal.” In his opinion, "a technical movement over the next month or two may be enough to break this resistance." Dave the Wave has previously said that its Logarithmic Growth Curve (LGC) model indicates that bitcoin could rise to $160,000 by January 2025.

Eric Wall, Chief Investment Officer at crypto-currency hedge fund Arcane Assets, gives a much more modest forecast: the expert believes that the price of bitcoin may exceed $30,000 in the coming year. Eric Wall often bases his comments on the BTC Rainbow Price Chart, an analytical tool created by BlockchainCenter. And this time he said that the $15,400 exchange rate was the bottom for bitcoin.

Jiang Zhuoer, founder and CEO of a number of crypto projects, agrees with Eric Wall. By his calculations, all three previous bear markets took the same amount of time to go from the previous high to the bottom. Based on this, Jiang Zhuoer concludes that we are now in the last sideways period of the bear market bottom. His optimistic estimate suggests that if the 2018 scenario repeats, BTC price could be flat for another two months before the next bull run begins. At the same time, events such as bankruptcies of crypto companies will no longer have a significant impact on the prices of major digital assets.

The strategists of the British international financial conglomerate Standard Chartered strongly disagree with this statement. According to them, “more and more crypto companies and exchanges are facing insufficient liquidity, leading to further bankruptcies and the collapse of investor confidence,” which could lead to BTC falling to $5,000 this year.

It is said that the truth lies in the middle. This is exactly the “optimistic-pessimistic” position taken by Galaxy Digital CEO Mike Novogratz. He said in a recent interview with CNBC that the prospects for cryptocurrencies are not so good, but everything is not so bad either. Leveraged traders closed out their positions in December 2022, creating what the entrepreneur called a “clean market.” In addition, market participants have significantly reduced their spending and will continue to do so in order to get through the transition period. Novogratz also stressed that 2023 will be a defining year for the future development of the industry. At the same time, he pointed to the problems that exist between Gemini and Genesis, which could create an unpleasant situation for the entire digital asset market.

Another source of nervousness is the Binance situation. According to a recent Forbes report, the exchange lost $12 billion in assets due to users continuing to withdraw money from the exchange. And despite statements from Binance CEO Changpeng Zhao that the situation has calmed down, the outflow of funds is now only increasing.

The new year 2023 has just come. There are still eleven and a half months ahead, which will show which of the forecasts will turn out to be closer to reality. In the meantime, at the time of writing the review (Saturday January 13), BTC/USD has broken through the $20,000 horizon and is trading in the $20,500 zone. The total crypto market capitalization is $0.968 trillion ($0.790 trillion at the low of December 30). The Crypto Fear & Greed Index rose from 25 to 46 points in a week, but still remains in the Fear zone, although it is already close to the Neutral state.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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USDJPY and GBPUSD: What Happened in 2022, What Will Happen in 2023

We talked a week ago about how economists from the world's leading financial institutions see the future of EUR/USD in 2023. However, our reviews have included two more major pairs for many years, USD/JPY and GBP/USD. And it would be unfair to ignore them this time. Moreover, after the euro, the Japanese yen and the British pound are the most significant components in the formation of the US Dollar Index DXY (13.6% and 11.9%, respectively).

But in addition to forecasts for the future, we will traditionally tell you what the experts' expectations were regarding the past, 2022, and how close they turned out to be.



USD/JPY: First North, Then South

We titled the forecast for this pair a year ago as “Japan Needs a Weak Yen”. And this was absolutely true: starting at 115.00 on January 1, thanks to ultra-soft monetary policy and a negative interest rate (minus 0.1%), the pair came close to 152.00 on October 21. The last time it was this high was 32 years ago. Even the Ministry of Finance and the Bank of Japan (BoJ) were afraid of such a weakening of their national currency, and currency interventions were urgently launched to save it. The yen was also assisted by the expectations of the US Federal Reserve's transition from an extremely tough, hawkish policy to a softer one. As a result, the annual dynamics of USD/JPY took the following form (data are as of the end of each quarter): Q1 - 121.00, Q2 - 135.00, Q3 - 144.00 and Q4 - 131.00.

 Almost none of the experts doubted a year ago that the differentiation between the approaches of the US and Japanese regulators would strengthen the dollar's position. But almost no one expected that the jump would be so powerful. The closest to reality (but still far enough) was the forecast of the Dutch banking ING Group (Internationale Nederlanden Groep), which looked like this: Q1 - 114.00, Q2 - 115.00, Q3 - 118.00 and Q4 - 120.00. Morgan Stanley (Q4 - 118.00) and Amundi (Q4 - 116.00) are next in descending order.

The French financial conglomerate Societe Generale, the British Barclays Bank and CIBC (Canadian Imperial Bank of Commerce) also indicated a maximum of 116.00, but not at the end of the year, but in the Q2. Further, according to analysts of these financial institutions, the yen had to move the dollar to the zone of 114.00-115.00. Goldman Sachs missed the most, they believed that the pair would meet 2023 with a fall to 111.00.

The final statistics for the past year are not yet known. But it is expected that the final consumer inflation in 2022 will be 2.9%. This is slightly above the target, but well below the performance of other major countries whose regulators have been aggressively raising rates over the past year in an effort to curb price increases. Moreover, according to BoJ forecasts, this figure may fall to 1.6% by the end of 2023. And this raises a logical question: if everything is so good, why tighten the current monetary policy, raise the base rate and create problems for producers?

The Central Bank of Japan did just that at its last meeting last year, on December 20, leaving the rate unchanged. However, it still managed to surprise the market by expanding the range of fluctuations in government bond yields to 0.5%. This decision led to the growth of the national currency against the dollar by more than 3%.

Further, a period of calm is likely to come, and there will be no major changes in the monetary policy of the Central Bank of Japan during the Q1. Certain steps can be expected only after April 08. It is on this day that the term of office of BoJ head Haruhiko Kuroda ends, and a new candidate with a tougher position may take his place. However, despite the fact that there are candidates with more hawkish views among the candidates, we can hardly expect radical changes.

We described what the US Federal Reserve, counterpart for USD/JPY, plans for 2023 in the previous review. And if the Japanese regulator remains in its current positions, the interest rate gap will increase, but not by much. And then it stabilizes completely.  Some experts suggest that the state of affairs in China may have a serious impact on the yen. If China's economic indicators continue to sag, the Japanese currency may become a "safe haven" for Asian investors, which will help strengthen it.

Perhaps it was the above factors that influenced the opinion of the strategists at the world's leading banks. Thus, ING assumes that USD/JPY may approach 125.00 at the end of 2023. Societe Generale gives a similar quarterly forecast: Q1 - 135.00, Q2 - 135.00, Q3 - 130.00 and Q4 - 125.00. HSBC also estimated that it will meet 2024 almost where it is now, around 130.00.

There are still 12 months to go until the end of December, and a lot of unexpected things can happen during this time. The previous three years have been clear evidence of this: the COVID-19 pandemic and Russia's armed invasion of Ukraine have shattered many forecasts and calculations. That is why it is interesting to see what experts say in a shorter time period.

The range of opinions regarding the dynamics of the pair in Q1 is unusually wide. Some analysts (not many of them) expect the pair to further decline, now to the 124.00-125.00 zone. Goldman Sachs and Brown Brothers Harriman, on the contrary, expect the pair to test the 150.00 height again. Barclays Bank and Bank of America are also looking north at 146.00-147.00. And although the forecasts of ING, BNP Paribas and CIBC look somewhat more modest (136.00-138.00), it is obvious that most influencers expect the dollar to strengthen against the yen in January-March.


GBP/USD: Still at the Сrossroads

Last year's forecast for this pair was headlined "At the Crossroads of Three Roads." And this was due to the fact that the position of the Bank of England (BoE), unlike its counterpart from Japan, was much less predictable. There were three options: north, south, or east.

Although the UK's dependence on energy was incomparably lower than in the European Union, the global crisis associated with anti-Russian sanctions did not bypass it.  Starting at 1.3500 on January 1, 2022, the pair moved as follows (the data are as of the end of each quarter): Q1 - 1.3100, Q2 - 1.2100, Q3 - 1.1100 and Q4 - 1.2000. GBP/USD reached a 37-year low on September 26, 2022, finding a bottom around 1.0350.

Analysts at ING had forecast that the pound would fall somewhere in the middle of a triangle of a stronger US dollar, stable commodity currencies and weaker low-yielding currencies. Therefore, according to their scenario, GBP/USD  should have moved sideways: Q1 - 1.3300, Q2 - 1.3400, Q3 - 1.3400 and Q4 - 1.3400. However, they were wrong. But this mistake is nothing compared to the patriotic scenario of the British bank Barclays: Q1 - 1.3300, Q2 - 1.3700, Q3 - 1.4000 and Q4 - 1.4200. That is, instead of 1.4000, the pair was at 1.0350 at the end of Q3. An error of 3,850 points!  

Thanks to the tightening of the BoE position and expectations of a softening of the Fed's position, the pound managed to win back part of the losses and rise to the 1.2000 zone in October-December 2022. However, specialists of the German Commerzbank consider the current situation only a temporary respite and expect increased pressure on the pound.

With the economic recovery from the crisis, the US is doing much better than the UK. Representatives of the Central Bank of the United Kingdom spoke openly about the difficult times. A recession began last year, which, according to the forecasts of the Central Bank, will last until mid-2024, while the economy will shrink by 2.9%. At the moment, the pound's vulnerability is also associated with a large current account deficit and galloping inflation, which shows multi-year highs. First of all, this situation has arisen due to the sharp increase in the cost of importing oil and gas.

It is likely that the Bank of England will continue to raise rates in 2023 in an attempt to bring price growth under control. At the moment, the Fed and BoE interest rates are 4.50% and 3.50%, respectively. The gap is not as big as it used to be, only 100 bp. This advantage of the dollar may continue, and rates may reach parity if the British regulator becomes even more hawkish.  In the meantime, economists are talking about raising rates in Q1 and Q2 by 50 bps (basis points) and 25 bps, respectively, to 4.25%.

In such a situation, according to HSBC, one of the largest financial conglomerates in the UK, events in GBP/USD will develop as follows: Q1 - 1.2200, Q2 - 1.2300, Q3 - 1.2400 and Q4 - 1.2500. The French Societe Generale Group sees quotes as follows: Q1 - 1.2000, Q4 - 1.2400.

As in the case of USD/JPY, the forecast for GBP/USD for the next quarter looks more specific and varied: from 1.0700 at TD Securities Research to 1.2600 at Citi Bank. In the middle of this range are forecasts: BNP Paribas (1.0800), Barclays (1.1300), CIBC (1.1500), Scotiabank (1.2000) and Westpac Institutional Bank (1.2200).

***

We will traditionally switch from annual and quarterly forecasts to weekly ones starting next week. We think the guidelines will be much clearer there.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Traders from NordFX TOP-3 Earned Almost 1.5 Million USD in 2022

NordFX publishes regular statistics on the performance of its clients' trading transactions, as well as the profits received by the company's IB partners. The results of not only the last month, but the whole of 2022 have been summed up this time.

- The best result among traders was shown in December by a client from West Asia (account No. 1657XXX), whose profit amounted to 115,335 USD and was received mainly due to transactions with gold (XAU/USD).
- The second place in NordFX's top three highest-performing clients belongs to the holder of account No. 1637XXX, who earned 46,115 USD from transactions with Brent crude oil (Ukoil.c).
- And, finally, the third step of the December podium was occupied by another representative of the West Asian region (account No. 1644XXX) with a profit of 22,256 USD, who also traded gold (XAU/USD).

Now about the results of the entire 2022. The composition of the top three changed from month to month, with representatives from various countries and regions taking places on the trading podium. In total, the TOP-3 participants earned an impressive amount of 1,441,457 USD last year. Thus, the average income of a trader who was in the TOP-3 was 40,040 USD per month. The client from Southeast Asia (account No. 1620XXX) managed to get the maximum profit, having earned 146,396 USD on transactions with gold (XAU/USD) in April.

Note that gold occupies the top, golden step in the TOP-3 of the most profitable trading instruments. It was transactions with this noble metal that brought NordFX traders to the podium most often. The British pound is on the silver step. As for the most famous pair, EUR/USD, it managed to take only third place in this ranking, having hardly overtaken pairs with the Japanese yen, Canadian and Australian dollars.

Among the NordFX IB partners, December TOP-3 is as follows:
- the largest commission, 5,830 USD, was credited to a partner from South Asia, account No.1562ХXХ;
- the next is their compatriot (account No. 1618XXX), who received 5,692 USD in a month;
- and, finally, their colleague from Western Asia (account No. 1621XXX) closes the top three, having earned 3,525 USD in commissions in December.

Like traders, the composition of the top three was constantly updated. In total, its participants were paid 243,344 USD in 2022. The largest commission, 24,700 USD, was credited to a partner from Southeast Asia, account No.1371ХXХ in June.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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What to Expect from the Dollar and the Euro in 2023

We analyzed last week what happened to the two most popular currencies in 2020-2022, what forecasts were given then by the strategists of leading financial institutions for EUR/USD, and how accurate they turned out to be. Now it's time to tell what experts expect from 2023.


It should be noted right away that these forecasts differ greatly: life has brought too many “surprises” in recent years and has left too many unresolved problems for the future.

What will be the geopolitical situation, in what direction and at what pace will the monetary policy of the Fed and the ECB go, what will happen to the recession and labor markets, will it be possible to defeat inflation and curb energy prices? We have yet to find out the answers to these and many other questions. There are a lot of uncertainties, which do not allow experts to come to a common opinion.

Some believe that EUR/USD will approach the 2000-2002 lows around 0.8500, while others believe that it will rush to 1.6000, as it was in 2008. Of course, these are extreme values. It is highly likely that the pair will not reach either the first or the second of these extremes, and the range of oscillations will be much narrower.  At least, this is what most reputable experts point out, and we will introduce you to their forecasts.


What the Bulls Say for EUR/USD

Deutsche Bank strategists assume that the pair may return to the February-March 2022 figures in 2023 (a two-month fluctuation range of 1.0800-1.1500). In their opinion, this may happen even if the geopolitical situation does not improve and remains at the level of the second half of 2022. However, in their opinion, such a weakening of the dollar is possible only if the Federal Reserve begins to ease its monetary policy in the second half of 2023.

And that is what might not happen. Recall that Fed Chairman Jerome Powell said at the press conference following the December FOMC (Federal Open Market Committee) meeting that the regulator will keep interest rates at their peak until it is sure that the decline in inflation has become a stable trend. The base rate can be raised to 5.1% in 2023 and remain so high until 2024. (Recall that 4.6% was mentioned as the peak rate in the September statement). According to Jerome Powell, the Fed understands that this will trigger a recession, but is willing to pay that price to control inflation.

It should be noted that the position of the US Central Bank runs counter to the position of the United Nations, which called for a suspension of rate hikes. The UN believes that further tightening of monetary policy could cause serious damage to developing countries, which have already suffered greatly from the increase in the cost of goods in the United States.

In addition to putting pressure on the Fed, there is another way to balance and even weaken the dollar's position. This is what the ECB and several other Central Banks have demonstrated in recent months by raising their own interest rates. As we wrote in the previous review, the common European currency managed to seriously push the dollar over the last three months of 2022 and lift EUR/USD by about 1,200 points.

ECB President Christine Lagarde, as well as her overseas counterpart, showed a hawkish attitude at the press conference on December 15 and made it clear that quantitative tightening (QT) in the Eurozone will not end there: the euro interest rate will face several more increases in 2023. The ECB also plans to start reducing its balance sheet from March.

At the beginning of 2023, the gap between the dollar and euro rates is 200 basis points (4.5% and 2.5%, respectively). The swap market expects that the European regulator may raise its rate by another 100 bp in the coming year, which will provide some support for EUR/USD.

Economists at Bank of America Global Research agree with this development. “According to our baseline scenario,” they write, “the US dollar will remain strong in early 2023 and will switch to a more stable downward trajectory after the Fed's pause.” Starting from Q2, according to BofA, the dollar will gradually weaken, and EUR/USD will rise to 1.1000.

German Commerzbank supports this scenario. “Given the expected change in the interest rate of the Fed and provided that the ECB refrains from cutting interest rates […], our target price for EUR/USD for 2023 is 1.1000,” economists of this banking group predict.

The French financial conglomerate Societe Generale also votes for the weakening of the dollar and the growth of the pair. “We expect,” says Kit Juckes, Chief Global FX Strategist at SocGen, “that the yield difference between 10-year US and German bonds will fall from 180 basis points to 115 basis points by the end of Q1, and the difference between 2-year interest rates will fall from 190 bps to less than 1%. The last time we saw such a difference between rate and return, EUR/USD was above 1.1500 and this is where it will be by the end of Q1 if it continues to rise at the same rate as it reached 0.9500 at the end of September ".


What the Bears Say For EUR/USD

Analysts at the Economic Forecasting Agency expect the pair to grow to 1.1160 in the coming year, but then, in their opinion, it will fall smoothly but steadily and reach 1.0430 at the end of Q2, 1.0050 at the end of Q3, and end the year at 0.9790.

