Daily Market Analysis from NordFX

March 2022 Results: Three Most Successful NordFX Traders Earned Over 215,000 USD

NordFX Brokerage company has summed up the performance of its clients' trade transactions in March 2022. The services of social trading, PAMM and CopyTrading, as well as the profit received by the company's IB-partners have also been assessed.

Representatives of Central and South-East Asia took all three steps of the podium in March.
 - The highest monthly profit, 128,026 USD, was received by a client, account No.1620XXX, mainly on transactions with gold (XAU/USD). It should be noted that this trader is not new to our rating. So, they occupied second place with a score of 22.046 USD in February.
 - This time, the second step has been taken by the owner of account No.1403XXX, who earned 70,910 USD on transactions on BTC/USD, XAU/USD and USD/CAD pairs.
 - And, finally, the third place is occupied by a trader, account No.1594XXX, with a profit of 17,791 USD, whose main trading instrument is gold (XAU/USD).

The situation in NordFX passive investment services is as follows:
 - CopyTrading still has an active provider under the nickname KennyFxPro. Signal with the complex name KennyFXPRO - Journey of $205 to $5,000 has shown a profit of 225% since March 2021 with a maximum drawdown of 67%. They increased their capital by almost 31% in March alone. As before, almost all trades were made with NZD/CAD, AUD/CAD and AUD/NZD pairs. Such a famous pair as EUR/USD took only 0.21% in their arsenal. Another signal from the same supplier, KennyFXPRO-Prismo 2K, is two months younger than the first one, the profit on it is less - 112%, but the drawdown has also been lower - about 45%.
 - The leaders in the PAMM service have not changed over the past month either. Here we mark the manager under the nickname KennyFXPRO once again. True, the aggressiveness of their trading on the PAMM account is much lower than in CopyTrading. They increased their capital on the KennyFXPro-the Multi 3000 EA account by 92% in 432 days with a fairly moderate drawdown of less than 21%. TranquilityFX-The Genesis v3 account, which showed a 67% profit in 330 days with a similar maximum drawdown of less than 21%, and NKFX-Ninja 136, which has generated 54% income since June 11, 2021, with the same drawdown of about 21%, are also among the leaders. The EUR/USD pair is still invisible among trading instruments. The vast majority of transactions were made with NZD/CAD, AUD/CAD and AUD/NZD. It should also be noted that the maximum drawdown showed a slight increase in March: it increased by about 5% for all three listed accounts.

Among the IB partners of NordFX, the TOP-3 also includes representatives of Central and Southeast Asia:
 - the largest commission, 8.952 USD, was accrued to the partner with account No.1336XXX, who moved from third place to first in a month and now leads the rating;
 - the next is the partner (account No.1229ХХХ), who received 3,881 USD;
 - and, finally, the partner with account No. 1336xxx, who received 5,789 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 Cryptocurrencies Forecast for March 28 - April 01, 2022

EUR/USD: A Tangle of Chaos and Paradoxes


The title of the previous EUR/USD review had a question of whether the market has gone crazy. Many analysts agreed that financial markets behaved at least illogically following the March Fed meeting. And at most, it's just absurd.

Despite aggressive tightening of monetary policy by the US regulator, despite a possible slowdown in economic growth in the US due to the actions of the Fed and anti-Russian sanctions, despite the worsening epidemiological situation in China, stock indices are going up. This is especially noticeable in the S&P500, which has added almost 10% since March 15, and it has more than doubled in the two years since the start of the COVID-19 pandemic (more precisely, it has gone up by 108%).

It is difficult to explain what is happening. The classic explanation that sounds most logical is that markets rise on expectations. Investors remembered how quickly stock indices recovered after the shock at the beginning of the pandemic and decided that something similar would happen again soon. That is, now is the time to buy shares before their price has flown to new heights.

As for EUR/USD, this pair behaved illogically as well. Markets were waiting for the difference in the monetary policies of the Fed and the ECB to push it sharply down. However, instead, the pair consolidated in the 1.1000 area, which fully confirmed the neutral forecast of experts and indicators given a week ago.

Apparently, investors believe that a sharp increase in interest rates by the Fed, although it will stop inflation, could create serious problems for the US industry. But Europe may expect good economic growth in Q3 and Q4.

US President Joe Biden said before his visit to the EU last week that he wanted to achieve new sanctions against Russia, including a complete embargo on Russian energy supplies. However, this did not happen, which supported the common European currency. The end of the armed conflict in Ukraine, or at least its transition from a hot phase to a frozen state, can further strengthen the euro. The situation on the debt market, which is much better in Germany, the locomotive of the European economy, than in the United States, also keeps the EUR/USD pair from falling.

At the same time, macro statistics look quite contradictory, introducing additional confusion into the assessment of the current situation. Thus, business activity in the eurozone slowed down from 55.5 to 54.5 this month. But it is still better than the forecast of 53.7 points. And in the US, the composite index of business activity jumped from 55.9 to 58.5 against the forecast of 55.4 points. And this is another paradox: how can this happen when anti-Russian sanctions are putting pressure on the economy on both sides of the Atlantic, and fuel prices are skyrocketing?

Even more confusion and chaos was added by President Putin's decision to sell energy resources for rubles. True, this only applies to countries that are unfriendly to him, but this list includes the United States and all EU countries, as well as Great Britain, Japan, Australia, New Zealand, Canada and Switzerland.

The UN Conference on Trade and Development has already lowered its forecast for US GDP for 2022 from 3.0% to 2.4%. There was also an adjustment for the GDP of the Eurozone, and it turned out to be more significant: the figure was halved, to 1.7%. This seems to be due to the EU's geographic proximity to war-torn Ukraine, as well as Europe's much greater dependence on Russian oil and gas. And now nobody knows how to buy them for rubles. There has never been anything like it in world practice. Therefore, most likely, purchases will take place through intermediary countries, for example, from North Africa or the Middle East, which will lead to another increase in prices.

The EUR/USD pair relied on support at 1.0960-1.0965 throughout the past week and ended the trading session at 1.0982. Most analysts (60%) believe that the pair will try to break through the support in the 1.0900 zone and retest the March 07 low at 1.0805. Then, with luck, the 2020 low of 1.0635 and the 2016 low of 1.0325 will follow. The strategic goal is parity at the level of 1.0000. The remaining 40% of experts have opposed such a scenario and vote for a bullish forecast. The nearest target for them is a breakdown of the resistance zone around 1.1050. Then there are zones 1.1100-1.1135, 1.1280-1.1350 and the highs of January 13 and February 10 in the area of 1.1485. At the same time, if we switch from the weekly to the median forecast for the whole of April, then the Pivot Point of the month is in the region of 1.1000, as it is now.

Among the oscillators on D1, the picture is mixed: 35% of them are colored red, 30% are green and the remaining 35% are gray neutral. Trend indicators have 100% on the red side.

The coming week will bring many important economic statistics. The value of the harmonized consumer price index in Germany will become known on Wednesday, March 30, and the volume of retail sales in this country on the next day. Statistics on consumer prices in general for the Eurozone will be published on Friday, April 01. In addition to European statistics, data on employment in the private sector and US GDP will be released on Wednesday, March 30, and in addition to data on business activity (ISM), we are traditionally waiting for a portion of statistics from the US labor market on Friday, including the number of new jobs created outside the agricultural sector (NFP).

GBP/USD: Narrow Channel Amid Uncertainty

As with the euro, GBP/USD bulls and bears are at a complete loss. The reasons are the same: a strange increase in the global risk appetite of investors and the unpredictable situation with energy resources. As a result, the pair has been moving east all week, trapped in a narrow corridor 1.3120-1.3220. The attempt of the bulls to break through in the middle of the five-day period above the horizon of 1.3300 ended in a fiasco, and the pair finished in the center of the named corridor, at the level of 1.3180.

Experts' forecast for the GBP/USD pair for the coming week is as follows: 50% vote for moving north, 25% vote for moving south, the remaining 25% vote for a sideways trend. Among the oscillators on D1 at the time of writing, 70% are looking up, 30% are looking down. For trend indicators, the opposite is true: 80% side with the bears, 20% - with the bulls. 

The nearest support is located in the area of 1.3150, then there is a zone of 1.3080-1.3100 and the March 15 (and at the same time 2021-2022) low of 1.3000, followed by the support of 2020. Resistance levels are 1.329-1.3215, then 1.3270-1.3325, 1.3400, 1.3485, 1.3600, 1.3640.