Economists at Internationale Nederlanden Groep have taken a much more radical stance. ING is confident that all the pressures of 2022 will continue into 2023. High energy prices will continue to put pressure on the European economy. Additional pressure will be exerted if the US Federal Reserve suspends the printing press before the ECB does. Analysts of this largest banking group in the Netherlands believe that the exchange rate of 0.9500 euros per dollar will be adequate in Q1 2023, which, however, may grow to parity of 1.0000 in Q4.

Many other authoritative experts also support the US currency. Thus, Dave Schabes at the University of Chicago's Harris School of Public Policy believes that Russia's war with Ukraine threatens to slow economic growth across Europe and prolong the continent's energy crisis until 2023 and possibly 2024. According to the scientist, this is a specific factor contributing to the strength of the dollar. “The US has always been considered the world's number one safe haven in times of political or military uncertainty,” he says.

Eric Donovan, head of Institutional FX at StoneX, a financial services company, shares the same point of view. “The main reason the dollar has become so strong is because it is still considered a safe-haven currency and it will strengthen during periods when the markets are in a state of fear,” he explains. Therefore, the dollar will remain strong against European currencies as long as this war continues.

***

The past year, 2022, was not an easy one: the problems created by the coronavirus pandemic were superimposed by the tragic events in Ukraine, which have hit the entire global economy. However, as the legendary King Solomon said to the king of Ethiopia: "This too shall pass." We really want to believe this.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Dollar and Euro 2020-2022: Forecasts and Realities

Traditionally, we publish currency forecasts from the world's leading financial institutions at the turn of the outgoing and coming years. We did this two years, and a year ago. Therefore, we can not only look into the future now, but also analyze whether experts were right in the past.



2020-2021: EUR/USD in Times of COVID

December 2019 There was no talk of a global pandemic that month, when the first outbreak of COVID-19 was recorded in Wuhan, China. But even then, the Financial Times published a forecast of Citigroup experts that the quantitative easing (QE) policy pursued by the US Federal Reserve and pumping the market with cheap dollar liquidity could cause the dollar to fall.

As the pandemic raged on, this scenario began to prove its case. The dollar began to lose ground starting from the last decade of March 2020. The Fed's printing press was running at full capacity, flooding the US market with new cheap dollars. There were no plans to curtail monetary stimulus and, moreover, to raise the interest rate. Starting from 1.0630 on March 22, 2020, EUR/USD met the new 2021 at 1.2300.    

The pair continued to grow with the onset of 2021. But this trend lasted... less than one week. It reached the level of 1.2350 on January 6, and this was the year's high. Everything changed starting from January 7, and the dollar began to win back losses.

The US currency moved in a sinusoidal manner until the end of May, fluctuating along with the waves of the coronavirus and statements by the Fed leaders. But the mood of the US Central Bank began to clearly change from dovish to hawkish just before summer, the country's economy was recovering, and investors began to grow confident in the imminent rise in the key interest rate from the current "miserable" level of 0.25%. As a result, the dollar went into steady growth, and EUR/USD ended 2021 in the 1.1350 zone, having lost 1,000 points in a year.


2022: EUR/USD During the Russian-Ukrainian Conflict

The prospect of a tightening of the Fed's monetary policy (QT) and a further rate hike inspired investors to be optimistic about the future of the US currency. Experts' forecasts also looked optimistic. The US economy, including the labor market, was recovering at a good pace, and GDP growth was forecast at 5%, which gave the Federal Reserve the opportunity to actively combat inflation. The fact that the interest rate will rise to at least 1.5% by the end of 2023 was almost beyond doubt. Confidence in the further strengthening of the dollar was added by the dovish position of the Central Banks of the G7 countries, which are more tolerant of rising prices.

 Strategists at the Dutch banking Group (Internationale Nederlanden Groep) predicted that EUR/USD would trade at 1.1000 in Q4 2022. Analysts of one of the largest financial conglomerates in the world, HSBC (Hongkong and Shanghai Banking Corporation) were in solidarity with ING. “Our main argument,” their forecast said, “is based on two factors supporting the dollar: 1. a slowdown in global economic growth, and 2. the Federal Reserve’s gradual transition to a possible rate hike." In addition, HSBC considered that the ECB would not raise the interest rate on the euro until the end of 2022.

CIBC (Canadian Imperial Bank of Commerce) specialists also sided with the US dollar, setting the same goal for EUR/USD for the last two quarters of 2022: 1.1000. The JP Morgan financial holding assessed the pair's prospects more modestly, pointing to the level of 1.1200.

However, not all financial authorities relied on the growth of the dollar. Thus, Barclays Bank considered the dollar to be highly overvalued. The bank's economists predicted its modest depreciation as risk appetite and commodities surged on the back of the global economic recovery and cooling inflation. The scenario written for EUR/USD in Barclays looked like this: Q1 2022 - growth to 1.1600, Q2 - 1.1800, Q3 and Q4 - movement in the 1.1900 zone.   

 Reuters interviewed the largest banks represented on Wall Street and published their scenarios of the dynamics of the foreign exchange market for the next 12 months. In addition to the aforementioned JP Morgan and Barclays, the respondents were banking conglomerates Morgan Stanley, Goldman Sachs, as well as Europe's largest asset management company Amundi.

Morgan Stanley believed that the Fed's rate hike would proceed fairly smoothly, while other central banks would move from dovish to hawkish politics. This should lead to convergence in the actions of regulators, put pressure on the dollar and raise EUR/USD to 1.1800.

Goldman Sachs strategists called the same target of 1.1800. And Amundi said the Fed "can do little to surprise market expectations," although it agreed that the momentum "would remain broadly positive for the dollar." According to the company's strategists, EUR/USD should have ended 2022 around 1.1400.

It's safe to say now that analysts from ING, HSBC, CIBC gave the closest forecast. And it is possible that this forecast could come true by 100%. Or maybe their opponents from Barclays, Morgan Stanley and Goldman Sachs would be right. But if the whole world was turned upside down by the coronavirus pandemic in 2020, a war entered the life of the planet in 2022. Russia's armed invasion of Ukraine and the subsequent anti-Russian sanctions have caused an economic crisis, energy starvation and increased inflation in many countries, even very far from this region.  

The proximity of the EU countries to the conflict zone, their heavy dependence on Russian natural energy resources, the nuclear threat and the risk of the transfer of hostilities to their territory all dealt a serious blow to the Eurozone economy and forced the ECB to act as carefully as possible so as not to bring it down completely. The USA found itself in much more favorable conditions, which allowed the Fed not only to continue, but also to accelerate the pace of QT and rate hikes. EUR/USD fell below the 1.0000 parity line for the first time in 20 years on July 14, and it hit a low at 0.9535 on September 28.

The main driver for the strengthening of the dollar was the expectation of a sharp rise in the refinancing rate, supported by the statements and actions of the Fed leaders. The rate was at the level of 0.25% between March 15, 2020 (beginning of the pandemic) to March 16, 2022. It was then raised by 25 basis points (bp), then by another 50 bps, followed by four more 75 bps increases. Then the US Central Bank slightly slowed down the pace of tightening and raised the rate by only 50 bps at its last meeting in 2022, after which it reached 4.50%.

The ECB kept the euro rate at 0.00% for a long time. However, it was forced to start tightening his monetary policy following the Fed. The regulator raised the rate to 0.50% at its meeting on July 21, to 1.25% on September 08, to 2.00% on October 27, and, finally, to 2.50% on December 15.

The fact that the ECB did start tightening its monetary policy has benefited the euro. The fact that Europe filled its oil and gas storage facilities to capacity before the winter cold and also found ways to replace Russian energy resources helped the pan-European currency as well. As a result, EUR/USD rose again above the 1.0000 level and reached a high of 1.0735 on December 15.

***

So, the common European currency lost 2,815 points to the American one from January 06, 2021, to September 28, 2022. Then the euro launched a counterattack, and it managed to win back 1,200 points by the end of the year, or more than 40% of losses. We will tell you what leading experts expect from these two currencies in the coming year, 2023, in a week, in our next review.

In the meantime, let us wish you and your loved ones success in your work, financial well-being, good health and the fulfillment of all your desires, even your most daring ones. And let's hope that unlike the past three years, the coming year will be filled with only positive events. Happy New Year!


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for December 19 - 23, 2022

EUR/USD: The Fed Doesn't Want to be Dovish. The ECB Either.

The past week can be divided into two parts: before and after the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve. The US inflation data produced a bombshell effect on the eve of this event, on Tuesday, December 13. The Consumer Price Index (CPI), with the forecast at 7.3%, fell in November from 7.7% to 7.1% (y/y), reaching its lowest level in almost a year, while core inflation fell from 6.3% to 6.0%. As a result, the market decided that since things were going so well, it was time for the Fed to turn from hawk to dove. Or at least ease their monetary policy significantly. Based on these expectations, the 10-year Treasury bond yield fell from 3.60% to 3.43%, and the DXY Dollar Index peaked and fell to its lowest levels over the past six months, from 105.07 to 103.60 points. Accordingly, stock indices (S&P500, Dow Jones, Nasdaq) flew up, and EUR/USD jumped to 1.0672.

The feast of risk appetites and the glee of opponents of the dollar did not last long. The FOMC raised its key interest rate by 50 basis points (bp) to 4.5% at its meeting. That is, exactly as market participants expected. Surprises were expected at the subsequent press conference, which showed that the US Central Bank is still hawkish. Fed chief Jerome Powell noted that the regulator will keep rates at their peak until they are sure that the decline in inflation has become a sustainable trend.  The base rate could be raised to 5.1% in 2023 and remain so high until 2024. (Recall that 4.6% was mentioned as the peak rate in the September statement). According to Jerome Powell, the Fed understands that this will trigger a recession, but is willing to pay that price to control inflation. The situation turned around 180 degrees after such statements: DXY went up, stock indices flew down, and EUR/USD fell by more than 140 points.

The last meeting of the European Central Bank this year was also held last week, on Thursday, December 15. The ECB, as well as the Fed, raised the interest rate by 50 bp: up to 2.5%, which fully met the forecasts. ECB President Christine Lagarde, as well as her overseas counterpart, showed a hawkish attitude at the press conference and made it clear that quantitative tightening (QT) in the Eurozone will not end there: the euro interest rate will face several more increases in 2023. The ECB also plans to start reducing its balance sheet from March. At the moment, the gap between the dollar and euro rates is 200 bp (4.5% and 2.5%, respectively). The swap market expects that the European regulator may raise its rate by another 100 bp in the coming year, which will provide some support for EUR/USD. Read our upcoming reviews to find out what forecasts leading financial institutions give regarding its quotes.

The data on business activity in the manufacturing sectors of Germany and the Eurozone (PMI), as well as the November value of the European Consumer Price Index (CPI) were published at the very end of the last week, on Friday, December 16. Data on consumer inflation did not have a significant impact on market sentiment: on the one hand, CPI in annual terms fell from 10.6% to 10.1%, and on the other hand, it turned out to be higher than the forecast of 10.0%. After the release of these macro statistics, the pair placed the last chord at 1.0590.

40% of analysts expect the euro to strengthen in the coming days and EUR/USD to grow, 50% expect Santa Claus to help the US currency. The remaining 10% of experts do not expect either the first or the second from the pair. The picture is different among the oscillators on D1. As for the oscillators, 75% are colored green, 10% are set to neutral gray and 15% stand out against this background with a bright red color. Trend indicators also have an advantage on the green side, these are 80%, and 20% are on the red side. The nearest support for EUR/USD is at the 1.0560 horizon, followed by levels and zones at 1.0500, 1.0440, 1.0375-1.0400, 1.0280-1.0315, 1.0220-1.0255, 1.0130, 1.0070, followed by the parity zone 0.9950-1.0010. Bulls will meet resistance at levels 1.0620, 1.0675-1.0700, 1.0740-1.0775, 1.0865, 1.0935.

Next week's calendar includes Thursday December 22 for the release of 3Q US GDP data, and Friday December 23 for the release of orders for capital goods and durables, as well as the core US Personal Consumption Expenditure Index. .

Attention! Christmas and New Year holidays fall on weekends this year; however, we strongly advise you read the trading schedule for this period, it is published on the NordFX website in the Company News section.

GBP/USD: The Market No Longer Trusts the Bank of England

Even more disappointment than EUR/USD awaited the bulls on the British pound. Having reached a six-month high of 1.2450 on December 14, GBP/USD then fell to 1.2119 and ended the weekly session at 1.2160.

There were quite a lot of statistics on the economy of the United Kingdom Last week, and they looked diverse: sometimes green, sometimes red. The country's GDP grew by 0.5% and was higher than the forecast of 0.4%. The manufacturing sector also rose to 0.7% after the zero dynamics in September. Such an important indicator of inflation as CPI was 10.7% in November (it was at the highest level since November 1981 - 11.1% a month ago). But retail sales fell to 0.4% in November against 0.9% in October. The unemployment rate rose from 3.6% to 3.7%. The business activity index (PMI) in the manufacturing sector of the UK fell to 44.7 in December against 46.5 in November. And in the services sector, on the contrary, it rose to 50.0 compared to the November value of 48.8 and the forecast of 48.5.

It seems that such multi-vector statistics have greatly confused market participants, and they focused not on the pound, but on the US dollar. Although the Bank of England (BoE) also issued its verdict on the interest rate last week. Like the Fed and the ECB, the regulator raised it by 50 bp up to 3.5% per annum (14-year maximum). However, BoE's statements turned out to be more dovish than those of their colleagues. According to the regulator, inflation may have already reached its peak. And two out of nine members of the Monetary Policy Committee considered that interest rates are already high enough and it is time to ease price pressures.

Prior to this meeting, quotes expected a maximum rate increase of up to 4.6%. After the meeting, the swap market lowered its forecast to 4.5% by August (that is, a total increase of another 100 bp). As for the survey of market participants conducted recently by the Bank of England, the median expectations are even lower here: only 4.25% with a peak in March 2023.

These forecasts put strong pressure on the British currency. Therefore, according to Commerzbank economists, the pound does not have much potential for recovery. “After the Bank of England hesitated for several months, the market now believes that it is the least trustworthy thing to suddenly become a mega hawk,” they write. “So, the pound has no chance against either the euro or the dollar.”

As for the short term, the median forecast for GBP/USD looks quite neutral here: 45% of experts side with the bulls, the same number side with the bears, and the remaining 10% prefer to decline to comment.

The readings of the indicators on D1 look mixed as well. Among the oscillators, 30% are colored green, 25% are red and 45% are neutral gray. Trend indicators have a ratio of 65% to 35% in favor of the green ones. Support levels and zones for the pair are 1.2085-1.2115, 1.2030, 1.1940, 1.1900, 1.1800-1.1840, 1.1700-1.1720. When the pair moves north, the pair will face resistance at the levels of 1.2200-1.2225, 1.2270, 1.2330-1.2345, 1.2425-1.2450 and 1.2575-1.2610, 1.2700 and 1.2750.

Among the events related to the United Kingdom economy this week, we can highlight Thursday, December 22, when we will find out what happened to the country's GDP in Q3 2022. We also pay attention to the early closing of trading in the UK on Friday, December 23, which, of course, is associated with the upcoming Christmas.

USD/JPY: What to Expect from the Bank of Japan

Like previous pairs, USD/JPY reacted to both US inflation data and statements by the Fed Chairman. But, unlike EUR/USD and GBP/USD, this pair has not gone beyond the side corridor for the last two weeks. Its boundaries can be designated as 134.25-137.85, and timid attempts to break through in one direction or another can be ignored. This balance is most likely due to the fact that both the dollar and the yen are safe-haven currencies. Of course, the global advantage, thanks to the difference in interest rates, is on the side of the dollar. But, having carried out a number of foreign exchange interventions, the Bank of Japan (BoJ) has managed in recent months not only to stop the advance of the American currency, but also to significantly push it back. 

As we have already mentioned, the future of the pair will continue to depend on the difference in interest rates between the US and Japan. If the Fed remains at least moderately hawkish and the BOJ remains ultra-dovish, the dollar will continue to dominate the yen. The threat of new foreign exchange intervention by the Ministry of Finance of Japan, the same as it was on November 10, seems unlikely at current levels. Raising the key rate could help, but it is very likely that the Bank of Japan (BoJ) will leave it unchanged at its meeting on December 20: at the negative level of -0.1%. A radical change in monetary policy can be expected only after April 8 next year. It is on this day that Haruhiko Kuroda, the head of the Bank of Japan, will end his term, and he may be replaced by a new candidate with a tougher position. Although this is not a fact.

Another hope is for renewed concerns about China's economic prospects. By the way, the People's Bank of China will also make its decision on the interest rate on the yuan on Tuesday, December 20.

USD/JPY finished at 136.70 on Friday, December 16. Analysts' forecast for the near future is exactly the same as the forecast for GBP/USD: 45%/45%/10%. For oscillators on D1, the picture looks like this: 25% look south, 40% look north, and 35% look east. Among the trend indicators, the ratio is 60% versus 40% in favor of the red ones. The nearest support level is located at 136.00 zone, followed by levels and zones 134.40, 133.60, 131.25-131.70, 129.60-130.00, 128.10-128.25, 126.35 and 125.00. Levels and resistance zones are 137.50-137.70, 138.00-138.30, 139.00, 139.50-139.75, 140.60, 142.25, 143.75. The goal of the bulls to renew the October 21, 2022 high, and to gain a foothold above the height of 152.00 seems realistic only in a very distant future.

In addition to the mentioned interest rate decision by the Bank of Japan, the calendar also includes Friday, December 23, when the Report from the BoJ Monetary Policy Committee meeting will be published. Market participants will try to catch at least small hints of changes in this policy. However, the chances of this happening are close to zero.

CRYPTOCURRENCIES: Santa Claus Is the Only Hope


The results of the Fed meeting seem to have greatly tempered investors' risk appetites. If stock indices (S&P500, Dow Jones, Nasdaq) were growing throughout the first half of the week, and after the publication of inflation data in the US, they just soared up, dragging crypto asset prices, they all went into the red after the Fed meeting, on Wednesday evening, November 14. Amid fears of a global recession, the decline continued on Thursday and Friday. The local maximum for BTC/USD was fixed at $18.381, but it met the end of the working week much lower, in the $16.830 zone.

The general situation in the crypto industry does not help the growth of prices either. Recall that, in addition to the bankruptcy of FTX in November, it has experienced a number of major shocks this year. First of all, this is the collapse of the Terra ecosystem in May. Compute North, Voyager Digital, Celsius Network, Three Arrows Capital, and Blockfi also filed for bankruptcy. According to some estimates, approximately several million customers lost billions of dollars as a result of all these events.

The events of recent days are not encouraging either. Sam Bankman-Fried, founder of crypto exchange FTX, has been arrested in the Bahamas after U.S. Attorney's Office filed eight felony charges against him. According to the representative of the prosecutor's office, Bankman-Fried faces up to 115 years in prison in the aggregate of all criminal cases. Market participants were also alarmed by the strange, to put it mildly, financial report by FTX's main competitor, the Binance exchange. It contained only three indicators, which caused bewilderment and criticism from representatives of the accounting community.

There is very little time left until the end of this year, and it is only Santa Claus Rally, a phenomenon when stock indices suddenly begin to go up at the very end of December, that can help the growth of bitcoin and the crypto market as a whole. This Rally usually starts on the last Monday of the month and lasts for seven trading days. However, sometimes Santa Claus decides to help not risky assets at all, but the dollar. And then, instead of the North Pole, they head south. (You can read more about Santa Claus Rally on NordFX's Useful Articles section).

Some experts hope that bitcoin will still be able to gain a foothold above the $18,000 area in the coming days. Then, in their opinion, it will most likely reach an extreme of $20,000 by the end of the year.

In such a situation, the price of the flagship cryptocurrency will again be on a growth parabola, according to a well-known analyst under the nickname Plan B. According to their latest forecast, BTC could reach $100,000 in 2023. Jim Wyckoff, Senior Analyst at Kitco News, also believes BTC is close to developing a sustained bullish rally in the current environment as strong buyers have stepped in.

Arthur Hayes, the former CEO of BitMEX, expressed a similar point of view, although his arguments differ from those of Jim Wyckoff. Hayes believes that the first cryptocurrency has reached the low of the current cycle, as almost all “irresponsible organizations” have run out of coins to sell. He explained that when facing financial difficulties, centralized credit companies often borrow first and then sell off their BTC holdings, followed by a collapse. “When you look at the balance of any of these ‘heroes’, you won’t see bitcoin there. They sold it before they went bankrupt." That is why, according to Hayes, the fall in the quotes of the first cryptocurrency precedes such bankruptcies. At the same time, the expert believes that the period of large-scale liquidations is over.

ARK Invest CEO Catherine Wood also spoke negatively about centralized companies and positively about DeFi. In her opinion, DeFi will be further developed, as investors have learned how important fully transparent decentralized networks are thanks to the crisis. “When centralized crypto companies went bankrupt, investors who invested in transparent distributed networks saw what was happening. They were able to withdraw their assets on time. Even those who used a large margin leverage were able to survive,” said Catherine Wood. And she added that Sam Bankman-Fried has always disliked bitcoin because it is transparent and decentralized, and he could not control it, including during the crisis provoked by opaque centralized players.

According to former BitMEX CEO Arthur Hayes, the digital asset market expects a partial recovery in 2023 amid another launch of the US Federal Reserve's printing press. Mike McGlone, senior strategist at Bloomberg Intelligence, also expects new flows of cash liquidity from the Central Bank, he called next year the bitcoin market and a time of shine after a year and a half of direct downward trends. However, at the same time, the analyst added that if the easing of monetary policy does not happen, the world may plunge even deeper into a recession with negative consequences for all risky assets.

Max Keiser, a former trader and now TV host and filmmaker, also believes that BTC will certainly catch up in 2023 and may stage an epic rally before the 2024 halving. In his opinion, the growth of the flagship cryptocurrency will continue over the next decade. And, as Cathie Wood stated, it will reach a price of $1 million per coin by 2030.

In the meantime, at the time of writing this review (Friday evening, December 16), ETH/USD is trading around $1,200, while BTC/USD is trading at $16,830. The total capitalization of the crypto market for the week decreased by almost 4.0% and amounted to $0.818 trillion ($0.852 trillion a week ago). The Crypto Fear & Greed Index has grown by only 3 points in seven days, from 26 to 29, and still remains in the Fear zone.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for December 12 - 16, 2022

EUR/USD: Ahead of the Fed and ECB Meetings


Two key events await us next week. The first is the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve, which will be held on Wednesday, December 14. Recall that the key interest rate on the dollar is 4.00% at the moment, and that Fed Chairman Jerome Powell confirmed on November 30 that the pace of rate growth may slow down in December. These words of his convinced market participants that the rate would be increased in December not by 75 basis points (bp), but by only 50 bp. The actual developments on December 14 will set the mood of the regulator for 2023. Naturally, an important role here will be played not only by the decision on the interest rate itself, but also by the economic forecasts of the FOMC and the press conference of the management of this organization following the meeting.

It is highly likely that the decision of the Committee members will be influenced by data on inflation in the US: the November values of the Consumer Price Index (CPI) will be announced on the eve of the meeting, on Tuesday, December 13.

The second event is the ECB meeting on Thursday, December 15. The interest rate on the euro is 2.00% at the moment, and according to forecasts, the European regulator will also raise it by 50 bp, which will keep the advantage in favor of the US currency: 4.50% against 2.50%. As in the case of the Fed, the comments and forecasts of the ECB leaders, which will be made after this meeting, will also be important for market participants.

As for the past week, the DXY Dollar Index did not manage to win back at least some of the losses it has suffered since the end of September. This time it was hampered by statistics from China. On the one hand, China's manufacturing sector continues to deflate: the Producer Price Index (PPI) has been falling by 1.3% for the second month in a row. On the other hand, inflation is slowing down: the Consumer Price Index (CPI) in November was 1.6% against 2.1% a month ago. In this situation, the Chinese government has taken a course of easing monetary policy (QE) to support the country's economy. A survey conducted by Bloomberg showed that the market expects the People's Bank of China to cut interest rates on the yuan as early as Q1 2023. Against this background, stock indices, primarily Asian ones, went up, and the dollar went down. Optimism over the easing of strict COVID-19 restrictions in China also supported the positive tone in equity markets.

Additional pressure on the US currency was exerted by statistics on the US labor market. The number of initial applications for unemployment benefits became known on Thursday, December 08. This figure showed a slight increase from 226K to 230K, which was fully in line with the forecast. But repeated applications have reached a maximum over the past ten months: 1671K, which is also a signal for the Fed, pointing to problems in the economy.

On the contrary, European macro statistics looked good. Thus, the GDP of the Eurozone in Q3 turned out to be higher than the forecast, 0.3% vs. 0.2% (q/q) and 2.3% vs. 2.1% (y/y).

As a result, EUR/USD abandoned a deep correction and, having reached a local low of 1.0442 on December 07, reversed and rose to the level of 1.0587 on December 09. The Producer Price Index (PPI) and the Consumer Confidence Index from the University of Michigan made modest adjustments to the prices at the very end of the working week, after which the pair finished at 1.0531.

50% of analysts count on its further growth, 25% expect the pair to turn south. The remaining 25% of experts point to the east. It should be noted here that when moving to a medium-term forecast, the number of bearish supporters who expect the pair to drop below the parity level of 1.0000 increases sharply, up to 75%.

The picture is different from the oscillators on D1. All 100% of the oscillators are colored green, while 10% is in the overbought zone. Among the trend indicators, the 100% advantage is on the green side.

The nearest support for EUR/USD is located at the 1.0500 horizon, then there are levels and zones 1.0440, 1.0375-1.0400, 1.0280-1.0315, 1.0220-1.0255, 1.0130, 1.0070, followed by the parity zone 0.9950-1.0010. Bulls will meet resistance at levels 1.0545-1.0560, 1.0595-1.0620, 1.0745-1.0775, 1.0865, 1.0935.

We will see other important macro statistics next week in addition to the above. Thus, data on consumer inflation (CPI) and economic sentiment (ZEW) in Germany will be released on Tuesday, December 13. And business activity indicators in the manufacturing sectors of Germany and the Eurozone (PMI), as well as the November value of the European Consumer Price Index (CPI) will become known on Friday, December 16.

GBP/USD: Ahead of the Bank of England Meeting

Not only the ECB, but also the Bank of England (BoE) will decide on the interest rate on Thursday, December 15. It should be noted that the regulator of the United Kingdom was one of the first among the G10 Central Banks, following the Fed, to curtail the policy of quantitative easing (QE). It raised the pound interest rate by 75 bps in November. However, it is expected that like the ECB and the Fed, it will raise it by only 50 bp in December, after which it will reach 3.50%. According to a survey conducted by Reuters, 96% of economists have voted for this step. And only 4% of them insist on 75 bp.

Most respondents believe that the recession will be long and shallow. According to forecasts, the economy contracted by 0.2% in Q3 2022 (exact data will be known on December 12) and will decrease by another 0.4% in Q4. The fall in the first three quarters of 2023 may be 0.4%, 0.4% and 0.2%, respectively.

As for inflation, the survey conducted by the BoE showed that the fears of the UK population about it have slightly decreased. If we talk about economists' forecasts, it is expected that in it will reach a peak of 10.9% in Q4, and then it will decline. The current value is more than five times higher than the target level of 2.0%. And the Bank of England will be forced to continue to raise the rate to fight inflation, despite the threat of a deepening recession. It is predicted that BoE will raise it in Q1 and Q2 2023, another 50 bp and 25 bp, respectively, to 4.25%.

GBP/USD, as well as EUR/USD, has been developing an upward trend since the end of September taking advantage of the weakness of the dollar. In addition, it is being pushed up by the end of the fiscal micro-crisis and the Bank of England's actions to tighten monetary policy and support the British government bond market. GBP/USD reached its maximum value on December 05 at the height of 1.2344, however, it did not go further north and completed the five-day period at the level of 1.2260 in anticipation of the decisions of the coming week.

Strategists at the German Commerzbank consider the current situation only a temporary respite and expect increased pressure on the British currency. “At present,” they write, “the relief that the fiscal crisis has been brought under control prevails, and there are no signs of a further worsening of the energy crisis. In our opinion, this is only a temporary respite for the pound. The deteriorating economic outlook, relatively prudent monetary policy […] and continued high inflation continue to put major pressure on the pound.”

The median forecast for the near term copies the forecast for EUR/USD in full: 50% of experts side with the bulls, 25% side with the bears, and the remaining 25% prefer to remain neutral. At the same time, there is a slight difference when moving to the medium-term forecast: the number of bear supporters here is 10% higher, 85%.

The readings of trend indicators and oscillators on D1 also copy the readings of their counterparts for EUR/USD: all 100% are on the green side, and 10% of the oscillators give signals that the pair is overbought.

Levels and support zones for the pair are 1.2210-1.2235, 1.2150, 1.2085-1.2105, 1.2030, 1.1960, 1.1900, 1.1800-1.1840, 1.1700-1.1720, 1.1475-1.1500, 1.1350, 1.1230, 1.1150, 1.1100. When the pair moves north, it will meet resistance at the levels of 1.2290-1.2310, 1.2345, 1.2425-1.2450 and 1.2575-1.2610, 1.2750.

As already mentioned, Monday, December 12, when the country's GDP data will be published, attracts attention this week, as for the events concerning the economy of the United Kingdom. Data on unemployment and wages will arrive the following day, that on consumer prices (CPI) will become known on Wednesday, December 14, and on retail sales and business activity in the UK - on Friday, December 16. And of course, a special emphasis is on December 15, when the Bank of England will issue its verdict on the interest rate.

USD/JPY: What Can Help the Yen

USD/JPY rose from the Dec 02 low of 133.61 to 137.85 last week, slightly above the strong 137.50 support/resistance zone. The last chord of the week sounded at 136.60.

The future of the pair will continue to depend on the difference in interest rates between the US and Japan. If the Fed remains at least moderately hawkish and the BoJ remains ultra-dovey, the dollar will continue to dominate the yen. The threat of new foreign exchange intervention by the Ministry of Finance of Japan, the same as it was on November 10, seems unlikely at current levels. Raising the key rate could help, but it is very likely that the Bank of Japan (BoJ) will leave it unchanged at its meeting on December 20: at the negative level of -0.1%. A radical change in monetary policy can be expected only after April 8 next year. It is on this day that Haruhiko Kuroda, the head of the Bank of Japan, will end hs term, and he may be replaced by a new candidate with a tougher position. Although this is not a fact.

Another hope is for renewed concerns about China's economic prospects. “Weak growth rates and a clear decline in bond yields,” economists from the ING banking group believe, “should lead to the fact that safe currencies, such as the yen, will begin to show superiority,” and this will support the Japanese currency.

Analysts' forecast for the near future is bearish: 50% of them vote for the pair to fall, the remaining 50% have taken a neutral position. However, in the medium term, most experts (60%) are shifting their gaze from south to north, expecting a serious strengthening of the dollar and the return of the pair to the 145.00-150.00 zone.  For oscillators on D1, the picture looks like this: 90% look south, 10% look north. Among the trend indicators, the ratio is 85% versus 15% in favor of the red ones.

The nearest support level is located at 136.00 zone, followed by levels and zones 134.10-134.35, 133.60, 131.25-131.70, 129.60-130.00, 128.10-128.25, 126.35 and 125.00. Levels and resistance zones are 137.50-137.70, 138.00-138.30, 139.00, 139.50-139.75, 140.60, 142.25, 143.75, 145.30, 146.85-147.00, 148.45, 149.45, 150.00 and 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00.

The calendar could mark Wednesday December 14, when the values of the Sentiment Indices of Large Manufacturers and Non-Manufacturing Tankan Companies for Q4 2022 will be announced. The publication of other macro indicators of the Japanese economy is not expected next week.

CRYPTOCURRENCIES: Christmas Rally After Crypto Massacre

We titled the last review “Cryptogeddon Instead of Crypto Winter” (by analogy with Armageddon, the place of the last and decisive battle between the forces of good and the forces of evil). There is another “bloody” term now: “crypto massacre”, which characterizes what happened as a result of the collapse of the second most capitalized crypto exchange, FTX. Investors lost $10.16 billion in just one week in November. This crisis was like a domino, which led to the collapse of many other companies. About 94% of respondents believe the FTX bankruptcy will be followed by further turmoil as years of easy lending give way to a tougher business and market environment, according to a Bloomberg survey. To complicate matters , between 73% and 81% of investors lost money due to investing in cryptocurrencies between 2015 and 2022. This is evidenced by data from a study conducted by the Bank for International Settlements (BIS).

The price of bitcoin is consolidating around $17,000 at the moment, and the readings of the SMA100 and SMA200 indicators on the four-hour chart have converged almost at one point. BTC/USD is kept from falling by the dollar that has sagged in recent weeks. Markets froze in anticipation of December 14, when the Fed will make a decision on the interest rate. And it, in turn, depends on the data on inflation in the US, which will arrive the day before. The FOMC (Federal Open Market Committee) Economic Forecasts will also play a significant role in the dollar dynamics.

Optimists, including crypto communities such as Credible Crypto, Moustache and Dave the Wave, expect this data to positively influence the market's risk appetite, and the Christmas rally will push bitcoin to $20,000. According to the expectations of members of the crypto community CoinMarketCap, BTC will trade at an average price of $19,788 by the end of the year.

PricePredictions' machine learning algorithms, which include a number of technical indicators (MA, RSI, MACD, BB, etc.), indicate a price of $1,000 lower. According to their metrics, the main cryptocurrency will reach $18,797 on December 31, 2022.