From the events related to the economy of the United Kingdom, we can highlight the speech of the Governor of the Bank of England Andrew Bailey on Monday, March 28, as well as the publication of UK GDP data for the Q4 2022 on Thursday March 31. 

USD/JPY: New Anti-Record of the Japanese Currency

The yen fell to a six-year low last week, reaching 119.15 JPY per 1 USD. The record was updated this week: the pair was marked at the level of 122.43 on Friday, March 25.

The Bank of Japan, which does not want to change its ultra-soft monetary policy, is to blame for such a sharp weakening of the yen. The position of the Japanese regulator contrasts sharply with the plans and actions of the Fed, the Bank of England and even the ECB. It still believes that a premature withdrawal of stimulus policies could do more harm than good. Admittedly, there are certain reasons for this. Inflation in the country amounted to only 0.9% in February in annual terms against 0.5% in January. This indicator, although it was the highest since April 2019, is simply insignificant compared to the inflation rate in the UK or in the US, where it reached 7.9%, the highest in the last 39 years.

This dovish position was once again confirmed during the speech of the head of the Bank of Japan Haruhiko Kuroda on March 22, who said that it was too early to discuss the possibility of curtailing the quantitative easing (QE) program, as well as raising the interest rate. Recall that it has been at a negative level for a long time - minus 0.1%.

Three other factors also pushed the yen down and USD/JPY up. The first one is the departure of investors from quiet currency havens to risky assets. The second factor is the Fed Chairman's rhetoric that has become even more hawkish. Speaking on March 21 at the US National Association of Economics and Business, Jerome Powell said that the US Central bank is ready to act even more aggressively if necessary. These words led the markets to think that the Fed could raise interest rates 10-11 times by the end of 2023. Based on such expectations, the yield on 10-year US government bonds rose from 2.146% to 2.282%, reaching a maximum since May 2019. And as we know, the exchange rate of the Japanese currency traditionally correlates with these securities. If the yield on ten-year Treasury bills grows, so does the USD/JPY pair. Which is what we saw last week.

And finally, the third factor is the decision of the Russian leadership to introduce payments for gas in rubles. “We do not quite understand what Russia's intentions are and how it will do it,” Finance Minister Shun'ichi Suzuki said at a meeting of the Japanese Parliament on March 23.

Most analysts have been waiting for the end of the bullish rally for the past two weeks, but it still has not happened. On the contrary, the pair USD/JPY has added about 700 points. And now this "majority" of 70-80% has "shrunken" to 50%. Moving from a weekly to a monthly forecast, the number of those voting for the pair's reversal to the south and its fall at least to 117.00-118.00 is still large and amounts to 85%.

Among the indicators on D1, there is complete unanimity after such a powerful breakthrough to the north. 100% of trend indicators and oscillators are looking up, although 35% of the oscillators are already in the overbought zone.

The previous bullish forecast called the 119.80-120.20 zone as the target, which is now far below. It is difficult to point to any new targets in the current situation. Most likely, it is worth focusing on subsequent round levels with a backlash of plus/minus 15-20 points. This approach was confirmed last week, when the pair finished at 122.08. The range of support zones has also become wider due to very strong volatility. These are the zones 120.60-121.40, 119.00-119.40, 118.00-118.35.

The economic calendar of the week can mark Friday, April 1, when the Bank of Japan publishes the Tankan Large Producers Index. This is quite an important indicator that reflects the general business conditions for export-oriented large industrial companies in the country.

CRYPTOCURRENCIES: In Anticipation of a Bull Rally

Investors' risk appetites, which caused the growth of stock indices, have dragged the crypto market along with them. Bitcoin reached the powerful resistance level of $45,000 on the evening of Friday, March 25, for the fifth time since the beginning of the year. it is still an open question whether it will be able to gain a foothold above this level. The previous four attempts failed; the BTC/USD pair rolled back down. However, the rising wedge is clearly visible on its chart, in which each next drawdown becomes smaller and smaller. So the main cryptocurrency fell to $32.945 on January 24, to $34.415 a month later, and it hit the bottom at $37.170 on March 7.

The total market capitalization rose to $2.280 trillion at the peak on March 25, but it also failed to gain a foothold above this significant mark, and at the time of writing the review it is trading at $1.995 trillion ($1.880 trillion a week ago). The Crypto Fear & Greed Index finally moved out of the Extreme Fear zone to the middle of the scale, rising from 25 to 47 points.

Ethereum creator Vitalik Buterin condemned Russia's invasion of Ukraine in an interview with Time. At the same time, in his opinion, this event reminded the crypto community that the purpose of digital assets is to bring real benefits to people, and cryptocurrencies can become a counterbalance to authoritarian governments and undermine the “suffocating control” of technology giants.

Arthur Hayes, co-founder of the BitMEX cryptocurrency exchange, agrees with Buterin, he believes that due to anti-Russian sanctions, bitcoin will gain an advantage over the US dollar, and possibly gold. In his opinion, sanctions against Russia and other countries only encourage their citizens to invest in gold and bitcoin, and not to keep money in dollars. Hayes explained that in a difficult economic situation, citizens have more confidence in assets with a limited supply or offer, considering them a more reliable way to save money.

The BitMEX co-founder believes that Russia's disconnection from the SWIFT international payment system, that is, the isolation of one of the energy leaders, may have long-term negative consequences for the global financial system. Gold will become the dominant asset for some time, as it will be used for international trade in energy and food products. After some time, Central banks will begin to save this precious metal, it will become increasingly difficult for them to make such payments. And this will contribute to the widespread introduction of digital currencies.

Cryptocurrencies need a clear regulation to become really popular. This is the opinion of Matt Hougan, investment director at Bitwise Asset Management. He believes that the current stage in the history of the digital industry is paving the way for growth that will occur this year and will continue next year.

One of the important regulatory steps, according to the top manager of Bitwise, is the recent decree of US President Joe Biden, which could lead to an increase in the price of bitcoin. Recall that this document instructs federal agencies to study the impact of cryptocurrencies on national security and the economy by the end of the year, as well as outline the necessary changes in legislation. In particular, it is supposed to coordinate the work of the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission), as well as the definition of roles for government agencies - from the State Department to the Department of Commerce.

Bank of America crypto strategist Alkesh Shah also believes regulation of the crypto market will increase confidence and capitalization to a record high. “Ultimately we need some governance and some level of trust, but regulators want to ban when something goes wrong,” the expert explained. Therefore, in his opinion, a semi-decentralized system is optimal: blockchains, which are secretly managed by centralized organizations. “I think that $30 trillion for the semi-decentralized part of the cryptocurrency ecosystem is quite real capital,” Shah concluded.

If we talk about the foreseeable future, the analytical company Glassnode expects a repeat of the bitcoin high of $69,000. The coin has been trading below the 200-day Simple Moving Average (SMA) For the past 9 weeks but continues to rise. A similar situation was observed during the accumulation period of 2021, which paved the way for a rally in the fourth quarter, when an all-time high was reached. Glassnode data also shows that long-term holders are still hoarding bitcoin and the number of bitcoins on exchanges is declining. The company's specialists interpret this data as the end of the downward correction period.

According to some experts, ethereum is now even slightly better off than bitcoin, as many investors are now buying ETH for BTC. In addition, the community is waiting for the long-awaited update to the ethereum mainnet. The Merge update is approaching rollout following successful testing on the testnet. Before its launch, more than $5.0 billion in ETH tokens had already been withdrawn from circulation as a result of burning. As burning reduces the total supply of ethereum, this can positively affect its price, contributing to the rally of the altcoin.

Analysts at FXStreet suggest that its price could rise by 20% in the current uptrend. But for this to happen, the ETH/USD pair needs to gain a firm foothold above $3,033, which could lead to a perfect bullish breakout for the first time since October 2021.


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 21 - 25, 2022

EUR/USD: Has the Market Gone Crazy?

What happened in the market after the US Federal Reserve meeting can be called "the theater of the absurd". As expected, the regulator raised the key interest rate from 0.25% to 0.5% on Wednesday, March 16, for the first time since 2018. As expected, the dollar began to strengthen after that. But what no one expected was that the strengthening will last only about an hour and will amount to some 50 points. After that, it will be not the American, but the European currency that will begin to grow. As a result, the EUR/USD pair will fix a weekly high at 1.1137 the next day.

Everything that happened was completely contrary to logic. The forecasts for US GDP were revised. And they showed that the Fed expects economic growth to slow down in 2022 from 4% to 2.8% due to the sanctions war with Russia. In addition, the forecasts for the interest rate have also changed. It was earlier said that it will reach 0.75-1.00% by the end of the year. This figure has now risen to 1.75-2.00%. Given that there are only six meetings left this year, it turns out that the FOMC (Federal Open Market Committee) will have to raise the rate by 0.25% at each of them.

But this is not all either. The forecast for the end of 2023 was also raised from 1.50-1.75% to 2.75-3.00%. Moreover, it seems that we will face several more acts of monetary restriction in 2024. That is, this is not just a revision of forecasts, but a sharp tightening of the US monetary policy, which could deal a serious blow to the labor market and lead to a large-scale recession.

In such a situation, the dollar would have to grow steadily, and the S&P500, Dow Jones and Nasdaq stock indices would fall drastically. But everything went the opposite way: the DXY Dollar Index fell drastically, and stock indices quickly flew up.

As already mentioned, there is no logical explanation for this. Some believe that the reason for this is the rate increase not by 0.5%, but only by 0.25%. According to another version, the reason is that the regulator has not clarified plans to reduce the Fed's balance sheet. And someone thinks that it is the greed factor that worked. Speculators remembered how quickly stock indices recovered after the shock at the beginning of the pandemic and decided that something similar would happen again soon. So now is the time to buy US stocks while they are still relatively cheap after a 10-week drop.

Logic began to return to the markets at the very end of the working week. The dollar began to rise again, and the EUR/USD turned south, finishing at 1.1050. As for its future, experts' opinions are divided as follows: 45% have supported the growth of the pair, 35% support the fall, and 20% have taken a neutral position. Among the oscillators on D1, the picture is mixed: 30% of them are colored red, 30% are green and the remaining 40% are neutral gray. The trend indicators have an advantage on the side of the red ones: those are 65% against 35% of the green ones.

The nearest target for the bears will be to break through support at 1.1000, then 1.0900. If successful, we can expect a retest of the March 07 low at 1.0805. This will be followed by the 2020 low of 1.0635 and the 2016 low of 1.0325. The strategic goal is parity at the level of 1.0000.

The bulls' immediate goal is to break through the resistance zone in the 1.1100-1.1135 area. Then there are zones 1.1280-1.1390 and the highs of January 13 and February 10 at 1.1485.

As for the upcoming week, there are few important macro data expected. Thursday, March 24, can be singled out in the economic calendar, when data on business activity in Germany and the Eurozone will arrive. The volume of orders for capital goods and durable goods in the US will be known on this day as well.

GBP/USD: Bank of England Is One Step Ahead of the Fed

Strange market reaction to the Fed meeting helped the pound as well. Positive statistics on the national labor market also sided with the British currency. The unemployment rate, with the forecast of 4.0%, actually fell from 4.1% to 3.9% in January, and the number of applications for unemployment benefits in February decreased by 48.1K (31.9K in the previous month). The average wage increased from 3.7% to 3.8%. Taking into account bonus payments, its growth amounted to 4.8%, which is also better than the forecast of 4.6%. All this allowed the Bank of England to once again be one step ahead of the US Federal Reserve and to raise the interest rate from 0.50% to 0.75% at its meeting on Thursday, March 17.

It is highly likely that the regulator of the United Kingdom will continue to tighten monetary policy and raise the refinancing rate again at its next meeting, in a month and a half. The new inflation forecast will also push it to this. Unlike its US and European counterparts, the Bank of England expects it to reach 7.25% in April. It will take at least two years to bring it down to the target level of 2.0% in such a situation.

The results of the meeting of the Bank of England initially caused the same paradoxical reaction of investors as in the case of the US Federal Reserve. The GBP/USD pair, instead of growing, fell from 1.3210 to 1.3087 on expectations of an active rate hike. However, then, as in the case of the euro, the market changed its mind, and the pair completed the five-day period at 1.3175.

Experts' forecast for the GBP/USD pair for the next week is as follows: 50% vote for the movement to the north, 40% are for further movement to the south, the remaining 10% vote for the sideways trend. Among the oscillators on D1, 70% are looking down, 30% have taken a neutral position at the time of writing the review. For trend indicators, 65% side with the bears, 35% side with the bulls.

The nearest support is located in the zone 1.3080-1.3100, then comes the low of the past week (and at the same time of 2021-2022) - 1.3000, followed by the 2020 support. Resistance levels are 1.3185-1.3210, then 1.3270-1.3325, 1.3400, 1.3485, 1.3600, 1.3640.

As for the events of the upcoming week, one can pay attention to the data from the UK consumer market, which will arrive on Wednesday March 23. The country's services PMI (Markit) will be released on the next day, Thursday, March 24, which is expected to rise from 60.5 to 60.7 over the month.

USD/JPY: Yen Falls to Six-Year Low


The headline of the previous USD/JPY review stated that “the markets chose the dollar”. The past week has only confirmed this conclusion. Despite the fact that the US currency fell against the euro and the pound, it continued to grow steadily against the yen. The high of the week was fixed at 119.40, while the finish was slightly lower­, at the level of 119.15.  The last time the USD/JPY pair traded so high was a very, very long time ago, at the turn of 2016/2017.

The reason for this is the Bank of Japan, which does not want to change its ultra-soft monetary policy. The position of the Japanese regulator differs sharply from the position of the Fed, the Bank of England, and even the ECB. Although, admittedly, there are certain reasons for this. Inflation in the country amounted to only 0.9% in February in annual terms against 0.5% in January. This indicator, although it was the highest since April 2019, is simply insignificant compared to the inflation rate in the UK or in the US, where it reached 7.9%, the highest in the last 39 years.

And although, following the results of the last meeting on Friday, March 18, the Central Bank of Japan announced that it expected inflationary pressure to increase due to rising energy and commodity prices, it still kept the interest rate at a negative level, minus 0.1%, and the target yield of ten-year government bonds are close to zero.

As for the forecast, 70% of analysts believe that it is time for the pair to turn down, 20% hold the opposite view, and 10% have just shrugged. Among the indicators on D1, there is almost complete unanimity after such a powerful breakthrough to the north. 100% of trend indicators and oscillators are looking up, although 35% of the oscillators are already in the overbought zone.

The pair easily broke through all the resistance levels indicated a week ago, and one can most likely focus on the next round values with a backlash of plus/minus 15-20 points now. The nearest zone is 119.80-120.20. Supports are located at the levels and in the zones 119.00, 118.00-118.35, 117.70, 116.75, 115.80-116.15.

Of the week's macro statistics, inflation data in Tokyo, which will be released on Friday, March 25, is of interest. According to forecasts, the core consumer price index in the country's capital may fall from 0.5% to 0.4%. A report on the latest meeting of the Japanese regulator's Monetary Policy Committee will be published a day earlier. However, all its main decisions are already known, so one should hardly expect any surprises from this document.

CRYPTOCURRENCIES: The Salvation of Bitcoin Is in Small Holders

So, Jerome Powell's speech at the end of the Fed meeting has returned investor interest to the stock market, becoming the driver of the best two-day increase in the S&P500 index since April 2020. Both Dow Jones and Nasdaq went up. This is not to say that the increase in such risk appetites has helped cryptocurrencies a lot, but at least it has kept them from falling further. The BTC/USD bulls tried to gain a foothold above $40,000 once again, while their ETH/USD counterparts tried to push the pair closer to $3,000.

Bitcoin is trading in the $41,650 zone at the time of writing this review, on the evening of Friday March 18. The total market capitalization increased from $1.740 trillion to $1.880 trillion over the week. And the Crypto Fear & Greed Index remained in the Extreme Fear zone, having hardly risen from 22 to 25 points.

Probably, the growth of US stock indices can be considered good news for the digital market as well. Another piece of good news came from the other side of the Atlantic, from Europe. The Committee on Economic and Monetary Affairs of the European Parliament (ECON) has adopted a bill to regulate cryptocurrencies. “It is a good day for the crypto sector! The EU Parliament has paved the way for innovative regulation of cryptocurrencies that can set standards for the whole world,” said one of the drafters of the law. It is also positive that the document has not included an amendment to ban mining on the Proof-of-Work consensus algorithm, which would de facto mean a ban on bitcoin.