However, not everything is so rosy and unambiguous. For example, Bloomberg Intelligence senior strategist Mike McGlone believes that cryptocurrencies are now going through the last stage before reaching the bottom. However, he warns that it will be very difficult to survive this phase: “Normally, markets do not just form a V-bottom. They make it as hard as possible with a lot of volatility, taking money from all investors.”

According to Michael Van De Poppe, a well-known trader and analyst, the pair will face many difficulties on the way to $19,000. The bulls will need to break through the important resistance level in the $17,400-17,600 range and then try to reach the $18,285 horizon.

As for the price of ethereum, Van de Poppe believes that the key support level for this cryptocurrency is the price of $1,200. Mike McGlone is of the same opinion. According to his calculations, ETH has strong support close to the current price level.

There is very little time left until the end of the year, and then we will find out who was more accurate in their forecasts. In the meantime, at the time of writing the review (Friday evening, December 09), ETH/USDis trading around $1,260, and BTC/USD - $17,100. The total capitalization of the crypto market has not changed much over the week and is $0.852 trillion ($0.859 trillion a week ago). The Crypto Fear & Greed Index has fallen only 1 point in seven days, from 27 to 26 and still remains in the Fear zone.

And to conclude the review, a few words about longer-term forecasts. Such popular Twitter analysts as Bluntz and Korinek_Trades do not rule out BTC/USD falling to $15,000 or even $12,000 in Q1 2023.

The picture drawn by Standard Chartered economists is even bleaker. They expect that the collapse of FTX will continue to affect the mood of the crypto market, the series of bankruptcies of large industry participants will continue, which will lead to a further loss of confidence in digital assets. As a result, bitcoin's price could fall to $5,000 during 2023. Standard Chartered Chief Strategist Eric Robertsen allowed investor interest to switch from the digital version of gold to its physical counterpart and the price of the precious metal to rise to $2,250 per troy ounce. At the same time, Robertsen emphasized that the proposed scenario is not a forecast, but only suggests a possible deviation from the current market consensus.

Galaxy Digital founder Mike Novogratz looked farthest into the future and saw a light at the end of the tunnel. In a comment to Bloomberg Television, he maintained his forecast that the price of the first cryptocurrency will rise to $500,000. However, it will now take more than five years for bitcoin, in his opinion, to achieve this goal due to significant changes in the macroeconomic situation and the aggressive actions of the Fed.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for December 05 - 09, 2022

EUR/USD: Focus on the US Labor Market

The DXY dollar index is down 5% over the past month. This is the largest monthly decline since September 2010. And the American currency lost more than 10% against the euro over the same period. EUR/USD was trading at 0.9541 back on October 28, and it reached the high of 1.0544 on December 2. There are several reasons for this, and the main one, of course, lies in the US Federal Reserve's interest rate forecasts.

The head of this organization, Jerome Powell, speaking on Wednesday, November 30, confirmed once again that the rate of rate growth in December may slow down. Market participants were finally convinced after these words that the rate would be increased not by 75 basis points (bp), but by only 50 bps in December. Thus, the futures market for the federal funds rate expects that there will be no increase at all in January, and the rate will be increased one or two times by 25 bps in February and March, as a result, its peak value will be 4.75-5.00%, and not 5.25%, as previously predicted. Then there will be a gradual decline and it will drop to 4.45% by December 2023.

Of course, this is only a forecast, but the market reacted to it with a sharp drop in US Treasuries. Thus, 10-year securities fell in yield to 3.5%, the lowest value since September 20, and two-year securities fell to 4.23%, which put strong pressure on the dollar. Moreover, the statement by the head of the Fed was made against the background of the publication of statistical data on the US economy. And it pointed, on the one hand, to a slowdown in inflation, and on the other hand, to the fact that the country's economy is quite successfully coping with rising interest rates and is not in danger of sliding into a deep recession. As a result, the risk appetite of the market began to grow, stock indices ( S&P500, Dow Jones and Nasdaq ) went up, pulling cryptocurrencies with them, and the dollar continued to fall.

China also intervened in the dollar exchange rate. Vice Premier of the State Council of the People's Republic of China Sun Chunlang said that the omicron strain of coronavirus is becoming less pathogenic due to the increase in vaccinated people. Therefore, the strategy to combat the pandemic is entering a new stage. The authorities will even allow some infected people to spend a period of isolation at home rather than in the hospital. This shift towards less stringent anti-COVID measures also had a positive effect on investors' appetite for investments in Asia, and the dollar received another blow, losing its attractiveness as a defensive asset.

The Fed chief's speech about avoiding a “collapse of the economy” suggests that the regulator wants to bring inflation down to its target level, while minimizing the rise in unemployment. Based on this, reports on the US labor market will soon be even more important than before. And this was clearly shown by the market's reaction to the macro statistics released on Friday, December 2. The unemployment rate in the US remained at the same level and was fully in line with the forecast of 3.7%. But as for the number of new jobs created outside the agricultural sector of the country (NFP), on the one hand, it turned out to be less than the October value (284K), but higher than the forecast of 200K, and amounted to 263K. The American currency reacted to this with a sharp increase, EUR/USD dropped to 1.0427. However, then the situation calmed down, everything returned to normal, and it finished at 1.0535.

Among the analysts surveyed, 50% of analysts expect the pair to continue growing to 1.0600, and 20% expect it to turn to the south. The remaining 30% of experts point to the east. It should be noted here that when moving to the medium-term forecast, the number of bearish supporters who expect the pair to drop below the parity level of 1.0000 increases sharply, up to 75%. The picture is different among the oscillators on D1. All 100% of the oscillators are colored green, while 25% is in the overbought zone. Among the trend indicators, the 100% advantage is on the green side.

The immediate support for EUR/USD is located on horizon 1.0500, then there are levels and zones 1.0450-1.0467, 1.0380-1.0405, 1.0280-1.0315, 1.0220-1.0255, 1.0130, 1.0070, 0.9950-1.0010, 0.9885, 0.9825, 0.9750, 0.9700, 0.964, 0.9580 and finally the Sep 28 low at 0.9535. The next target of the bears is 0.9500. Bulls will meet resistance at levels 1.0545, 1.0620, 1.0750, 1.0865, 1.0935.

We are in for quite a lot of macro-economic statistics this week. There will be data on retail sales in the Eurozone and ISM business activity in the US services sector on Monday, December 05. Data on Eurozone GDP in Q3 will be released on Wednesday, December 07. The number of applications for unemployment benefits will become known the next day, December 08, and the US Producer Price Index (PPI) - on December 09. In addition, market participants will be waiting for the speeches by the head of the ECB Christine Lagarde, which are scheduled for December 05 and 08.

GBP/USD: If the Dollar Falls, the Pound Rises


Business activity in the manufacturing sector of the UK increased slightly in November compared to September: the PMI rose from 46.2 to 46.5 points (against the forecast of 46.2). However, this did not have any noticeable effect on the quotes of GBP/USD: it moved almost in unison with EUR/USD, reacting to events in the US. The week resulted in the continuation of its growth from 1.2153 to 1.2310, the highest value since early August. The last chord of the week sounded a bit lower, at 1.2280. 

Thus, the dollar weakened by about 1.2% against the pound over the week. And now GBP/USD is only a short distance away from the important level of 1.2450, which is the lower limit of the multi-year range from which it left at the beginning of this year. According to the strategists of the French financial conglomerate Societe Generale, this is where a strong resistance zone is located. “A retreat from this barrier could lead to a pullback phase,” they write. “The October high at 1.1500, which is also a 50DMA, is expected to be the first level of support if the decline continues.” If the pair fixes above 1.2450, Societe Generale predicts that the upward movement may last to 1.2750 and even higher, to the 1.3250-1.3300 zone.

Of course, as we have repeatedly written, the actions of the Central Banks of the leading countries and how quickly and how much they will raise key interest rates in a recession will be decisive for exchange rates. It is possible that the growth of inflationary pressure in the UK may cause a more active rate hike by the Bank of England (BoE). However, according to many economists, the regulator is likely to avoid drastic steps since excessive tightening of monetary policy could knock out the UK economy for a long time. Recall that the main events of the end of this year are expected on December 14 and 15, when the Fed, ECB and BoE meetings will be held almost at the same time.

The median forecast so far is similar to that for EUR/USD: 50% of experts are bullish, 30% are bearish, and the remaining 20% remain neutral. At the same time, when moving to a medium-term forecast, the number of bear supporters increases to 80%. Among the trend indicators and oscillators on D1, 100% side with the greens, however, among the latter, 15% of them give signals that the pair is overbought. Support levels and zones for the pair are 1.2210, 1.2145, 1.2085, 1.2030, 1.1960, 1.1900, 1.1800-1.1840, 1.1700-1.1720, 1.1600, 1.1475-1.1500, 1.1350, 1.1230, 1.1150, 1.1100. When the pair moves north, it will meet resistance at the levels of 1.2290-1.2310, 1.2425-1.2450 and 1.2575-1.2610, 1.2750. 

Among the events concerning the UK economy, Monday 05 December will attract attention this week, when the November Composite Business Activity Index (PMI) and the UK Services PMI will be released. The change in the same indicator in the country's construction sector will be published the next day, on Wednesday, December 06.

USD/JPY: The Yen Thanks the Fed Once Again

The main trading range for USD/JPY for the last three weeks has been 137.50-140.60. It tried to move to a higher echelon on November 21, however, the published minutes of the Fed's last FOMC (Federal Open Market Committee) meeting returned it to the set limits. As an analyst wrote at the time, “the whole world (except the US) thanks the Fed for the minutes of its meeting, which strengthened the dovish reversal, bringing down the dollar and US bond yields.” 

Last week, the world thanked once again the Fed represented by its head, Jerome Powell whose speech knocked over the dollar on Wednesday, November 30 and the yield on US securities is even lower. USD/JPY broke through the lower border of the channel after the speech of this important official and rushed down, finding the local bottom at the level of 133.61.

The American currency could get a chance to win back losses as a result of the release of the official report on employment in the US on Friday, December 02. As mentioned above, the NFP value of 263K was higher than the 200K forecast, and USD/JPY jumped more than 230 pips to 135.98. However, then the market realized that unemployment remained at the same level, and these 263 thousand new jobs are the lowest since April 2021. The pair turned south again and finished at 134.33.   

Recall that 10-year US Treasuries fell to 3.5% after Jerome Powell's “epic” speech, the lowest level since September 20. And according to the forecasts of ING strategists, the largest banking group in the Netherlands, if their yield ends 2023 at about 2.75%, USD/JPY may end up in the 125.00-130.00 zone at that moment, that is, where it was traded in May-August 2022.

In the meantime, the forecast for the near future looks rather vague. 45% of analysts vote for the bearish scenario, 35% for the bullish one, and 20% prefer to remain silent. Although, in this case, most experts (70%) expect a serious strengthening of the dollar in the medium term. For oscillators on D1, the picture looks like this: 100% are facing south, 25% of them are in the oversold zone. Among the trend indicators, the ratio is 100:0 in favor of the red ones.

The nearest support level is located at 133.60 zone, followed by levels and zones 131.25-131.70, 129.60-130.00, 128.10-128.25, 126.35 and 125.00. Levels and zones of resistance are 135.20, 136.00, 136.65, 137.50-137.70, 138.00-138.30, 139.85, 140.60, 142.25, 143.75, 145.30, 146.85-147.00, 148.45, 149.45, 150.00 and 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00. Then there are the 1990 highs around 158.00. 

Thursday, December 08 can be marked in the macroeconomic calendar, when the data on Japan's GDP for Q3 will be released. According to forecasts, this indicator will remain at the same negative level: a drop of 0.3%, which will serve as another argument in favor of the super-soft monetary policy of the Bank of Japan (BoJ). The next meeting of this Central Bank is scheduled for December 20, and it is likely to leave the interest rate on the yen unchanged at minus 0.1%.

CRYPTOCURRENCIES: Cryptogeddon Instead of Crypto Winter

If the most frightening word for investors was "crypto winter" earlier, a new, much more terrible term has appeared in the current situation: "cryptogeddon" (similar to Armageddon, the place of the last and decisive battle between the forces of good and the forces of evil).

Everyone will probably agree that the outgoing year was terrible for the entire crypto industry. Macroeconomic events in early 2022, the collapse of Terra, which not only buried two cryptocurrencies from the TOP-10, but also caused a domino effect that destroyed many industry participants. A new shock in November, when one of the market giants, the FTX crypto exchange and related companies, collapsed. There are now rumors that cast doubt on the fortunes of the Digital Currency Group and its subsidiaries, two of which are Genesis and Grayscale.

The next victim of "cryptogeddon" was the BlockFi platform. It filed for bankruptcy last Monday. Creditors that will suffer the most from this will include Ankura Trust Company ($729 million), West Realm Shires Inc ($275 million), and even the SEC itself, the great and all-powerful US Securities and Exchange Commission ($30 million).

Miners are in huge trouble as the cost of mining bitcoin has fallen deep below the market price. Thus, according to MacroMicro estimates, it was $19,400 on November 29 at the price of $16.500 per BTC. This situation led to the fact that the losses of such an industry leader as Core Scientific Inc reached $1.7 billion, and it was also on the verge of bankruptcy.

(By the way, on December 6, Bitcoin will face the largest reduction in computation complexity this year. It takes more than 10 minutes now to find a block, and the expected correction will be from 6% to 9%).

Despite all the losses, the industry continues to hope for the best. The main forecasts are divided into 1) BTC/USD will fall again, but then it will turn up, and 2) the pair has already found the bottom and there is only a bright future ahead. Let's start with the first scenario.

So, Mark Mobius, co-founder of Mobius Capital Partners LLP investment company, shared his prediction that bitcoin will continue to fall, and its immediate goal is $10,000. This target is in line with options data from Deribit, which shows a large number of outstanding bitcoin put contracts, so called open interest, with an exercise price of $10,000 at the end of December. 

Crypto analyst Benjamin Cowen is waiting for the bull market to start soon. But this will happen, in his opinion, after a noticeable fall and reaching a real bottom. We are following a simple signal: the intersection of the 200-day moving average and the bitcoin price chart,” the analyst advises. According to him, such an intersection will take place on December 25-27. It is then that we can expect the price to reach the bottom and the transition of BTC/USDto a steady growth. According to the expert's forecast, the bottom has not yet been reached so far. In addition to not crossing the BTC price with the 200-day SMA, Cowen also refers to the Puell Multiple indicator. The metric value at the minimum was about 0.3 in previous cycles. The indicator has so far dropped only to 0.375 this year.

Cowen pointed to the duration of bearish markets, which has historically been about a year, as an additional argument for the future turn. The 2014 cycle lasted 14 months, and the 2018 cycle lasted 12 months.

Renowned crypto trader Ton Vays has described how bulls can end a year-long bearish market. According to him, they should push the price of the main cryptocurrency to the November high, and this will start an upward rally. “I want to see a move to $23,000. If there's a rebound, we'll need to hold on to $19,000 and then come back for a further $23,000. This is 95% to 98% likely to show that a bull market has begun,” he writes. 

However, the crypto trader who predicted the collapse of bitcoin in 2018 accurately does not rule out either that bitcoin will soon face a new sale. “Another scenario is we will fall to $11,000. I believe the bull market will start right after that because I just don't believe bitcoin could fall even lower.” In any case, under any of these scenarios, Vays expects bitcoin to reach $23,000 later this year or early 2023.

The second scenario, the beginning of a bearish trend, is hinted at by IntoTheBlock data. Analysts of this company note that bitcoin is currently experiencing a sharp backwardance: a situation where BTC futures are priced much lower compared to the current price of the asset in the regular (spot) market. This suggests that the market is under strong pressure from sellers. Traders are actively opening short positions, hoping that the price of bitcoin will continue to go down.

At the same time, IntoTheBlock points out that the times when futures contracts are backward tend to coincide with market lows, as was the case in March 2020 and May 2021. And it can also be a signal that the cryptocurrency has found a bottom now.

This version is supported by small (up to 10 BTC) retail investors. According to a report from analytics platform Glassnode, they are becoming increasingly optimistic about bitcoin and have accumulated a record number of coins despite the FTX crash and the ongoing crisis.

Since the FTX crash in early November, shrimp investors (less than 1 BTC) have reportedly added 96,200 coins worth $1.6 billion to their portfolios, a “record high balance increase.” And now they own 1.21 million BTC in total, which is equivalent to 6.3% of the current turnover of 19.2 million coins. Meanwhile, “crabs” (up to 10 BTC) have bought about 191,600 coins worth about $3.1 billion over the past 30 days, which is also a “convincing all-time high.”

While crabs and shrimps were accumulating a record number of bitcoins, large investors were selling them. According to Glassnode, bitcoin whales have released about 6,500 BTC ($107 million) to exchanges over the past month. However, this is a very small fraction of their total holdings of 6.3 million BTC ($104 billion), which suggests that the whales remain somewhat optimistic as well. 