The European Parliament's decision came just days after US President Joe Biden signed an executive order on the same subject. Recall that this document instructs federal agencies to study the impact of cryptocurrencies on national security and the economy by the end of the year, as well as outline the necessary changes in legislation. In particular, it is supposed to coordinate the work of the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission), as well as the definition of roles for government agencies - from the State Department to the Department of Commerce.

According to some analysts, the events in Ukraine prompted both the White House and the EU Parliament to take these steps. More precisely, the fear that some organizations and individuals may use digital assets to circumvent sanctions against Russia. And there is no doubt that such attempts are being made.

So, it became known last week that some large investors from Russia had been keeping their cryptocurrency reserves on Swiss exchanges, counting on the neutrality of this country. However, Switzerland announced unexpectedly that it was joining the European sanctions. And now the Russian oligarchs are trying to save their assets. For example, Reuters reports that a cryptocurrency company (the name is not published) received orders from Swiss brokers to sell 125,000 bitcoins, which are worth about $5 billion, and to convert them into cash.

Analytical company Elliptic said that it transfered to the US authorities information about digital wallets allegedly associated with sanctioned Russian officials and oligarchs, Bloomberg reports. To support the sanctions regime against Russia, Elliptic employees have identified more than 400 virtual asset service providers (mostly exchanges) where cryptocurrencies can be purchased for rubles (according to analysts, turnover on these platforms tripled in a week). In addition, the company's specialists have identified several hundred thousand crypto wallets associated with sanctioned individuals and legal entities.

According to some experts, it is possible that bitcoin will return to a bearish trend, against the backdrop of a tense geopolitical situation and the upcoming tightening of the Fed's monetary policy. AcheronInsights editor Christopher Yates expects BTC/USD to drop to $30,000. Well-known analyst Willy Woo shares similar fears. His calculations indicate that there is no necessary dip in the relative cost measurement. This, in his opinion, suggests that "there is room for another fall."

In addition to the growth of investors' risk appetite, bitcoin keeps the activity of small buyers with wallets up to 10 BTC from a collapse: they increase their purchases in the hope of a local bottom being formed. So, CoinMarketCap's SMM service has conducted a survey among subscribers, as a result of which 4 out of 5 users expressed confidence that the price of BTC will rise to almost $50,000 by the end of March.

According to analysts from IntoTheBlock, the number of holders of the flagship cryptocurrency has now reached a record high: 39.79 million unique addresses. About 888 thousand new BTC holders have joined the network since the beginning of this year. At the same time, according to Finbold, a serious growth is observed among small holders holding less than 1 BTC on their balance. As for the whales (from 1000 to 10,000 BTC), they have not increased their holdings much. According to the analysts, this suggests that bitcoin is unlikely to show serious growth in the medium term.

Apple co-founder Steve Wozniak is more optimistic about the prospects of the flagship cryptocurrency; he believes that bitcoin will still rise to $100,000. According to him, BTC is “the most incredible mathematical miracle” that surpasses gold due to the confirmed digital scarcity.

Other influencers in the crypto world believe that the coin can reach this milestone as well. Bitbull CEO Joe DiPasquale is one of the biggest proponents of cryptocurrency. Even though bitcoin has been falling since November, he believes that the digital asset is still on track to reach the long-awaited $100,000 mark.

Galaxy Digital CEO Mike Novogratz named five times the figure during his speech at Bloomberg TV. He once again confirmed his forecast, according to which the largest cryptocurrency could rise to $500,000 in five years. And it will be a smooth, not aggressive growth.

The billionaire had accurately predicted that the cryptocurrency market would stall at the beginning of 2022. According to him, bitcoin’s upward rally in 2021 was fueled by fears that the Federal Reserve would “print money forever. Now that the Fed is winding down its stimulus program, the largest cryptocurrency is in the middle of a bearish trend.

The CEO of the crypto-bank Abra Bill Barhydt draws no less brilliant prospects for the ethereum. He believes that a steady decrease in fees within the ethereum network can serve as a driver for the growth of the asset to the $30,000-40,000 zone. Today, the ethereum network is one of the most sought after in the industry, as it is used in the field of non-fungible tokens (NFT), DeFi decentralized finance, games, etc. The number of ethereum holders will only grow with the launch of Ethereum 2.0 and the launch of staking approaching.

However, Bill Barhydt has not ruled out the possibility of selling small amounts of ETH in June or July. According to him, this will be a completely predictable correction against the backdrop of the growth of cryptocurrency.


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 14 - 18, 2022

EUR/USD: Mega Event of the Week: US Federal Reserve Meeting

As expected, the main event of the past week was Thursday, March 10th, thanks to the meeting of the European Central Bank. The interest rate was left at the same level of 0%, and this was no surprise to anyone. But despite the absolute predictability of this decision, the EUR/USD pair first soared to 1.1120 after the statement of the regulator, and then fell below 1.1000. It's all about the failed attempt to "feed" both hawks and doves.

On the one hand, the ECB surprised everyone with its hawkish decision to roll back QE more quickly. Asset buyback volumes under QE will be reduced from €40bn in April to €30bn in May and to €20bn in June, which is significantly ahead of the previous forecast. It had been Previously assumed that the reduction to €20 billion could occur only by October.

However, the position of the ECB on the issue of raising the interest rate has become even more dovish than it was. The regulator stated Earlier that a very small time gap is planned between the QE curtailment and the subsequent rate hike. Now, according to the head of the Central Bank, Christine Lagarde, "any adjustment of the ECB key rate will occur only some time after the end of bond purchases and will be gradual." Such a dovish statement disappointed investors and pushed the EUR/USD pair down.

An additional impetus to the sell-off of the euro came from the inflation report in the US, where consumer price growth reached a 40-year high. Thus, in monthly terms, the consumer price index increased from 0.6% to 0.8%, and in annual terms, inflation accelerated from 7.5% to 7.9%. These data further confirmed the markets in confidence that the increase in the US federal funds rate will take place already at the next Fed meeting, which is to be held next Wednesday, on March 16. Moreover, Jerome Powell, the head of the US Central Bank, said that he plans to propose a 0.25% rate increase at this meeting.

Naturally, inflation is growing not only in the US, but also in Europe. The ECB raised its growth estimates in 2022 from 3.2% to 5.1%. And according to experts at Goldman Sachs, this figure could rise to 8%.  But the divergence in monetary policy and economic prospects is clearly not on the EU's side. The geographical factor should also be taken into account: proximity to the zone of armed conflict in Ukraine, as well as Europe's dependence on Russian energy carriers.

At present, Europe bears the main losses from the sanctions imposed against Russia. Analysts believe that it is facing a steady stagflation. The US is not immune from slowing economic growth either. But it is one of the world's leading oil suppliers and have significant shale gas reserves, so it will be much less affected by skyrocketing energy prices. In addition, savings accumulated by American households during the COVID-19 pandemic are now at an all-time high. This financial cushion dampens inflationary pressures, allowing the Fed to pursue a tighter monetary policy.

The EUR/USD pair slightly won back the losses of February over the past week and completed the five-day period at the level of 1.0911. However, in the event of an escalation of hostilities in Ukraine and an increase in mineral fuel prices, the nearest strategic target for the bears will no doubt be a retest of the March 07 low of 1.0805. This will be followed by the 2020 low of 1.0635 and the 2016 low of 1.0325. In the previous review, we already expressed the idea that the quotes may be at the level of 1.0000 at some point. This forecast was supported by ABN Amro bank strategists, who consider the fall of the pair to parity as the baseline scenario.

On the other hand, even a slight hint of a diplomatic settlement of the situation in Ukraine, not to mention the complete cessation of hostilities, can provide serious support to the common European currency and lead to its growth. Given the increased volatility, the nearest target for the bulls is a breakdown of the resistance zone around 1.1000. Then there are zones 1.1100-1.1125, 1.1280-1.1390 and the highs of January 13 and February 10 in the area of 1.1485.

Analysts' opinions are distributed as follows. 50% of them vote for the fact that EUR/USD will be able to return to at least 1.1200 within March. 25% side with the bears, and the remaining 25% have taken a neutral position. Oscillators on D1 are 90% red, 10% are neutral gray. Trend indicators are 100% on the side of the bears.

As for the calendar for the upcoming week, as already mentioned, the US Fed meeting on Wednesday, March 16 will be a mega event. And statistics on retail sales in the United States will be released a few hours before the release of the final commentary and the press conference of the regulator's leadership. Attention should be paid to the speech of the head of the ECB, Christine Lagarde the next day, on Thursday, March 17, as well as to data from the consumer market of the Eurozone and from the US labor market.

GBP/USD: What to Expect from the Bank of England?

The EU's dependence on Russian gas was about 45-50% before the imposition of sanctions. Unlike the countries of the European Union, the UK is practically independent of Russian gas supplies: this figure is less than 3%. Its trade turnover with the Russian Federation is also much lower. And geographically, it is separated from the zone of the armed Russian-Ukrainian conflict by about 2,000 kilometers. All these factors enable the Bank of England, in contrast to its colleagues from the ECB, to act more decisively in the normalization of its monetary policy.

There will also be a meeting of the Bank of England on March 17, the day after the Fed meeting. And it is quite possible that the decision of the UK regulator on the interest rate will depend on how much the US Central Bank will raise (or not raise) its rate on the eve. This is an additional factor of uncertainty when predicting the exchange rate of the British currency.

Recall that the Bank of England was the first to raise the rate, raising it to 0.5%. But it is still unclear how long its hawkish fuse will last.

Experts' forecast for the GBP/USD pair for the next week is as follows: 35% vote for the movement to the north, 35% - for further movement to the south, the remaining 20% vote for the sideways trend. However, when moving to a monthly forecast, bull supporters get a clear advantage: those are 65%, with 15% of the votes cast for bears and 20% of abstentions. All 100% of the indicators on D1 are facing south at the time of writing the review, however, 30% of the oscillators signal that the pair is oversold.

The pound finished the weekly trading session at 1.3035. The nearest support is located in the zone 1.2985-1.3025, followed by the 2020 supports. Resistance levels are 1.3080, 1.3145, 1.3200, 1.3270-1.3325, 1.3400, 1.3485, 1.3600, 1.3640.

Aside from the Bank of England meeting, next week's events include the publication of data from the UK labor market on Tuesday, March 15, including the average wage level in the country, as well as changes in the number of applications for unemployment benefits.

USD/JPY: Markets Have Chosen the Dollar


We put the question: “Yen or Dollar: Which Safe Haven Is Better?” in the title of the previous USD/JPY review, implying that when the market is in a panic, investors start looking for the safest place to store their capital.

The dollar won this dispute last week. It not only won, but by a wide margin. Having started at 114.81, on Friday March 11, the USD/JPY pair peaked at 117.35, and the last chord of the week sounded a little lower at 117.25. Recall that the vast majority of experts (75%) predicted the growth of the pair, but almost no one expected the breakthrough to be so powerful and all-destroying. As a result of this blitzkrieg, the pair not only renewed the January-February high of 116.35 but reached the zone where it had been traded for a very, very long time, at the turn of 2016/2017.

Experts cite the fact that the Bank of Japan still prefers to refrain from cutting economic stimulus, as the reason for such weak demand for the yen. As we have already written, the regulator believes that tightening monetary policy in the current conditions can bring more harm than good to the economy. Moreover, the country has also joined the sanctions against Russia, which deprives its export-oriented companies of a serious share of income.

Against the backdrop of Russia's invasion of Ukraine, it is also noteworthy that a peace treaty between Russia and Japan was never concluded at the end of World War II, and the countries are still formally at war. The reason is the disagreement regarding the ownership of South Sakhalin and the Kuril Islands. And this issue has been raised again in recent days.

Weak statistics played against the yen last week as well. Japan's GDP fell from 1.3% to 1.1% in the Q4 2021 instead of growing to 1.4%. In annual terms, this figure fell from 5.4% to 4.6%, which disappointed investors.

As for the forecast, 80% of analysts believe that the pair's growth potential has already been exhausted, 20% adhere to the opposite point of view. There is almost complete unanimity among the indicators on D1, after such a powerful breakthrough to the north. 100% of trend indicators, as well as 90% of oscillators are looking up, although a third of them are already in the overbought zone. The remaining 10% of oscillators have taken a neutral position. 

Experts name 117.35, 117.70, 118.00 and 118.60 as resistance levels. Supports are located at levels and zones 117.00, 116.75, 116.35, 115.75, 115.00, 114.40-114.65, 114.15, 113.75.

A regular meeting of the Bank of Japan will take place on Friday, March 18. But if the Bank of England has something to answer the US Federal Reserve, nothing of the kind can be expected from the Japanese regulator with its always negative (minus 0.1%) rate. The yen, as a safe-haven currency, is usually supported by investors running away from risky assets. However, judging by the events of the past week, they may give preference to the dollar.

CRYPTOCURRENCIES: March 09 Mystery and the Secret Struggle of Crypto Clans

Many were probably surprised by the unexpected jump in bitcoin on Wednesday March 09. The beginning of the week passed quite calmly: the bulls tried to break above $40,000, the bears tried to lower the quotes below $37,000. And then all of a sudden, in just a few hours, the BTC/USD pair soared by 10%, reaching a high of $42,520.

Why did it happen?

We have repeatedly said that the present and future of the crypto market is largely in the hands of the White House and the US central bank, and the jump on March 09 is an obvious proof of this.

Bitcoin and other digital assets surged after the details of President Joe Biden's executive order were revealed. The document instructs federal agencies to study the impact of cryptocurrencies on national security and the economy by the end of the year, as well as outline the necessary changes in legislation. In particular, it is supposed to coordinate the work of the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission), as well as the definition of roles for government agencies - from the State Department to the Department of Commerce.

According to a number of analysts, the events in Ukraine prompted the preparation of this document by the White House. More precisely, the fear that some organizations and individuals may use digital assets to circumvent sanctions against Russia. But, whatever the reason, it doesn't change the point. Unlike, for example, China, which seeks to completely destroy this market, the United States, on the contrary, seems to want to develop this industry. And this was positively received by crypto investors.

Such Washington's intentions were confirmed by Anthony Scaramucci, founder of SkyBridge Capital and former White House Communications Director. He is confident that the United States will not tighten the noose around the neck of the crypto market: “I don’t think the US wants to lose its leadership in financial services. If they decide to ban or over-regulate digital currencies, we will see capital flight and brain flight out of the country.”|

This businessman also stated in an interview with Magnifi that investors should buy BTC even if they have never worked with cryptocurrencies before. According to Scaramucci, cold-blooded holders who know how to wait will benefit in the future. He is confident that bitcoin is guaranteed to reach $100,000 in a couple of years. Note that the entrepreneur stores about $1 billion in bitcoins at the moment.

Returning to the sanctions against Russia, they can cause the price of bitcoin to skyrocket, according to another billionaire, the legendary investor Bill Miller. “Almost 50% of its reserves are held by Russia in currencies controlled by people who want to harm it,” Miller said. In this regard, the Russian government may try to use digital gold as a reserve currency. And this, according to Miller, is a “very bullish signal” for bitcoin.

The bullish sentiment was also supported by an authoritative cryptanalyst known as Dave the Wave. According to his forecast, the price of the main cryptocurrency should update its historical maximum in 2022. Dave the Wave has published the BTC price chart and explained that despite bitcoin falling below $40,000, it is still on its way to $100,000. Against the background of the collapse of the global market, the coin has a chance for a steady rebound from the $36,000 mark.

The well-known crypto-analyst and trader Michael van de Poppe looks at the current situation quite differently. He believes that against the background of geopolitical tensions in the east of Europe, bitcoin can continue its fall to $30,000. "Why?" asks the specialist. And he answers: “Because of a short-term panic. You should understand that traders are people who are focused on the short term, are very impulsive, emotional, and this is what the markets reflect.” At the same time, Michael van de Popp notes that the current recession is a good opportunity for those who are still optimistic about the first cryptocurrency to replenish its reserves.

As for the altcoins led by ethereum, according to the trader, they are under strong selling pressure in the current situation, which could push them further down until the ethereum reaches the $2,000 mark.

According to Galaxy Digital CEO Mike Novogratz, bitcoin and gold will become the safest assets in the near future. “You can put an equal sign between these two instruments and stop the discussion about what is more important, BTC or precious metals,” this billionaire said.