Many influencers are also optimistic about the future. Tom Lee, head of research at Fundstrat Global Advisors and well-known analyst, said that the tragic events of 2022 mentioned above are a “cleansing” moment for the industry, the next year should be better than this one, and bitcoin can still serve as an investment tool.

Michael Novogratz, CEO of the crypto investment company Galaxy Digital, also thinks that digital assets will not leave the market, even though the industry is experiencing a crisis of confidence. “There are 150 million people who have chosen to store part of their wealth in bitcoin. […] Therefore, bitcoin, ethereum will not disappear. Other cryptocurrencies will not either,” he said.

Novogratz expects the recovery of the crypto industry and its slow growth. “You will see how people like ARK Invest CEO Cathy Wood will soon enter the crypto market and invest. I don't think this will be a quick recovery. It will most likely take a long time. It will not be easy to restore trust,” the businessman said. Cathy Wood herself, according to Yahoo, answered “yes” when asked whether she still sticks to her forecast of the BTC price of $1 million by 2030.

In the meantime, at the time of writing this review (Friday evening, December 02), BTC/USD is trading well below the coveted $1 million, in the $17,040 zone. Its correlation with stock market indices (S&P500, Dow Jones and Nasdaq) has almost recovered. The Crypto Fear & Greed Index rose from 20 to 27 points in seven days and finally got out of the Extreme Fear zone into the Fear zone. The total capitalization of the crypto market has also grown slightly and stands at $0.859 trillion ($0.833 trillion a week ago).


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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November 2022 Results: A Difficult Month for Forex Traders

NordFX Brokerage company has summed up the performance of its clients' trade transactions in November 2022. The services of social trading, CopyTrading and PAMM, as well as the profit received by the company's IB-partners have also been assessed. The results show that November was not the best month for Forex traders.

- The maximum profit was received this month by a client from Western Asia, account No. 1652XXX, whose profit amounted to 24,789 USD. This solid result was achieved mainly in gold (XAU/USD), British pound (GBP/USD), and euro (EUR/USD) trades.
- Gold helped their compatriot, account No. 1638XXX, to take the second step of the podium with the result of 19,260 USD.
- The third place belongs to the owner of account No. 1664XXX from Southeast Asia. Using various trading instruments (GBP/NZD, EUR/JPY, EUR/NZD, etc.), this trader made a profit of 15,597 USD.

The passive investment services:

- “Veteran” signal, KennyFXPRO - Prismo 2K, continues to grow in CopyTrading. Ie brought the profit to 277% in 576 days, but its maximum drawdown approached 67% in November. The signal provider had to increase the leverage to 1:200 for the first time to get out of it. The indicators of the second signal from the same provider, ­­KennyFXPro - The Cannon Ball, look like this: 244 days of lifespan, 79% profit. At the same time, its subscribers avoided stress: the leverage did not exceed 1:43, and the maximum drawdown remained at the same level, a little less than 13%.

Startups include the Jhunjhunu signal (profit 547%/max drawdown 61%/lifespan 55 days). Here, as usual, we recall that such profitability certainly looks very attractive, but the subscriber should definitely take into account risk factors such as drawdown and signal life.
    
- However, as practice shows, a long lifespan and good trading performance in the past do not guarantee against future losses. Thus, two leading accounts in the PAMM service suffered significant losses in November.

The KennyFXPRO-The Multi 3000 EA account has been in existence since January 2021, and the maximum drawdown on it had not exceeded 20% until recently. However, the situation became more complicated last month, the drawdown exceeded 42%, and the account manager decided to close unprofitable positions. As a result, profits fell from 170% to 70% and returned to early 2022 levels. The TranquilityFX-The Genesis v3 account found itself in a similar situation: its maximum drawdown doubled as well, while profits fell from 130% to 44%.

It is clear that closing losing orders was a very difficult decision for these PAMM managers, and they made it in order to save at least part of the money. Perhaps, if they had acted the same as with the KennyFXPRO - Prismo 2K account in CopyTrading, the losses would have been avoided, but the risk of a complete zeroing of deposits would have increased many times over. At the same time, it should be noted that the profit in both these accounts exceeds the interest on bank deposits many times even after the November losses.

Among the NordFX IB partners, TOP-3 is as follows:
- the largest commission was accrued to a partner from Western Asia, account No. 1645XXX, for the second month in a row. It was 4,924 USD this time;
- the next is their colleague from Southeast Asia, account No. 1660XXX, who earned 4,173 USD in November;
- and, finally, a partner from Southern Asia, account No.1618ХХХ, who received 3,742 USD as a reward, closes the top three.

***

Attention! The NordFX Super Lottery New Year's Draw will take place in just a month, on January 04, 2023, where numerous cash prizes from 250 to 10,000 USD will be drawn among the company's clients.

You still have time to join it and get a chance to win one or even several of these prizes. All the details are available on the NordFX website.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for November 28 - December 02, 2022

EUR/USD: FOMC Protocol Dropped the Dollar


Last week ended quietly: the US celebrated Thanksgiving. But its first part was marked by the weakening of the dollar, as a result of which EUR/USD rose by more than 200 points, from 1.0222 to 1.0448. It has risen above its 200-day moving average (SMA) for the first time in 17 months, since June 16, 2021.

The reason for this behavior of the US currency was the forecasts regarding the future policy of the US Federal Reserve. Market participants expect the regulator to slow down the rate of interest rate hikes significantly. And the minutes of the November meeting of the FOMC (Federal Open Market Committee), published on November 23, confirmed the validity of such expectations.

They state that “Some of the Fed's leaders have observed that monetary policy has reached a point where it is sufficiently restrictive to meet FOMC targets and it would be appropriate to slow down the rate hike. The vast majority of participants in the meeting considered that a slowdown in the pace of recovery is likely to be appropriate in the near future.”

At the same time, some of the FOMC members believe that the rate "should reach a slightly higher level than previously expected," since both inflation and the imbalance of supply and demand in the US economy remain at a fairly high level. Combining these two points of view, we can conclude that the peak of monetary tightening (QT) may be higher than previously planned, but the rise to it will be longer and smoother.

Recall that the Fed has raised rates by 75 basis points (bp) four times in a row, and the market is now expecting a 50 bp rise in December, with the prospect of moving to a step of 25 b.p. in 2023. The key rate for the dollar is 4.00% at the moment.

As for actions on the other side of the Atlantic, the ECB raised the euro rate by 50 bps in July and then twice by 75 bps, and it is at 2.00% now. The swap market estimates it will rise by 50 b.p. in December, with a probability of 62%, and by 75 b.p. with a probability of 38%. The European regulator may also move to a step of 25 b.p. next year. In this case, the gap between the rates on the dollar and the euro will remain, which will give EUR/USD an incentive to fall below the parity line of 1.0000 again.

It should be noted that the ECB's monetary tightening has not had a suffocating effect on the European economy so far. Moreover, there is a way out of the energy crisis caused by the sanctions imposed on Russia because of its armed invasion of Ukraine. The EU countries have decided to exclude Russian gas from joint purchases. European Commissioner for Energy Kadri Simson said that the EU managed to replace the Russian fuel completely with the help of energy resources from other sources. Gas storages, primarily in Germany, are already filled to the very neck. And the risks of Europe experiencing rolling blackouts or freezing this winter have been drastically reduced.

Against this background, the Business Activity Index (PMI) in the German manufacturing sector rose from 45.1 to 46.7 instead of the expected fall, while it rose from 47.3 to 47.8 in the Eurozone as a whole. The IFO business climate index in Germany has also started to improve: with the forecast of 85.0, it rose from 84.5 to 86.3 in reality. These macro statistics, along with Germany's GDP growth of 0.4% in Q3 (0.1% in Q2, the forecast is 0.3%), give the ECB the green light for further rate hikes. And this, in turn, according to a number of analysts, may push EUR/USD further up, to the zone of 1.0500-1.0600.

The week closed at 1.0400, above the 200-day SMA. Scotiabank experts believe that this could strengthen the bullish momentum. And their colleagues from Commerzbank say that the comfort level for the pair is likely to be between 1.0400 and 1.0500. In general, among the analysts surveyed, 30% of analysts expect the pair to continue to grow, and 40% expect it to turn to the south. The remaining 30% of experts point to the east. The picture is different among the oscillators on D1. All 100% of the oscillators are colored green, while 15% is in the overbought zone. Among the trend indicators, the 100% advantage is on the green side.

The immediate support for EUR/USD is at the 1.0380 horizon, then there are levels and zones 1.0280-1.0315, 1.0220-1.0255, 1.0130, 1.0070, 0.9950-1.0010, 0.9885, 0.9825, 0.9750, 0.9700, 0.9645, 0.9580 and finally, the September 28 low at 0.9535. The next target of the bears is 0.9500. Bulls will meet resistance at levels 1.0430-1.0450, 1.0480, 1.0620, 1.0750, 1.0865, 1.0935.

The coming week will be full of macroeconomic statistics. Preliminary data on such an important indicator as the level of consumer prices (CPI) in Germany and the Eurozone, respectively, will be released on Tuesday, November 29 and Wednesday, November 30. Data on unemployment in Germany and on GDP and the US labor market will also become known on Wednesday. Fed Chairman Jerome Powell is expected to speak on the same day. Thursday will bring information on retail sales in Germany and business activity (PMI) in the US manufacturing sector. We are traditionally waiting for another portion of statistics from the US labor market on the first Friday of the month, December 02, including the unemployment rate and the number of new jobs created outside the country's agricultural sector (NFP). 

GBP/USD: How Long Will the Pound Continue to Grow?

Despite the gloomy global outlook for the pound, a bullish scenario worked in the short term, voted by most experts, 85% of trend indicators and 100% of D1 oscillators. GBP/USD hit its highest level in three months at 1.2153 on Thursday, November 24. As in the case of the euro and other G10 currencies, the reason for its growth was not the achievement of the pound, but the weakening of the dollar.

The final chord for the pair sounded slightly below the maximum, at around 1.2095. According to Scotiabank strategists, the British currency rebounded strongly enough from the all-time low of September 26 (1.0350) to hold on to current levels. Fiscal policy in the UK has stabilized, market confidence has strengthened, and the pair's uptrend has been fairly stable. These factors, according to Scotiabank, should help the GBP/USD quotes stabilize in the 1.2000 area for the foreseeable future, and possibly even rise a little higher.

Analysts at ING, the largest banking group in the Netherlands, point to an even higher target. “We believe positioning has played a major role in the recovery of the pound, and GBP/USD could see further temporary gains towards the 1.22/23 area, which we see once again as the best level for the rest of the year,” they write.

At the same time, experts do not rule out a new bearish impulse and draw attention to the risks of the end of this year and the beginning of 2023, when the Central Banks of leading countries will raise rates during the recession. As we wrote earlier, rising inflationary pressures in the UK could lead to more aggressive rate hikes by the Bank of England (BoE). However, according to many economists, the regulator is likely to avoid drastic steps, since excessive tightening of monetary policy could knock out the UK economy for two long years. According to forecasts, the UK's current account deficit will remain at more than 5% of GDP in 2023-24. The result of such careful actions of the BoE may be the resumption of the downtrend of the British currency

The median forecast for the near term does not give any clear guidance: 45% of experts side with the bulls, exactly the same number side with the bears, and the remaining 10% prefer to remain neutral. Among the oscillators on D1, 100% are on the green side, however, 25% of them give signals that the pair is overbought. Among the trend indicators, the ratio of 85% to 15% is in favor of the greens, like a week ago. The levels and support zones for the pair are 1.2030, 1.1960, 1.1800-1.1840, 1.1700-1.1720, 1.1600, 1.1475-1.1500, 1.1350, 1.1230, 1.1150, 1.1100, 1.1060, 1.0985-1.1000, 1.0750, 1.0500 and the September 26 low of 1.0350. When the pair moves north, it will meet resistance at the levels of 1.2150, 1.2210, 1.2290-1.2330, 1.2425 and 1.2575-1.2610.

Among the events concerning the economy of the United Kingdom, Thursday 01 December attracts attention this week, when the value of November's Business Activity Index (PMI) in the country's manufacturing sector will be known.

USD/JPY: The Yen Thanks the Fed

As an analyst wrote, "The whole world (except the US) thanks the Fed for the minutes of its meeting, which reinforced the dovish reversal, crashing the dollar and US bond yields, and gave respite to the fallen currencies around the world." Indeed, the DXY Dollar Index went down and 10-year Treasury yields hit a 7-week low.

As the yields on these US Treasuries declined, the Japanese currency was among the leaders of growth, and USD/JPY rushed to November lows once again, finding a bottom at 138.04 this time.

(Recall that there is a fairly stable correlation between US government bond rates and USD/JPY. And if the yield on securities increases, so does the dollar against the yen. If the 10-year Treasury bill yield falls, the yen rises, and the pair forms a downtrend).

Strategists at Singapore's United Overseas Bank (UOB) say that if the dollar continues to weaken, the pair might retest the 137.70 area. ING strategists look even further here. According to their forecasts, if the yield on 10-year treasuries ends 2023 at around 2.75%, USD/JPY may end up in the 125.00-130.00 zone at that moment, that is, where it was traded in May-August 2022. As for the possible upward dollar rally this December, according to ING, it will not be able to lift the pair above the 142.00-145.00 zone. There is no question of updating the maximum of October 21 and a new assault on the height of 152.00.

In addition, we must not forget about Day X, which is scheduled for April 8 next year. It is on this day that Haruhiko Kuroda, the head of the Bank of Japan, will end hs term, and he may be replaced by a new candidate with a less dovish position. Such a change could lead to a revolutionary push for USD/JPY to the south. After that, it could end 2023 exactly where ING strategists expect it to be.

As for the current situation, the pair closed last week at 139.05. Only 10% of analysts are counting on the fact that the dollar will try to win back at least part of the losses in the near future, and USD/JPY will turn to the north. 45% vote for a breakthrough to the south and a new fall. And another 45% find it difficult to make a forecast. For oscillators on D1, the picture looks like this: 100% are looking south, 10% of them are in the oversold zone. Among the trend indicators, the ratio is 85% to 15% in favor of the red ones.

The nearest strong support level is located in the zone 138.00-138.30, followed by the levels and zones 137.50-137.70, 136.00, 135.55, 134.55 and the zone 131.35-131.75. Levels and resistance zones are 139.85, 140.60, 142.20, 143.75, 145.30, 146.85-147.00, 148.45, 149.45, 150.00 and 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00. Then there are the 1990 highs. around 158.00.

No important events regarding the state of the Japanese economy are expected this week.

CRYPTOCURRENCIES: Market of Rumors and Fears

BTC/USD fell to its lowest level in two years on Monday, November 21. It was also trading in the $15,500 area on November 21, 2020. The local bottom was found at $15,482 this time. The main cryptocurrency was kept from falling further by the growth of risk sentiment, which is pushing up the S&P500, Dow Jones and Nasdaq stock indices. Additional support was provided by the minutes of the last Fed meeting published on November 23, in which the market saw dovish sentiment. But despite this, cryptocurrencies are still under strong bearish pressure, and many experts believe that a new collapse is inevitable.

JPMorgan analysts have warned that the collapse of major digital assets is not over, and the FTX crash crisis could act like a domino and lead to “cascading liquidations”. And now the market is gripped by anxiety related to the possible bankruptcy of Genesis, a subsidiary of the Digital Currency Group (DCG) fund. This happened after the company failed to raise $1 billion in funding. Citing the difficulties of Genesis, the lending arm of the Gemini crypto exchange has already frozen the withdrawal of client assets. Bloomberg estimates their volume at $700 million.

Investors are already afraid of their own shadow. And then Ethereum co-founder Vitalik Buterin added fear by posting a mysterious tweet. Without going into details, he wrote that "the rumor is that something important is about to happen." Almost at the same time, information appeared from somewhere that he was getting rid of his Ethereum reserves, and this alerted the crypto community furthermore. A wallet allegedly owned by Vitalik Buterin sold 3,000 ETH worth $3.75 million in the middle of the night, just hours after FTX crashed.

Jordan Belfort, a former stockbroker convicted of fraud and commonly known as The Wolf of Wall Street, believes that the FTX trading platform's bankruptcy was intentional, and Sam Bankman-Fried is a sociopath who implemented FTX pump and dump schemes.

The author of the world-famous book Rich Dad Poor Dad, Robert Kiyosaki, tried to soften the intensity of passions, saying that he still believes in the bright future of the two flagship digital assets bitcoin and Ethereum. According to him, bitcoin is not the same as Sam Bankman-Freed. The situation around FTX must be considered as a special case, and conclusions about the entire industry cannot be drawn only on its basis.

But it seems that investors are in no hurry to listen to Mr. Kiyosaki. Analytics firm Glassnode said in their November 21 report that recent market weakness has “shattered the confidence of bitcoin holders” and the looming crypto winter is following in the footsteps of its 2018-19 predecessor. According to Glassnode, most of the whales (wallets with more than 1,000 BTC) are now lying on the bottom, waiting for better times.

At the height of the previous bear market, bitcoin fell by 84% from its maximum. It took just under a year for the asset to fall from $20,000 in November 2018 to $3,200. It took about the same time this time to drop 77.3% and crash from $69,000 on November 21 to a new cycle low of $15,482. At the same time, some analysts believe that BTC should not be expected to recover soon, because several months had passed after the collapse of 2018 before the first noticeable upward impulse appeared.

In addition, last week saw the fourth-largest spike in realized losses with a daily volume of $1.45 billion. This dumping of crypto assets by long-term players “is often a sign of fear and capitulation among this more experienced cohort,” the Glassnode report notes.

According to the IntoTheBlock platform, out of 47.85 million BTC holders, 24.56 million addresses (51%) suffer losses. About 45% of wallets are still in the black, and the remaining addresses are in the break-even zone. According to IntoTheBlock analysts, the last time a similar situation was observed after the March market crash. At the same time, one of them added that the share of unprofitable addresses usually exceeds 50% at the moment when the market is at the bottom. Thus, he hinted that a more significant fall in the cryptocurrency should not be expected. However, statistics show the opposite: the share of addresses that suffered losses reached 55% in December 2018, and this figure exceeded 62% during the dominance of the bearish trend in 2015.

Arthur Hayes, former CEO of BitMEX, has increased the negative outlook for bitcoin to $10,000. American economist Benjamin Cowen does not rule out another decline in quotations either. He has recently published a comparison chart of the current bear market with the previous three, which shows that bitcoin is at a very interesting point today. On the one hand, 379 days have passed since ATH (the all-time high). In the previous two bearish markets, this period was 363 days in 2018 and 410 days in 2015. On the other hand, the current ROI (return on investment) is 0.247. In previous times, it has always fallen below the value of 0.2, which indicates a possible further fall of the market.

Another chart was published by a well-known cryptanalyst named Dave the Wave. According to his charts, bitcoin is now right at the lower end of the long-term LGC, which has historically acted as support. BTC's history has already seen price actions below this curve: for example, in the 2015 bear market or during the crash at the start of the COVID-19 pandemic in March 2020. However, such a fall did not last long then, and the cryptocurrency quickly restored its long-term support. This usually signaled the end of the bear market and the start of a new bull market.

Dave the Wave noted in a comment on his chart that special attention should be paid to the end of the month. According to him, there is technically nothing catastrophic in the price action yet, but the lower border of the model is hardly holding. If bitcoin closes the month below $16,000, LGC support is highly likely to collapse, and the fall will continue. And vice versa: if it manages to hold on and bounce up, this may be a signal for the beginning of a new bull market.

In the meantime, at the time of writing this review (Friday evening, November 25), BTC/USD is trading in the $16,520 zone. The total capitalization of the crypto market is $0.833 trillion ($0.832 trillion a week ago). The Crypto Fear & Greed Index fell from 23 to 20 points in seven days and could not get out of the Extreme Fear zone.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for November 21 - 25, 2022

EUR/USD: The Pair Is at a Crossroads

We wondered at the beginning of the last review if the dollar rally had come to an end. Let us recall that the US inflation data published on November 10 turned out to be significantly better than both previous values and forecasts. Core consumer inflation (CPI) rose by 0.3% in October, which was lower than both the forecast of 0.5% and the previous September value of 0.6%. The annual growth rate of core inflation slowed down as well to 6.3% (against the forecast of 6.5%, and 6.6% a month ago).

This pace of change in CPI was the slowest in the last 9 months, confirming that a series of sharp interest rate hikes has finally had the desired effect. Market participants have immediately decided that the Fed is now likely to slow down the pace of tightening its monetary policy (QT). As a result, the DXY Dollar Index went into a steep peak, losing 2.1%, which was a record drop since December 2015. The American currency weakened against the euro as well: EUR/USD rose from 0.9935 to 1.0363 in two days, from November 10 to 11, breaking through the parity level.

The pair continued to grow at the beginning of last week:  it fixed a local maximum at 1.0480 on Tuesday, November 15, but then went down sharply to 1.0279, and ended the five-day period in the 1.3210 zone.

The main reasons for this behavior are the ambiguous macro statistics from the US, the hawkish forecasts of the Fed leaders and the vague statements by the head of the ECB. Let's start in order, with statistics. Data on the US Producer Price Index (PPI) showed a reduction in inflationary pressure: the growth slowed down from 8.4% to 8.0%. US construction volumes rose to 1.425 million new homes in October, which was higher than expected. But at the same time, the September figure had been revised up to 1.488 million homes. As a result, the dynamics turned out to be negative. Statistics on building permits issued in October was also above the forecast of 1.526 against 1.512 million houses, but lower than the previous month­, 1.564 million. The manufacturing activity index of the Federal Reserve Bank of Philadelphia generally fell sharply to -19.4 points against -8.7 points in September, although the forecast for October was -6.2.

Things are quite multidirectional in Europe as well. Thus, the ZEW Economic Sentiment Index in Germany turned out to be significantly better than both the forecast and the previous value (-36.7/-50.0/-59.2). But the Consumer Price Index (CPI) in the Eurozone pointed to an increase in inflation from 9.9% to 10.6%.

The second factor that determined the dynamics of the dollar was the statements by the leaders of the US Federal Reserve. Thus, if the Fed's chief hawk, the head of the Federal Reserve Bank (FRB) of St. Louis James Bullard, had earlier predicted a peak in the key interest rate in the range of 4.75-5.00%, he has now raised the bar by another 25 basis points to 5.00 - 5.25%. San Francisco Federal Reserve Bank President Mary Daley shares a similar opinion, pointing to the target range of 4.75-5.25%. Atlanta Fed chief Rafael Bostic also said that monetary tightening and interest rate hikes would continue.

Note that, according to the CME Group FedWatch Tool, the probability that the Fed will raise the base rate by 50 bps in December is 85%, while the probability of a rise by 75 bps is only 15%. Such assessments of the market can be considered quite neutral, since the American Central Bank is still ahead of its counterparts from other G10 countries in terms of monetary policy tightening. Thus, speaking at the Financial Conference in Frankfurt (Germany) this week, the head of the European regulator Christine Lagarde said that the ECB certainly “expects a further increase in rates to the levels necessary to ensure that inflation returns to the medium-term target of 2%.” But at the same time, she did not outline any specific steps. Moreover, Madame Lagarde emphasized that "it is necessary that the normalization of the balance occurs in a measured and predictable way." After such words, investors experienced a certain disappointment, which did not allow EUR/USD to continue its growth.

According to strategists at ING, the largest banking group in the Netherlands, the pair will fall again below the 1.0000 parity line in the medium term. "If the Fed remains a key driver for the dollar,  the ECB will continue to play a fairly minor role for the euro, which instead remains largely pegged to global risk sentiment and geopolitical/energy dynamics." At the same time, ING does not rule out a new mini rally for the pair in the short term.

Only 15% of analysts expect the pair to rise even higher to the north in the near future, 55% expect a turn to the south. The remaining 30% of experts point to the east. The picture is different among the oscillators on D1. All 100% of the oscillators are colored green, while 15% are in the overbought zone. Among the trend indicators, the advantage is also on the side of the greens: 75% advise buying the pair, 25% selling. The immediate support for EUR/USD is at 1.0270, followed by the levels and zones at 1.0254, 1.0130, 1.0070, 0.9950-1.0010, 0.9885, 0.9825, 0.9750, 0.9700, 0.9645, 0.9580, and finally the Sep 28 low at 0.9535. The next target of the bears is 0.9500. Bulls will meet resistance at levels 1.0390-1.0400, 1.0422-1.0438, 1.0480, 1.0620, 1.0750, 1.0865, 1.0935.

The calendar includes Wednesday, November 23, among the events of the upcoming week. A lot of macroeconomic statistics on the US economy will be released on this day. This includes data on unemployment, the state of the housing market, and the volume of orders for capital goods and durable goods. In addition, the minutes of the last meeting of the FOMC (Federal Open Market Committee) of the US Federal Reserve will be published.  Information on business activity in Germany and the Eurozone as a whole will be received on the same day. The United States has a holiday on Thursday, November 24, and an early closing of trading on Friday, November 25: the country celebrates Thanksgiving. But the value of the IFO Business Climate Index and the volume of German GDP will become known on the same days.

GBP/USD: Gloomy Forecasts for the Pound

As in the case of the euro, GBP/USD rose not because of the gains in the pound, but because of the weakening of the dollar, caused by the latest US inflation data. As for the British currency, the fundamental background of the United Kingdom gives signals about the deterioration of the economic situation in the country over and over again. Thus, according to data published last week, the unemployment rate increased from 3.5% to 3.6%. The average salary level increased from 5.5% to 5.7%. Inflation, such as the annual Consumer Price Index (CPI), rose in the UK in October to its highest level since 1982 and reached 11.1% (with a forecast of 10.7% and the September value of 10.1%). Retail sales (y/y) fell by -6.1% in October against the forecast -6.5% and the previous result -6.8%. It seems that the fall has slowed down here, but it is still a very strong fall.

UK Chancellor of the Exchequer Jeremy Hunt presented a new plan from the government of new Prime Minister Rishi Sunak on Thursday November 17, according to which budget spending should be reduced by up to 60 billion pounds. Given that this plan also included tax increases, GBP/USD could go down sharply again. However, as ING analysts commented sarcastically, "the pound has survived the long-awaited autumn announcement by the Treasury Secretary." The impact of tax increases on the economy may not be huge and should only affect high incomes and the energy industry. However, ING believes that it is still too early to talk about stabilization and believes as before that downside risks remain for the pair, as the dollar may start to recover towards the end of the year. As a result, the target for GBP/USD will be below 1.1500.

While ING thinks that the pound has survived Jeremy Hunt's speech in the short term, the economic situation in the UK still looks rather bleak in the long term according to experts from Commerzbank. The head of the Ministry of Finance turned out to be much more pessimistic than the average opinion of analysts. He believes that the country's economy is already in recession and expects a 1.4% decline in GDP (analysts' median forecast is -0.5%).

Of course, rising inflationary pressures in the UK could lead to more aggressive rate hikes by the Bank of England (BoE). However, according to many experts, the regulator will still avoid drastic steps, since excessive tightening of monetary policy can generally knock out the economy for a long two years. According to forecasts, the UK's current account deficit will remain at more than 5% of GDP in 2023-24. The result may be a resumption of the downward trend of the British currency

The last chord of the week for GBP/USD sounded around 1.1880. The median forecast for the near future looks rather mixed: 40% of experts side with the bulls, 25% side with the bears, and the remaining 35% prefer to remain neutral.

Among the oscillators on D1, 100% are on the green side, of which, as in the case of the previous pair, 15% give overbought signals. As for the trend indicators, the ratio is 85% to 15% in favor of the green ones. The levels and support zones for the pair are 1.1800-1.1840, 1.1700-1.1715, 1.1600, 1.1475-1.1500, 1.1350, 1.1230, 1.1150, 1.1100, 1.1060, 1.0985-1.1000, 1.0750, 1.0500 and the September 26 low of 1.0350. When the pair moves north, the pair is for resistance at the levels of 1.1960, 1.2045-1.2085, 1.2135, 1.2210, 1.2290-1.2330, 1.2425 and 1.2575-1.2610.

Statistics on the United Kingdom economy include the publication of the S&P Global Business Activity Index in the country's manufacturing sector on Wednesday, November 23. The values of a whole group of business activity indices will become known a day later, on Thursday, November 24: in the services sector, in the manufacturing sector and the UK composite PMI.

USD/JPY: What Awaits the Yen after April 08?

Well, what can we say about this pair? Actually, nothing new. “Uncertainty about the Japanese economy is extremely high,” said Haruhiko Kuroda, Governor of the Bank of Japan (BoJ), speaking to the country's Parliament. And he added that his organization "will continue to ease monetary policy to support the economy and achieve a target inflation rate of 2% on a sustainable, stable basis, backed by wage growth."

The Japanese Central bank governor's comments come amid reports that the country's consumer inflation rate has hit a 40-year high. And, according to many experts, BoJ's super-pigeon position will not change until April 08, 2023. It is on this day that Haruhiko Kuroda's powers in this post will end, where he can be replaced by a new candidate with a less dovish position. Before that, in Q1of the new year, an important factor determining the future monetary policy of the Central Bank will be the growth of wages in the country, which can lead to a revolutionary reversal of USD/JPY down to the south. After that, according to the forecasts of a number of experts, it may end 2023 near the level of 130.00.

As for closer prospects, the forecast of specialists from the French financial conglomerate Societe Generale will be interesting here. “USD/JPY has experienced a deep pullback after breaking below chart levels at 145.00. A break of 137.80 could extend the downtrend,” they write. “An initial rebound is not ruled out, but 143.50 and the lower end of the previous range at 145 are likely to be short-term resistance levels. Holding below 143.50 risks another leg of decline. The break of 137.80 could see further downside to 200-DMA near 134 and 132.50.”

The pair ended the last trading session in the 140.35 zone. The fact that the dollar will try to win back at least part of the losses in the near future, and USD/JPY will turn to the north, is expected by 40% of analysts. 15% vote for a breakthrough to the south and a new fall. The remaining 45% have found it difficult to make a forecast. For oscillators on D1, the picture looks like this: 100% are looking south, 10% of them are in the oversold zone. Among the trend indicators, the ratio is 85% to 15% in favor of the red ones. The nearest strong support level is located in the zone 138.85-139.05, followed by the levels 138.45, 137.50, 135.55, 134.55 and the zone 131.35-131.75. Levels and resistance zones are142.20, 143.75, 145.30, 146.85-147.00, 148.45, 149.45, 150.00 and 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00. Then there are the 1990 highs around 158.00.

No important events regarding the state of the Japanese economy are expected this week. It should also be borne in mind that Wednesday, November 23 is a holiday in the country, Labor Day.

CRYPTOCURRENCIES: Is There Life after Bankruptcy?


The bankruptcy of the FTX exchange remains the most discussed event. But if the main topic was the event itself last week, the focus of the discussion has now shifted to the question of what will happen to the crypto industry as a whole. Will it be able to avoid collapse and recover from its wounds? And what can be done to prevent similar upheavals in the future?

The FTX incident has shown that the cryptocurrency industry needs “very careful regulation.” This opinion was expressed by US Treasury Secretary Janet Yellen, and she added that the consequences of the collapse of the Sam Bankman-Freed empire could be even worse if the cryptocurrency market had been more closely intertwined with the traditional financial system.

The head of the Ministry of Finance was supported by experts from the investment bank JPMorgan, who consider current events a positive catalyst. They stated that the FTX crisis would benefit the industry and help it move a few steps forward. The collapse of one of the largest crypto companies will push regulators to accelerate the process of forming regulatory rules that allow effective control of the sector. And the introduction of a comprehensive regulatory framework will facilitate the institutional acceptance of cryptocurrencies.

Jordan Belfort, a former stockbroker who served time in prison for securities fraud and known as the “Wolf of Wall Street”, has also sided with law enforcement. He believes that the potential of bitcoin will be realized when the crypto sector becomes fully regulated. And this “Wolf” called the current market downturn “cleansing”.

As a result of this “cleansing” and a prolonged decline in the crypto market, according to the Bank for International Settlements, approximately three-quarters of bitcoin investors lost money. And according to a study by the analytical agency Crypto Fund Research, losses of cryptocurrency funds can reach up to $5 billion. According to experts, the crisis affected 25-40% of industry investment structures that invested in FTX or its utility token FTT. Joshua Gnaizda, CEO of Crypto Fund Research, clarified that we are talking about 7-12% of assets under fund management.

Paradigm and Sequoia Capital reported that their potential losses due to the FTX crisis could be $278 million and $213 million, respectively. About $175 million has been blocked at the Genesis Trading brokerage company. As of November 8, Mike Novogratz's Galaxy Digital investment firm had $76.8 million in FTX-related positions. Multicoin Capital invested $25 million in the US division of FTX, and also held $2 million in USDC on the exchange itself. Investments in FTX US through the Venture Fund II, created in July, amounted to $430 million. Crypto Fund Research experts have estimated the value of Pantera Capital's FTX-related assets at approximately $100 million.

Industry participants admitted on condition of anonymity that the losses of asset managers could be even greater. “The number of funds absolutely destroyed by this bankruptcy is just beginning to be revealed,” one of the sources said. Researchers expect a record number of investor requests for refunds from crypto funds in November, up to $2 billion. The previous high of $1.3 billion was recorded in June after the Terra crash.

JPMorgan analysts also believe that the fall of major cryptocurrencies is not over, and the FTX bankruptcy crisis could lead to “cascading liquidations”. The market decline will continue for some time, reminiscent of the 2008 financial crisis. That being said, the JPMorgan team believes that the blow to total capitalization is likely to be less this time, as the TerraUSD episode has already caused a pullback in risk taking and a more wary attitude towards investing in dubious projects.