However, there is no equality at the moment. On the contrary, according to analysts from IntoTheBlock, the correlation between bitcoin and precious metals has fallen to its lowest level since August 2021. Thus, it has reached a 7-month low in relation to gold and silver. Experts believe that these changes have occurred against the backdrop of a military operation that Russia is conducting on the territory of Ukraine. Bitcoin is highly correlated with the traditional stock market while commodity prices continue to rise.

According to experts, indicators that assess the return on an asset and the degree of risk demonstrate how much better precious metals have reacted to the resulting volatility compared to the flagship cryptocurrency.

The experts have also noted that the majority of bitcoin holders (57%) have not been affected by the recent price fluctuations of the coin. Many holders keep their virtual assets for more than a year, which means they still have positive returns.

At the time of writing this review (the evening of March 11), after the jump on March 09, everything is back to normal: the BTC/USD pair is trading around $39,000, the total market capitalization, after rising to $1.854 trillion, returned to the values of a week ago at $1.740 trillion, and the Crypto Fear & Greed Index fell from 27 to 22 points, finding itself in the Extreme Fear zone once again.

And in conclusion, another tip in our joke crypto life hacks column. Recall that we talk in it about alternative ways to make money in this market. This time our advice is: “Try writing a crypto thriller.” An example is a bestseller that recently came out from the pen of Forbes journalist Laura Shin. Its title is very telling: The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze. The writer talks in this book about the large-scale struggle of the rich for influence and leadership in the “new money” industry.

Shin introduces readers to prominent figures in the digital space, such as Vitalik Buterin, Web3 prodigy, Charles Hoskinson, and Joe Labin (a former Goldman Sachs vice president who became one of the most famous cryptocurrency billionaires). “Sparks fly as these prominent personalities fight for their place in what seems to be a limitless new business world,” the author writes, describing the “crypto clans” confrontation.


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 07 - 11, 2022

EUR/USD: The Fate of the Euro Is Decided in Ukraine


Macro statistics were mixed last week. But few people pay attention to it at the moment. The dynamics of European currencies is determined by what is happening in Ukraine for the second week now. The escalation of the Russian-Ukrainian armed conflict is intensifying, increasing the demand for risk-free assets. And it is the dollar that acts as such, not the pan-European currency.

The difference in the monetary policies of the Fed and the ECB pushed the EUR/USD pair down both in 2021 and in January-February 2022. The tragic events of recent days have only given it an additional downward impetus. How else can the market react, say, to a rocket attack in the area of Europe's largest Zaporozhye nuclear power plant, located in southern Ukraine? The fire that arose not far from its power units was extinguished, but this did not make it any easier: Chernobyl has not been forgotten in Europe yet, and no one wants a new nuclear catastrophe that could claim millions of lives.

The negative outlook is reinforced by the extraordinarily tough economic sanctions that the EU has imposed against Russia to support Ukraine. They create huge problems in the supply of Russian energy resources to the EU, seriously limit industrial trade, and tighten the banking sector in a grip. It is difficult to imagine how, in such a situation, the ECB will be able to curtail monetary stimulus and raise interest rates. As for the US Federal Reserve, this regulator is unlikely to abandon its plans.

Speaking in Congress on Wednesday, March 02, Fed Chairman Jerome Powell named a number of advantages of the US currency. The first is the flight of investors from risk to such safe-haven assets as the dollar due to the events in Ukraine. Other trump cards include divergence in monetary policy with European countries and the growth of the US economy. By the way, such an important indicator as the number of new jobs created outside the US agricultural sector (NFP) has confirmed Powell's words, showing real growth to 678K against a forecast of 400K (481K a month ago).

Also, the US Central Bank believes that due to the events in Ukraine and the influence of Russia on commodity markets, inflation will be higher than previously predicted. And this, as Jerome Powell said, will require a more vigorous increase in interest rates. That is, they may be even higher by the end of 2022 than the market expects.

The previous week's forecast suggested that the EUR/USD pair would retest support at 1.1100, after which the bears would try to reach the landmark horizon of 1.1000. Such a scenario seemed very bold and almost unbelievable on February 25. But the events described above led to the fact that the pair easily broke through the seemingly "impenetrable" support of 1.1000 and collapsed to 1.0885, having lost 385 points in a week. The last chord, after a small correction, sounded at the level of 1.0932.

Amid mounting geopolitical tensions, the euro has lost more than 600 points to the dollar since February 10 and is now rapidly approaching the 2020 lows. And it is not far to parity 1:1. It is extremely difficult to predict where the bottom will be in the current situation. It was at around 1.0635 in 2020, the pair was falling to 1.0325 in 2016. Perhaps these values will become support levels.

As for the bulls, taking into account the increased volatility, their immediate goal is a return to the 1.1000 zone, followed by resistance in the 1.1100-1.1125 area, then a wide zone of 1.1280-1.1390, then - the highs of January 13 and February 10 in the 1.1485 area. However, the pair will be able to achieve them only if hostilities cease or, at least, when a stable truce is concluded. Most analysts hope for the best: 65% of them vote for the fact that EUR/USD will be able to return to at least 1.1200 within March. But trend indicators and oscillators on D1 have a completely different opinion: they are all colored red, although 25% of the latter are in the oversold zone.

As for economic statistics, data on retail sales in Germany will be published on Monday, March 07, then the data on GDP in the Eurozone on Tuesday. The event of the week can be Thursday, March 10, when the ECB meeting will take place. The interest rate is likely to remain the same at 0%, so the subsequent press conference of the regulator's management will be of more interest. Data on the US consumer market will come out on the same day, and we will find out the values of the harmonized consumer price index in Germany and the US University of Michigan consumer confidence index at the very end of the week, on Friday, March 11.

GBP/USD: Great Britain Is Europe as Well

The EU's dependence on Russian gas was about 45-50% before the introduction of sanctions. Unlike the countries of the European Union, the UK is practically independent of Russian gas supplies: this figure is less than 3%. Its trade turnover with the Russian Federation is much lower as well. And geographically, it is separated from the zone of the armed Russian-Ukrainian conflict by about 2,000 kilometers.

All these factors helped the GBP/USD pair to stay in a sideways trend for several days. But against the backdrop of events around the Zaporizhzhya NPP, it still could not resist and updated the February 24 low, dropping to the level of 1.3201. The week finished at 1.3246.

The experts' forecast for the pair for the next week is as follows: 50% of them vote for moving north and 25% for further movement to the south, the remaining 25% vote for a sideways trend. The indicator readings on D1 fully coincide with the readings for the EUR/USD pair. Strong support lies at 1.3170 (December 2021 lows), followed by 2020 supports. Resistance levels are 1.3270-1.3325, 1.3400, 1.3485, 1.3600, 1.3640.

Highlights of the upcoming week include the release of retail sales data for the UK on Tuesday March 08, and the release of UK output and GDP on Friday March 11.

USD/JPY: Yen or Dollar: Which Safe Haven Is Better?

Japan is even further from Ukraine than the UK, as much as 8,000 kilometers. Although it has joined the sanctions against Russia, this has not ceased to be a safe haven for investors. Therefore, everything that literally makes Europe feverish does not affect the dynamics of the USD/JPY pair. It continued to move along the 115.00 horizon last week, fluctuating in the range of 114.65-115.77. And it completed the five-day working week not far from its lower border, at 114.81. This decrease occurred on Friday, March 04, not because of the shelling of the Zaporizhzhya nuclear power plant, but because of the fall in the yield of US Treasury bonds.

That is, when the dollar rose against the euro and the pound, it fell against the yen. Competition between these two safe-haven assets will undoubtedly continue next week. 75% of analysts believe that the pair will return to the upper limit of the channel, while 25% believe that it may fall further down. As is usually the case in such situations, disagreements immediately arise among the indicators. Among the trend indicators on D1, 65% are for selling, 35% for buying. Among the oscillators, 20% vote for the purchase, 25% vote for the neutral status and 55% are for the sale, but at the same time, a quarter of them have signaled that the pair is oversold. The nearest resistance zone is 115.00-115.25, then 115.70. The main goal of the bulls is to renew the high of 116.34 and rise to where the pair has not been seen since January 2017. Support levels and zones: 114.40-114.65, 114.15, 113.75, 113.45, 113.20, 112.55 and 112.70.