Edward Snowden, a former CIA and National Security Agency officer who had fled to Russia, said that after the collapse of FTX, the industry should switch to secure DEXs. Decentralized exchanges are an alternative to centralized exchanges and are managed solely by smart contracts without the participation of a third party. Thanks to full decentralization, DEXs in their original state should never face problems similar to FTX, as their reserves never fall below users' deposits.

At the time of writing, Friday evening November 18, bitcoin has stopped the fall caused by the collapse of FTX and is consolidating in the $ 16,550-16,650 area. Such a lull after the tsunami gave BTC supporters a vengeance to demonstrate their faith in its bullish future. Thus, MicroStrategy Executive Chairman Michael Saylor announced that he is not going to abandon his strategy of buying and accumulating digital gold. Tesla CEO and new Twitter owner Elon Musk is confident that BTC will survive the bear market, although it will take a long time before its full potential is realized. Robert Kiyosaki, author of Rich Dad Poor Dad, also expressed optimism, who said that he is not concerned about the current price movement of the main cryptocurrency.

A popular analyst named Dave the Wave joined the chorus of optimists. He acknowledged that the cryptocurrency markets are facing a huge loss of public confidence. But at the same time, he recalled that bitcoin had earlier remained in a long-term uptrend even when many announced its actual death. “Do not underestimate the speculative beast underlying the BTC market, as reflected in the LGC (logarithmic growth curve), which has demonstrated the ability to absorb the most terrible news and events,” Dave the Wave believes.

BTC/USD has already lost long-standing support in the form of the MA200 weekly moving average. However, experts from the analytical firm TradingShot conducted a fractal analysis, which did not rule out a powerful rally in the main cryptocurrency in 2023. In addition, its results suggest an increase in the bullish potential of the coin by 2024 and, possibly, its growth to $95,000.

Analyst Jason Pizzino opined that bitcoin bulls would not allow BTC to fall to $10,000. “We have a figure of $14,900 in the spot market as a cycle low and around $15,500 depending on which exchange you use.” According to Pizzino, “If we go above $18,500 or $18,600, that would be a strong indication that the whole thing was just a shake-up.” “However,” the trader added, “that doesn't mean that once we close above that $18,500, we can't go back down. We would then have a price of around $13,500, which is relatively well in line with the previous highs of the old 2019 cycle.”

Morgan Stanley bank experts do not exclude a new fall. In their opinion, if BTC fails to gain a foothold above $17,000, traders will soon switch to sales. The result, most likely, will be a fall in the BTC rate below $15,000. In the event of such a rollback, the cryptocurrency can only qualify for immediate support in the $14,000 region. Moreover, Morgan Stanley does not exclude that bitcoin will find the bottom at $13,500 or even $12,500. But that would be the worst of the scenarios.

Delphi Digital came to a similar conclusion. Its report says that market consolidation has been delayed and that technical indicators hint at a new reset by the end of November. At best, bitcoin will be able to stay in the range of $14,000 to $16,000.

At the time of writing, BTC/USD is trading in the $16,600 area, ETH/USD - $1,200. The total capitalization of the crypto market is $0.832 trillion ($0.860 trillion a week ago). The Crypto Fear & Greed Index for seven days has not been able to get out of the Extreme Fear zone and is at around 23 points.

Finally, a few tips from Jordan Belfort. Tip No.1: Invest in bitcoin for 3-4 years. “If you take a three-, four-, or five-year horizon, I would be shocked if you didn’t make money,” says this Wolf of Wall Street. Tip No.2: Don't look at anything other than bitcoin and Ethereum. Finally, Tip No.3: Don't panic. “The entire crypto world is paralyzed with fear. I will say that if you return to the game, now is the very moment when the most money is being made in the market.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for November 14 - 18, 2022

EUR/USD: Is the Dollar's Growth Over?


Has the dollar rally come to an end? The answer to this question sounds more and more affirmative day by day. The reason for the weakening of the US currency lies in the interest rate of the Fed. This, in turn, depends on the state of the labor market and inflation in the US, which determine the regulator's monetary policy.

Recent data have shown that the labor market is doing well at least. The number of new jobs created outside the US agricultural sector (NFP) was 261K in October, which is higher than the forecast of 200K. Although the number of initial jobless claims increased, the growth was insignificant and, with the forecast of 220K, it actually amounted to 225K (218K a month ago).

As for inflation, the data published on Thursday, November 10, turned out to be much better than both previous values and forecasts. Core consumer inflation (CPI) increased by 0.3% in October, which is lower than both the forecast of 0.5% and the previous September value of 0.6%. The annual growth rate of core inflation slowed down to 6.3% (against the forecast of 6.5%, and 6.6% a month ago).

This rate of change in CPI is the slowest in the last 9 months and suggests that a series of sharp interest rate increases have finally had the desired effect. Market participants have immediately decided that the Fed is now likely to slow down the pace of interest rate increases. As a result, the DXY Dollar Index went into a steep peak, losing 2.1%, which was a record drop since December 2015.

The probability that the US Federal Reserve will increase the rate by 75 basis points (bp) at the next December meeting of the FOMC (Federal Open Market Committee) is now close to zero. The futures market expects it to rise by only 50 bp. The maximum value of the rate in 2023 is now predicted at 4.9%, and it can be reached in May (a forecast a week ago predicted a peak of 5.14% in June).

All this does not exclude a new wave of dollar strengthening in the coming months of course. But much will depend on the geopolitical situation and the actions of other regulators. Many analysts believe that a slowdown in the pace of monetary tightening by the Fed (QT) will allow rival currencies to counter the dollar more effectively. The Central Banks of other countries are currently playing the role of catching up, not having time to raise their rates at the same pace as in the United States. If the Fed moves more slowly (and at some point, slows down altogether), they will be able, if not to overtake their American counterpart, at least to close the gap or catch up with it.

Here we can cite the Eurozone as an example. According to preliminary Eurostat data for October, inflation here reached a record 10.7%. And this despite the fact that the target level of the ECB is only 2.0%. So, as stated by the head of the European Central Bank, Christine Lagarde, the regulator has no choice but to continue to raise rates, even despite the slowdown in economic growth.

The change in market sentiment resulted in a northward reversal of the EUR/USD pair. It was trading in the 0.9750 zone just a week ago, on November 04, and it fixed a local maximum at the height of 1.0363 on Friday, November 11. The last chord of the five-day period sounded almost nearby, at the level of 1.0357.

Most analysts expect the pair to return to the south in the near future, 60%, and only 10% expect further movement to the north. The remaining 30% of experts point to the east.  The picture is different among the oscillators on D1. All 100% of the oscillators are colored green, while a third of them are in the overbought zone. Among trend indicators, the green ones also have an advantage: 85% advise buying the pair and 15% advise selling. The immediate support for EUR/USD is at 1.0315, followed by the levels and zones at 1.0254, 1.0130, 1.0070, 0.9950-1.0010, 0.9885, 0.9825, 0.9750, 0.9700, 0.9645, 0.9580, and finally the September 28 low of 0.95. The next target of the bears is 0.9500. Bulls will meet resistance at levels 1.0375, 1.0470, 1.0620, 1.0750, 1.0865, 1.0935.

Highlights of the upcoming week include the release of preliminary Eurozone GDP data on Tuesday November 15. The ZEW Economic Sentiment Index in Germany and the Producer Price Index (PPI) in the US will be announced on the same day. Data on retail sales in the US will arrive on Wednesday, October 16, and the market will be waiting for the publication of such an important inflation indicator as the Consumer Price Index (CPI) in the Eurozone on Thursday, October 17. In addition, ECB President Christine Lagarde is scheduled to speak on November 16 and 18.

GBP/USD: UK Economy Plunged into Recession

Recall that the Bank of England (BoE), raised the key rate by 0.75%, from 2.25% to 3.00%, at its meeting on November 3, as well as the Fed. This move was the strongest one-time rate hike since the late 1980s. At the same time, the head of the Bank of England (BoE), Andrew Bailey, said on Friday November 11 that "more interest rate hikes are likely in the coming months" and that "efforts to curb inflation are likely to take from 18 months to two years." Silvana Tenreiro, a member of the Monetary Policy Committee of the British Central Bank, announced approximately the same dates. According to her, monetary policy will have to be loosened, possibly in 2024.

However, it is not yet clear when and how much the BoE will raise the pound rate. The United Kingdom's GDP data released last week, although below the forecast of -0.5%, still moved into the negative zone, showing a drop in the economy in Q3 by -0.2%. This was the first fall in 6 quarters, and it looks like it started the country's plunge into a long recession, which, if quantitative tightening (QT) continues, according to the Bank of England, could last about 2 years.

Economists at Bank of America Global Research analyzed how energy prices and the pace of Central bank policy normalization will affect G10 currencies. As a result, they concluded that the dynamics of the balance of payments will be a deterrent for currencies such as the euro, the New Zealand dollar and the British pound in 2023.

In the meantime, against the backdrop of data on slowing inflation in the US, GBP/USD, as well as EUR/USD, went up, adding almost 555 points over the week and reaching the weekly high at 1.1854. The final point of the trading session was set at 1.1843. And, according to the strategists at the American investment bank Brown Brothers Harriman (BBH), the pound may soon test the August 26 high at 1.1900.

As for the median forecast of analysts for the near future, here the bulls have received 25% of the vote, the bears 35%, and the remaining 40% of experts prefer to remain neutral. Among the oscillators on D1, 100% are on the green side, of which 25% signal that the pair is overbought. Among trend indicators, the situation is exactly the same as in the case of EUR/USD: 85% to 15% in favor of the greens. Levels and zones of support for the British currency: 1.1800-1.1830, 1.1700-1.1715, 1.1645, 1.1475-1.1500, 1.1350, 1.1230, 1.1150, 1.1100, 1.1060, 1.0985-1.1000, 1.0750, 1.0500 and the September 26 low of 1.0350. When the pair moves north, the bulls will meet resistance at the levels 1.1900, 1.1960, 1.2135, 1.2210, 1.2290-1.2330, 1.2425 and 1.2575-1.2610.

Of the events of the upcoming week, data on unemployment and wages in the UK, which will be released on Tuesday 15 November attract attention. The value of the Consumer Price Index (CPI) will become known the next day, on Wednesday, November 16, and the UK Inflation Report will also be heard. And data on retail sales in the United Kingdom will be published at the very end of the working week, on Friday, November 18.

USD/JPY: The Yen's Strength Is the Weak Dollar

it is evident that the fall of the dollar has not bypassed USD/JPY which, as a result, returned to the values of late August - early September 2022. The low of the week was recorded on Friday, November 11 at 138.46, and the finish was at 138.65. It is clear that the reason for such dynamics was not the strengthening of the yen and not the currency interventions of the Bank of Japan (BoJ), but the general weakening of the dollar.

Recall that after USD/JPY reached 151.94 on October 21, hitting a 32-year high, the BoJ sold at least $30bn to support its national currency. And then it continued to intervene.

Finance Minister Shinichi Suzuki said on November 4 that the government has no intention to send the currency to certain levels through intervention. And that the exchange rate should move steadily, reflecting fundamental indicators. But the dollar has now retreated by almost 800 points in just a few days without any financial costs from the Bank of Japan, without any fundamental changes in the Japanese economy. And this happened solely because of expectations that the Fed could reduce the rate of interest rate hikes.

What if it doesn't reduce it? Will the Japanese Central Bank decide on one or more interventions? And will it have enough money for this? The second tool for supporting the yen, the interest rate, can probably be forgotten, since the Bank of Japan is not going to depart from the ultra-dove exchange rate and will keep it at a negative level -0.1%.

The fact that the dollar will soon try to win back at least part of the losses and USD/JPY will turn to the north is expected by 65% of analysts. The remaining 35% vote for the continuation of the downtrend. For oscillators on D1, the picture looks like this: 80% are looking south, a third of them are in the oversold zone, 20% have turned their eyes to the north. Among the trend indicators, the ratio of green and red is 15% to 85% in favor of the latter. The nearest strong support level is located in the zone 138.45, followed by the levels 137.50, 135.55, 134.55 and the zone 131.35-131.75. Levels and resistance zones: 139.05, 140.20, 143.75, 145.25, 146.85-147.00, 148.45, 149.45, 150.00 and 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00. Then there are the 1990 highs around 158.00.

As for the release of macro statistics on the state of the Japanese economy, we can mark Tuesday, November 15 next week, when the data on the country's GDP for Q3 2022 will become known. According to forecasts, GDP will decrease from 0.9% to 0.3%. And if the forecast comes true, it will become another argument in favor of keeping the interest rate by the Bank of Japan at the same negative level.

CRYPTOCURRENCIES: Two Events That Made the Week

The past week was marked by two events. The first plunged investors into incredible melancholy, the second gave hope that not everything is so bad. So, one at a time.

Event No. 1 was the bankruptcy of the FTX exchange. After it became known about the liquidity crisis of Alameda Research, a crypto trading company owned by FTX CEO Sam Bankman-Fried, Binance CEO Chang Peng Zhao published a message about selling FTT tokens. Recall that FTT is a token created by the FTX team, and Chang Peng Zhao’s actions immediately led to a rapid drop in its value. FTX users began to massively try to withdraw their savings. About a billion dollars in cryptocurrency and stablecoins were withdrawn from the exchange, and its balance became negative. In addition to FTT, the price of Sol and other tokens of the Solana project, which is linked to both FTX and Alameda, fell sharply as well.

Other cryptocurrencies have also been affected by the decline. Investors do not like to see any failure in any risky asset, and they fear the domino effect when the collapse of one company threatens the existence of others.

Encouraging information came from the head of Binance: Chang Peng Zhao announced on November 08 that his exchange was going to buy the bankrupt FTX. (According to some estimates, the "hole" in its budget is about $8 billion). However, it turned out later that the deal would not take place. Quotes fell further down. As a result, bitcoin sank in price seriously, falling by almost 25% by November 10: from $20,701 to $15,583. Ethereum "shrunk" by 32%, from $1,577 to $1,072. The total capitalization of the crypto market has decreased from $1.040 trillion to $0.792 trillion.

There is no doubt that the collapse of FTX will increase the regulatory pressure on the entire industry. In the previous review, we started to discuss the question of whether the regulation of the crypto market is a good thing or a bad thing. It should be noted that the majority of institutions vote for regulation. For example, BNY Mellon, America's oldest bank, said that 70% of institutional investors can increase their investment in cryptocurrency, but at the same time they are looking for ways to safely enter the crypto market, and not mindlessly invest money in the hope of high profits.

Approximately the same has recently been stated by Mastercard Chief Product Officer Michael Miebach. In his opinion, this asset class will become much more attractive to people as soon as the supervisory authorities introduce the appropriate rules. Many people want but do not know how to enter the crypto industry and how to get the maximum protection for their assets.

As for the event No. 2 mentioned at the beginning of the review, it was the publication of inflation data in the US on Thursday, November 10. As it turned out, it is declining, from which the market concluded that the Fed may reduce the pace of raising interest rates. The DXY dollar index went down immediately, while risky assets went up. Correlation between cryptocurrencies and stock indices S&P500, Dow Jones and Nasdaq, lost at the time of the FTX crash, has almost (but not completely) recovered, and the quotes of BTC, ETH and other digital assets also began to grow.

At the time of writing this review, Friday evening, November 11, BTC/USD is trading in the $17,030 area, ETH/USD is $1,280. The total capitalization of the crypto market is $0.860 trillion ($1.055 trillion a week ago). The Crypto Fear & Greed Index fell back into the Extreme Fear zone to 21 points in seven days.

Cumberland, the crypto arm of venture capital firm DRW, believes a "promising uptrend" is emerging in the volatile digital asset market. “The dollar's seemingly inexorable rally ended up killing sentiment in all major risk asset classes earlier this year,” the firm said. “This rally seems to have peaked, probably as a result of expectations that the Fed will change course by mid-2023.”

Having analyzed bitcoin’s previous price action, including its upper highs and lower lows since November 2021, crypto analyst Moustache concluded that the cryptocurrency has displayed a “bullish megaphone pattern.” In his opinion, the expanding model, which looks like a megaphone or an inverted symmetric triangle, indicates that bitcoin could reach $80,000 around the summer of 2023.

As for the shorter-term outlook, some analysts believe that bitcoin could regain a critical support level by the end of 2022 and possibly even regain its $25,000 high.

The total volume of lost bitcoins, as well as digital gold in the wallets of long-term crypto investors, has reached a five-year high. This means that the active market supply of cryptocurrency is decreasing, promising optimistic prospects for prices, provided that demand increases or remains constant.

According to billionaire Tim Draper, women will be the main driver of the next bull market, as they control about 80% of retail spending. “You can’t buy food, clothes and housing with bitcoin yet, but once you can, there will be no reason to hold on to fiat currency,” he said, predicting the price of the first cryptocurrency to rise to $250,000 by mid-2023. It should be noted that this prediction is by no means new. Back in 2018, Draper predicted bitcoin at $250,000 by 2022, moved the forecast to early 2023 in the summer of 2021, and extended it now for another six months.