The release of any significant macro statistics on the state of the Japanese economy, with the exception of data on GDP on Wednesday, March 09, is not expected next week.

CRYPTOCURRENCIES: Sanctions, Bitcoin and What Robots Choose

Immediately after the Bank of Russia asset freeze due to hostilities in Ukraine, bitcoin trading volumes increased sharply on Monday, February 28, and the coin itself jumped in price by almost 17% (from $37,840 to $44,220). The number of bitcoin addresses with balances over 1,000 BTC increased by more than 6% to 2,226. The indicator had not reached this level since March 2021. The number of addresses with a balance of 100 to 1000 BTC  also increased on February 28, although not as noticeably. The indicator increased by 1.3%, to 15,929 over the day. This is evidenced by the data of the Glassnode service.

Some analysts suggest that such a rapid increase in the number of bitcoin whales is due to the attempts of the Russian elites to withdraw their assets to circumvent the sanctions and convert the depreciating rubles into cryptocurrency. 

According to Bloomberg, the National Security Council of the White House and the US Treasury Department appealed to the operators of the world's largest centralized exchanges with a request to stop any attempts to circumvent the sanctions imposed on Russia. The White House spokesman said that cryptocurrencies are not a replacement for the US dollar, which is widely used in the Russian Federation. However, the US authorities intend to combat their misuse. European Central Bank President Christine Lagarde also called for increased regulation of digital assets in the euro area.

At least four cryptocurrency exchanges, including Coinbase and Gemini, have said they will take steps to tighten controls.

According to well-known economist and analyst Alex Kruger, if Russia uses cryptocurrencies to circumvent sanctions, this will be enough for US regulators to ban digital assets altogether. "Don't expect this to happen. But be careful in your actions,” he warned, adding that if the geopolitical situation does not worsen, investors will soon see the growth of the crypto market.

The dynamics of the cryptocurrencies’ movement between private and exchange wallets indicates the lack of certainty among investors regarding the further developments in the digital asset market. This is written by CoinDesk with reference to the report of Bank of America (BofA).

According to analysts, the tightening of the Fed's policy and macroeconomic factors will limit the growth of cryptocurrencies in the next six months. However, BofA emphasized that this will not be the beginning of a new "crypto winter", as the level of adoption of digital assets by users and the activity of developers has increased significantly.

The bank also added that it will be difficult for the digital asset market to move out of the current price range until fears of a possible recession are discarded.

After the jump on February 28, the upward movement of the BTC/USD pair slowed down on March 01-02, when approaching the strong $45,000 resistance zone. And then, after an unsuccessful attempt to break further up, it turned back to the south. (Recall that this resistance had already sent the pair down several times in January-February).

If the flagship currency still manages to rise above $45,700 at some point, we can expect its further growth to $47,000-50,000 due to the triggering of a large number of buy orders.

Legendary trader Henrik Zeberg, author of The Zeberg Report and expert on macroeconomic cycles, presented three charts to show that major stocks and cryptocurrencies are poised to rise in Elliot Wave 5. According to Zeberg, the most important stock market indices S&P500 and Nasdaq are approaching bullish reversals on the weekly charts. If his prediction comes true, bitcoin could once again increase its correlation with stocks and indices.

At the time of writing (the evening of March 04), the BTC/USD pair is trading around $39,300, the total market capitalization, after rising to $1.963 trillion, returned to the values of a week ago at $1.755 trillion, and the Crypto Fear & Greed Index grew by only 6 points (from 27 to 33 points), having firmly stuck in the zone of Fear.

Bloomberg Intelligence Chief Strategist Mike McGlone reiterated that bitcoin is well on its way to becoming an international reserve asset. He assured that the BTC rate will reach $100,000 in 2022. The analyst also emphasized that the price of the flagship digital currency will not drop to $30,000 despite the bearish sentiment in the market.

McGlone also believes that such coins as Dogecoin must lose their influence in order for bitcoin to finally establish itself as a reliable tool for protecting money savings.

An AI robot advisor created by Portuguese software developer Tiago Vasconcelos has supported Bloomberg Intelligence's chief strategist's point of view. The coder "trained the bot, explained the rules, candles, principles when you can either buy or sell, or do nothing." The bot receives one point for each profitable trade and loses it as a "punishment" for unprofitable trades. having talen thousands/millions of steps to increase the balance of the trading account, the robot advisor eventually opted for a “hodling” strategy, that is, accumulating bitcoin. (Recall that Hodl is a popular meme in the bitcoin space that arose from a message on the Bitcointalk forum in 2013 with a misprint in the word “hold”).



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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New NordFX Super Lottery: 202 Prizes in 2022

The NordFX brokerage company started a new super lottery on March 1, which will give away 200 cash prizes of 250, 500 and 1,250 USD, as well as 2 two super prizes of 10,000 USD each. The total prize fund will be 100,000 USD.

Unlike traders' competitions, the undoubted advantage of this NordFX lottery is that its participants do not have to show exceptional results in trading in the financial markets. Both experienced professionals and beginners have equal chances of winning in this case.

Another advantage is that lottery winners receive their winnings not as bonuses, but as real money, which, if they wish, can be either used in further trading or withdrawn without any restrictions.

The first lottery was held in 2021 and was a great success: more than 20 thousand tickets participated in it. The draws were held online using an electronic lottery drum, and everyone could follow them. And now, a year later, the NordFX brokerage company has decided to hold a new lottery. Its slogan is More Prizes, More Winners. 202 prizes will be drawn in 2022 in three stages: 140 prizes of $250, 40 prizes of $500, 20 prizes of $1,250 and 2 super prizes of $10,000. Draws will take place on July 04, October 04, 2022, and January 04, 2023.

It is very easy to take part in the lottery and get a chance to win one or even several of these prizes. It is enough to have a Pro account in NordFX (and for those who do not have it - register and open a new one), top it up with $200 and... just trade.

Having made a trading turnover of only 2 lots in Forex currency pairs or gold (or 4 lots in silver), the trader will automatically receive a virtual lottery ticket. The number of such lottery tickets for one participant is not limited. The more deposits and the greater the turnover, the more lottery tickets the participant will have, and the greater their chances of becoming a winner. (If you look at the statistics of the last lottery, you will see that some of its most active participants were able to win two, and even three prizes).

Visit the NordFX website for more details. You can become a participant of the Super Lottery 2022 and start receiving lottery tickets right now.


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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Results of February 2022: Bitcoin and Gold Are Leading Again Among NordFX Traders

NordFX Brokerage company has summed up the performance of its clients' trade transactions in February 2022. 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 first place in the ranking of the most successful traders was taken by a client from Southeast Asia, account No. 1416XXX, who received a profit of 82,636 USD on transactions, most of which were carried out in pairs with bitcoin (BTC/USD), S&P500 and Dow Jones stock indices, and with oil.
The second place belongs to the owner of account No. 1602XXX. This trader earned 22,046 USD during the month, and their earnings were based on operations with bitcoin (BTC/USD), gold (XAU/USD) and silver (XAG/USD).

Another trader from Asia, who took the third step of the podium (account No. 1617XXX), also used the XAU/USD pair as a trading instrument. Their profit for February was USD 18,059.

The situation in NordFX passive investment services is as follows:

- CopyTrading still has an active provider under the nickname KennyFxPro. Signal with the complex name KennyFXPRO - Journey of $205 to $5,000 has shown a profit of 149% since March 2021 with a maximum drawdown of 67%. As before, almost all trades were made with NZD/CAD, AUD/CAD and AUD/NZD pairs. Such a famous pair as EUR/USD got only 0.27% in their arsenal.
Startup signals include NVT Capital (388% income with 41% drawdown) and Thuytien1707 (25% with less than 10% drawdown). Both signals exist for only 14 days. And such a short life span is an additional risk factor for subscribers.

- In the PAMM service, we once again mark the manager under the nickname KennyFXPRO. They increased their capital on the KennyFXPro-the Multi 3000 EA account by 73% in 400 days with a fairly moderate drawdown of less than 16%. In addition, investors can pay attention to the TranquilityFX-The Genesis v3 account, which showed a profit of 52% in 330 days with a drawdown of 16%, and NKFX-Ninja 136 , which has brought income of 40% since June 11, 2021 with a drawdown of about 15%. Interestingly, the EUR/USD pair is also missing among the trading instruments here. The vast majority of transactions were made with NZD/CAD, AUD/CAD and AUD/NZD.