And finally, some information from the criminal world. Moreover, it concerns not only the future, but also the past and present, and is important for each of us. The Australian Securities and Investments Commission (ASIC) has studied cases of cryptocurrency fraud and has divided them into three categories. The first relates to fraud, where the victim believes they are investing in a legitimate asset. However, the crypto app, exchange, or website turns out to be fake. The second category of scams involves fake crypto tokens used to facilitate money laundering activities. The third type of fraud involves the use of cryptocurrencies to make fraudulent payments.

ASIC says the top signs of a crypto scam include “getting an offer out of the blue,” “fake celebrity ads,” and asking a “romantic partner you only know online” to send money in crypto. Other red flags include asking to pay for financial services in crypto, asking to pay more money to access funds, withholding investment profits "for tax purposes" or offering "free money" or "guaranteed" investment income.

In general, as Adventus Caesennius, legate of the Imperial Legion from the computer game The Elder Scrolls V: Skyrim, said: “Keep your vigilance. It will pay off sooner or later."


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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NordFX Is Named Most Reliable Forex Broker Asia 2022 by Finance Derivative Awards

Finance Derivative magazine announced the Awards 2022. The overall winners for Sustainable Banks, Internet, Retail, SME, Innovative Banks and Forex Broker and Asset Management Company were announced. NordFX brokerage company is among the winners.

This year, nearly 500 individual companies & banks from around the world entered the competition. The Awards judging panel was comprised of representatives from global leaders in consulting, technology, and outsourcing solutions. Based on the judge’s panel evaluations, Finance Derivative’s Editor made the final selections.

“We would like to congratulate you and offer special recognition and appreciation for your outstanding performance and dedication to excellence, honoring your outstanding performance", the editorial letter reads. “We are delighted to announce that NordFX is the Winner for the Category Most Reliable Forex Broker Asia 2022”.

Finance Derivative is a global finance and business analysis magazine, published by FM. Publishing, Netherlands. Being one of prime print and online magazines providing broad coverage and analysis of the Finance industry, International Business and the global economy empowering the businesses and Corporate Companies around the world. The leadership articles are read by industry professionals at all levels of banking, financial services, payment solutions and insurance as well as technology and consulting executives.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for November 07 - 11, 2022

EUR/USD: Slower, Longer, Higher

Overall, last week passed, as predicted, without any majorsurprises. The main event was the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve on Wednesday, November 2, at which it was unanimously decided to raise the key rate by 75 basis points (bp) to 4.00%. This is the highest level since 2008. Such a move was quite expected. Therefore, the subsequent press conference of the regulator's management was of greater interest to market participants. Fed Chairman Jerome Powell said at the meeting that although inflation must be reduced "drastically", monetary policy parameters can be changed as needed. The hint was that the pace of rate hikes could slow down from December, but the final rate level would likely be higher than previously thought.

The market received this message from the head of the Federal Reserve in different ways. Some decided that the US Central Bank kept the opportunity for further tightening of its monetary policy. Some believed that we in for the next, fifth in a row, rate hike by 75 bp in December. And some, on the contrary, took Powell's words as a signal that the basic step will no longer be 75, but 50 bp. That is, the vector of fighting inflation will change direction from “raising rates faster” to “raising rates more slowly, but longer.” Although, in this case, this is just a change of route, and the ultimate goal in both cases is the same.

Moreover, the market decided that the keywords here are not only “slower” and “longer”, but “higher” as well. Back in late October, the futures market predicted that the highest rate would reach 4.85% in March 2023. Now the peak of expectations has shifted to June, having risen to 5.1%. And the median rate forecast for the end of next year rose from 4.46% to 4.8%.

Many analysts believe that a slowdown in the Fed's monetary tightening (QT) will allow rival currencies to counter the oncoming dollar more effectively. Now the central banks of other countries are catching up, not having time to raise their rates at the same pace as in the US. If the Fed moves more slowly, they will be able, if not to overtake their American counterpart, at least to close the gap or catch up with it.

Following the FOMC meeting, the DXY Dollar Index moved up, hitting 113.00. The US currency strengthened against all G10 currencies, except for the Japanese yen. Then a reversal followed, and before the release of the data on unemployment in the US on Friday, November 04, it fell to 112.35, and EUR/USD consolidated around 0.9800.

Labor market data showed that non-farm payrolls in the US (NFP) stood at 261K in October, up from the 200K forecast but below September's 361K. The unemployment rate in the country rose from 3.5% to 3.7% over the month, while the forecast was 3.6%. The market took this as a negative signal for the dollar, DXY fell to 110.80, and EUR/USD went up and ended the week at 0.9958.

Overwhelming majority of analysts, 90%, support the fact that it will continue to move south in the near future, and only 10% expect a correction to the north. Among the oscillators on D1, 40% are green, the same number are red, and 20% are neutral. Among the trend indicators, the advantage is on the side of the green ones. 65% advise buying the pair and 35% selling.

The immediate support for EUR/USD is at 0.9865-0.9885, followed by 0.9825, 0.9765, 0.9700, 0.9645, 0.9580 and finally the Sep 28 low at 0.9535. The next target of the bears is 0.9500. For the bulls, the first priority will be to break the 1.0000 barrier. Then they will meet resistance at the levels of 1.0100, 1.0250, 1.030 and 1.0370.

Of the notable events of the upcoming week, first of all, we should note the data on retail sales in the Eurozone, which will be published on Tuesday November 08. There will be data on the consumer market (CPI) and the US labor market on Thursday, November 10. And on Friday, November 11, we will find out the value of the German CPI and the US University of Michigan Consumer Confidence Index.

GBP/USD: BoE Failed to Help the Pound

If a slowdown in US QT is going to help certain currencies, the pound doesn't seem to be one of them. The Bank of England (BoE), as well as the Fed, raised the key rate by 0.75% at its meeting on Thursday, November 03, from 2.25% to 3.00%. This move was the strongest one-time rate hike since the late 1980s. However, this did not help the British currency, and it continued to fall, fixing the weekly low at around 1.1144.

It would seem that the new Prime Minister has been elected, tax cuts have been abandoned, and the rate has been raised. What else do investors need? First of all, they need confidence that the rate will continue to grow at the same pace. But there is no such certainty.

Following Jerome Powell, BoE chief Andrew Bailey hinted that the pace of rate hikes could be slowed down in the future. That is, the dollar will remain in the lead in this parameter. Although, according to Mr. Bailey, a repeat of the 1970s crisis is unlikely, the threat of a prolonged recession forces the regulator to act very carefully. It is important not to strangle the economy in the rush to defeat inflation and not to bring down the labor market. According to the forecasts of the Bank's economists, the country's GDP will decrease by about 0.75% in the second half of this year. At the same time, the decline will last until mid-2024.

Investors were also disappointed by the Retail Price Index published last week by the British Retail Consortium (BRC). Thus, the average prices in stores in October, with a forecast of 5.5%, in reality grew by 6.6%. Most of all, prices for food products rose, by 11.6%, and the “food basket” rose by 9.4%. According to the BRC, the reasons for the next jump in inflation are still the same as before: the energy supply crisis caused by anti-Russian sanctions and the lack of skilled labor, in the struggle for which employers are forced to constantly raise wages.

In such a difficult environment, the Bank of England will most likely not be able to stick to a certain line and will toss between tightening (QT) and easing (QE) its monetary policy, trying to find a balance. However, there is no guarantee that it will be able to do this, and such throws will cause increased volatility in the British currency quotes.

Against the backdrop of weak data from the US labor market, GBP/USD corrected to the north at the very end of last week and set the last chord at 1.1373. However, strategists at ING, the largest banking group in the Netherlands, believe that it may soon retest the 1.1000 level. At the same time, when moving to a long-term forecast, one can hope for some positive things. For example, economists at the Australian bank Westpac predict that the pound will trade at 1.2000 by the end of 2023, and it will reach 1.2700 by the end of 2024.

As for the median forecast of analysts for the near future, the advantage of bears over bulls is insignificant here: 55% to 45%. Among the D1 oscillators, 25% are on the green side, 40% are on the red side, and 35% are comfortably settled in the neutral gray zone. Among trend indicators, 65% are red, 35% are green. The levels and zones of support for the British currency are 1.1350, 1.1230, 1.1150, 1.1100, 1.1060, 1.0985-1.1000, 1.0750, 1.0500 and the September 26 low at 1.0350. When the pair moves north, the bulls will meet resistance at the levels of 1.1435, 1.1475-1.1500, 1.1560, 1.1600-1.1625 1.1645, 1.1720, 1.1830, 1.1900, 1.1960, 1.2135 and 1.2200.

Of the events of the upcoming  week, attention is drawn to the data on the GDP of the United Kingdom, which will be published on Friday November 11. The forecast looks disappointing and foreshadows a fall in Q3 2022. by -0.1% (+0.2% in Q2).

USD/JPY: Intervention from BoJ: Yes or No

FX interventions by the Bank of Japan (BoJ) at the end of October helped stabilize the yen, and USD/JPY ended the five-day period at 146.64, in the middle of the 145.30-148.85 channel. At the same time, the country's finance minister, Shunichi Suzuki, said on Friday, November 04 that the government has no intention of directing the currency to certain levels through interventions. And that the exchange rate should move steadily, reflecting fundamental indicators, and monetary policy is up to BoJ.

Such a statement may put downward pressure on the Japanese currency, as there may not be new interventions, and the Bank of Japan is not going to leave the ultra-dove rate and will keep the rate at the negative level of -0.1%.

Recall that USD/JPY reached the height of 151.94 on October 21, having renewed its 32-year high. But then, within just a few minutes, it collapsed by more than 500 points, from 151.63 to 146.24. According to the Financial Times, at that moment, the Bank of Japan sold at least $30 billion in an attempt to support the yen. After this intervention, the pair turned around and soared again: apparently, $30 billion was not enough. And another intervention followed on Monday, October 24, causing the pair to fall to 145.48. The last chord sounded at 147.40 on October 28. A week later, on November 4, the pair finished less than 100 points from this zone, at 146.64.

65% of analysts do not exclude that USD/JPY will try to test the 150.00 level again, and if successful, to rise above 152.00. 25% believe that the Japanese Central Bank will decide on one or more interventions, and therefore vote for the pair's downtrend. 10% expect further movement in the side channel. The oscillators on D1 have a mixed picture: 20% are looking north, 40% are looking south, and 40% are gray neutral. Among trend indicators, the ratio of green and red is 50% to 50%.

The nearest support level is 146.40, then 145.30, 143.75, 140.60, 140.00, 138.35-139.05 and 137.40. Resistance levels are 146.85, 147.50, 147.90-148.00, 148.45-148.85, 149.45, 150.00, 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00. Then there are the 1990 highs around 158.00.

No important statistics on the state of the Japanese economy are expected to be released this week.

CRYPTOCURRENCIES: BTC/ETH – Who Wins?


Let's start with the birthday. Monday, October 31, 2022 marks the 14th anniversary of the birth of the flagship cryptocurrency. Satoshi Nakamoto published the bitcoin white paper on this day in 2008. The white paper described how the peer-to-peer payment system worked that would revolutionize the financial technology world. The bitcoin network was launched in January 2009. Satoshi Nakamoto disappeared two years later, and the public has never been able to find out who wrote the document that underpins the huge industry. It is unknown as well whether it was one person or a group of people.

Bitcoin has lived a very turbulent life during these 14 years. It rose and fell, then got back on its feet and fell again. It climbed onto the crest of the wave and fell into the abyss. Starting from scratch, it came close to $70,000 on November 07, 2021. And now it is trading in the $20,000 zone, having fallen in price by 70% in a year.

Of course, it is important to know what happened before. But we are much more concerned about what the future holds for us. And here the forecasts of experts are volatile as well as the quotes of bitcoin itself are volatile. Some predict the inevitable death of the crypto market for the umpteenth time, while others expect a take off to unprecedented heights. For example, ARK Invest fund manager Cathie Wood believes that the capitalization of bitcoin will grow to $4.5 trillion (currently about $0.39 billion), and it will be able to become more valuable than most fiat currencies, including the US dollar.

Coinbase CEO Brian Armstrong shares this opinion, predicting that bitcoin will become a reliable asset over the next 5-10 years that can provide investors with security in difficult times. The billionaire believes that the market capitalization of BTC is not yet large enough for the first cryptocurrency to act as a serious hedge asset. However, according to the businessman, everything can change around 2030, when the crypto market will grow and “take a large share of the global economy.” Bitcoin can be then treated as digital gold, investments in which can protect during a crisis.

Former Goldman Sachs executive and macro investor Raoul Pal is also looking ahead, allowing the digital asset market capitalization to rise to $300 trillion in the next 10-15 years. According to him, the capitalization of almost all financial markets ranges from $200 trillion to $300 trillion. Pal believes that cryptocurrencies will also reach this level in the future as part of the “fastest and most massive growth” in history. He is confident that the market capitalization of cryptocurrencies will soar immediately after the end of the macroeconomic turmoil.

After the Fed's decision to raise interest rates again, risky assets sank down. However, poor data from the US labor market came to their aid. As a result, at the time of writing the forecast, on the evening of Friday, November 04, BTC/USD, together with the S&P500, Dow Jones and Nasdaq stock indices, turned north and is trading at $21,180, trying to gain a foothold above $21,000. However, it is not at all certain that it will succeed. And if the main risky assets start to fall again, the main cryptocurrencies may follow them.

Kitco News analyst Jim Wyckoff believes that the crypto market's flagship will succeed. In his opinion, in technical terms, the bulls now dominate the bears. The specialist does not rule out that consolidation may form on the market in the near future before the quotes move into a phase of stable growth. Wyckoff has not ruled out either that bitcoin could experience increased volatility in the coming weeks.

A well-known analyst aka Plan B also believes that bitcoin is on the verge of a new upward cycle. The expert predicts the growth of the coin for two reasons. First, thanks to the recent rise in the value of bitcoin, investors who collectively own more than 60% of the available coins have made profits. According to Plan B, this factor indicates the upcoming BTC price pump. Secondly, the RSI index speaks in favor of the increase in the value of bitcoin. The value of this technical indicator has recently dropped to its all-time low, that is, the market has fallen into an extreme oversold zone, so a reversal is inevitable.

Researchers at Glassnode agree with Plan B. Their latest report says that the bitcoin market is currently in an accumulation phase, leading up to a massive bull run. There is a trend At the moment, similar to what happened at the beginning of 2019 before the rapid increase in bitcoin's value more than threefold.

However, for the crypto market to go up, institutional investors must move from sell-off or hibernation to accumulation. The mood of the general public (the so-called shrimps) is of course important, but the mood of the whales is much more important.

BNY Mellon, America's oldest bank, said that 70% of institutional investors would increase investment in crypto, albeit under certain conditions, such as "custody and execution that would be available in recognized, reliable institutions." The BNY Mellon report notes that "nearly all institutional investors (91%) are interested in investing in tokenized products." But at the same time, they are looking for ways to enter the cryptocurrency market safely, and not invest recklessly in the hope of high profits.

As for ordinary people, we can cite the results of another survey conducted by Grayscale Investment. Only 52% of ordinary Americans surveyed agreed that cryptocurrencies are the financial future. And only 44% of respondents said they were considering investing in digital assets. At the same time, the majority of respondents (81%) agreed that cryptocurrencies need clear regulation rules.

The question of whether the regulation of the crypto market is good or bad is still open. For example, many experts consider the threat of increased attention to Ethereum from the SEC (U.S. Securities and Exchange Commission) as negative factors.

It has been a month and a half since the leading altcoin moved from the PoW algorithm to PoS, after which the responsibility for building blocks has passed from miners to validators. The developers consider the main advantage of this change in the algorithm to be the reduction in network energy consumption from peak 112 TWh/year to 0.01 TWh/year. With regard to ETH, this practically nullified all the claims of environmentalists related to environmental pollution by miners. However, as a result of this step, the coin is increasingly moving away from what Satoshi Nakamoto introduced to the concept of cryptocurrency: the network has become more centralized and the SEC's desire to deprive ethereum of its cryptocurrency status has increased, replacing it with the status of a security and subjecting it to stricter regulation. SEC Chairman Gary Gensler hinted at this on the day of the transition to PoS.

At the same time, it would be naive to think that only ethereum will be in the clutches of financial regulators. Certainly, bitcoin will also be subject to sanctions. So both cryptocurrencies are on an equal footing in this regard. But in terms of network development and its prospects, ethereum has clearly overtaken its older colleague in the past few months. This is clearly seen on the chart of BTC/ETH. Since mid-June, it fell from a high of 20.3 to 13.0 and returned to the values of the beginning of the year.

At the time of writing this review, on the evening of Friday November 04, BTC/USD is trading in the $21,180 area, ETH/USD - $1,650. The total capitalization of the crypto market is $1.055 trillion ($1.005 trillion a week ago). The Crypto Fear & Greed Index has not changed in seven days and is in the Fear zone, at the level of 30 points. According to the index developers, one can think about opening long positions at such a moment. Although, in our opinion, the situation is very shaky, and traders need to act as carefully and cautiously as possible.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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