Among the IB partners of NordFX, the TOP-3 also includes representatives of Central and Southeast Asia:
- the largest commission, 10.498 USD, was credited to a partner with account No.1593ХXХ;
- the next is the partner (account No. 1371ХХХ), who received 9.410 USD;
- and, finally, the partner with account No. 1336xxx, who received 5.789 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 Cryptocurrencies Forecast for February 28 - March 04, 2022

EUR/USD: War Is Not Only Blood, But Also Business

The dynamics of European currencies is now determined by what is happening in Ukraine. You can forget about all kinds of macro-economic indicators for a while. Who and how much earned on Russia's invasion of a neighboring country, and who lost and how much, will become clear only when the situation stabilizes finally. And this may not happen soon.

Russia's possible hostilities against Ukraine had been discussed for several weeks. However, the world had expected that they would be limited to two regions in the east of the country, Donetsk and Luhansk. However, Russia launched missile and bomb attacks on all major cities of the country on Thursday, February 24, early in the morning, including the capital city of Kyiv, followed by an offensive by ground forces.

Nobody had expected anything like this (except for Russian President Putin and his inner circle). The markets experienced a real shock, and a stampede began not only from risky assets, but also from European currencies.

A number of European countries, primarily the Baltic ones, are afraid that Russia may invade their territory, following Ukraine. But even if these fears are discarded, Europe's economy has already suffered serious damage.

Due to its proximity, the Eurozone is much more dependent on Russian energy than the United States. Russia accounts for about 40% of gas supplies and 30% of oil supplies to the EU. Moreover, one of the main gas pipelines passes through the territory of Ukraine, where the fighting is going on. This situation instantly raised the prices for blue fuel to cosmic heights and they were eight times higher than similar prices in the United States.

It is clear that for Western Europe this does not portend anything else but falling into a deep recession, or even into stagflation Stagflation is an extremely weak GDP growth coupled with extremely high inflation, which has already reached a record level of 5.1%.

The negative outlook is reinforced by the economic sanctions that the EU imposed against Russia to support Ukraine. They limit the current industrial turnover seriously, and also tighten the banking sector. It is difficult to imagine how the ECB will be able to wind down monetary stimulus and raise interest rates in this situation. As for the US Federal Reserve, this regulator is unlikely to abandon its plans. Although, it is possible that their implementation will be somewhat slowed down for the sake of supporting the stock market. At least in the near future.

The EUR/USD pair was trading at 1.1494 back on February 10. The war in Eastern Europe led to the fact that it found the bottom at the level of 1.1106 just two weeks later, losing 388 points.

The markets recovered somewhat from a powerful shock at the end of the week on Friday, February 25. The old principle, known since Napoleon Bonaparte, “Buy while the blood is shed,” worked. Stock indices went up, supporting the European currency. After the correction, it completed the week at 1.1270.

At the time of writing the review, on February 25, it is unknown how the operation of Russian troops in Ukraine will end. It is unknown either what new sanctions the EU and the US will take against Russia if hostilities do not stop. Therefore, it is President Putin alone who could give the most accurate forecast for the coming week. We can only record the opinions of experts and the readings of indicators at the moment.

The forecast of analysts for the next week looks very uncertain: 65% of them point to the 1.1300 zone, which has been the Pivot Point since mid-November 2021. The remaining 35% vote for the bears and do not rule out that the pair will test the support of 1.1100 again. Trend indicators on D1 are 90% red and 10% green. Among the oscillators, 80% are colored red, 20% are green.

Given the current increased volatility, the nearest resistance is located in a wide area of 1.1285-1.1390. If the bulls do not stop there, their next target will be the highs of January 13 and February 10 at 1.1485, then 1.1525, 1.1570 and 1.1615. Support zones are 1.1185-1.1200 and 1.1085-1.1120. They are followed by the levels of summer 2020, which are hardly worth focusing on in the current unstable geopolitical situation. Although, it can be assumed that the bears will try to at least reach the symbolic horizon of 1.1000.

As for the upcoming week's calendar, it will be quite busy. It is clear that the main focus will be on the events in Ukraine and the new sanctions associated with them from the EU and the US.

In addition, there will be data on the consumer market in Germany and business activity (ISM) in the US manufacturing sector on Tuesday, March 01. There will be statistics on the consumer market of the Eurozone on Wednesday, March 02, and a report from ADP on employment in the private sector will be published in the USA. Fed Chairman Jerome Powell will address Congress on the same day. The value of the ISM business activity index in the US services sector will become known on Thursday. And in addition to data on retail sales in the Eurozone, we are traditionally waiting for a portion of statistics from the US labor market, including the number of new jobs created outside the agricultural sector (NFP) on the first Friday of the month, March 04.

GBP/USD: Great Britain Is Europe as Well

Although the United Kingdom has left the European Union, it has not ceased to be part of Europe. Therefore, everything that has been said about the EU and the Eurozone is also relevant for the UK. The only difference is the numbers. Thus, the maximum volatility of the week for the GBP/USD pair was 366 points (falling from 1.3638 to 1.3272), and the finish, after the correction, fell at 1.3410. We can now forget about consolidation around 1.3600.

Just like the EU, the UK was very quick to impose sanctions on Russia and the Prime Minister issued an extremely tough and angry statement condemning the military operation in Ukraine. The consequences of such a step will be quite serious not only for the Russian, but also for the British economy. Suffice it to say that British Petroleum is one of the largest foreign investors in Russia and a shareholder of Rosneft. And the British banks have very close contacts with the largest Russian corporations and individuals. In addition, both countries have banned flights of national airlines over each other's territories.

Experts' forecast for the GBP/USD pair for the next week is as follows: 40% of them vote for the movement to the north and 40% for the movement to the south, the remaining 20% vote for the sideways trend. Almost all indicators on D1 are colored red. Among trend indicators, these are 100%, among oscillators these are 85%. Only 15% of them have reacted to the upward correction of the pair. Supports are located at 1.3400, 1.3365 and 1.3275-1.3315, then 1.3200 and the low of 08 December 2021, 1.3160. Resistance levels are 1.3485, 1.3600, 1.3645, 1.3700-1.3740, 1.3830 and 1.3900.

Following the results of February, we will have a fairly large package of macroeconomic statistics related to the British economy this week. The manufacturing business activity index (PMI) will be published on Tuesday, March 01, the composite index and the index of business activity in the services sector on Thursday, and a similar index in the construction sector - on Friday. The annual budget of the United Kingdom, which will be made public on Wednesday 02 March, is of interest as well.

USD/JPY: Japan Is Not Europe

Japan is the one who practically did not react to the war in Ukraine. This is understandable: Kyiv and Tokyo are separated by 8205 kilometers. Japan, of course, joined the sanctions against Russia, but this made almost no impression on the dynamics of the USD/JPY pair. Rather, it was influenced by the rise in prices for energy resources, on which the economy of this country is quite dependent. As a result, having bounced off the level of 114.40 on Thursday, February 24, the pair rose to a height of 115.75, and put the last chord a little lower, at the level of 115.52. Summing up the results of the week, it can be noted that the fluctuation of the pair's quotes was quite insignificant: only 57 points (115.03-115.60).

Analysts' forecasts for the coming week look like this: 55% are in favor of the pair's growth, 35% are in favor of its fall, and 10% are in favor of a sideways trend. Among the oscillators on D1, 65% are green, 20% are red, and 15% are neutral grey. For trend indicators, 65% look up, 35% take the opposite position. The nearest resistance zone is 115.70. The main goal of the bulls is to renew the high of 116.34 and rise to where the pair has not been seen since January 2017. Support levels are at 115.00, 114.80, 114.15, 113.75, 113.45, 113.20, 112.55 and 112.70.

No significant economic events are expected in Japan next week.

CRYPTOCURRENCIES: Bitcoin and Ethereum Prove to Be More Reliable Than Stocks


The main factor putting pressure on the crypto market was the expectation of an increase in interest rates by the US central bank a week ago. Russia's possible invasion of Ukraine was number two. It has now moved to the forefront, from assumption to fact.

The aggravation of the geopolitical situation associated with this increased the flight of investors from risky assets and led to a further fall in both stock indices and digital currency quotes. The 90-day correlation between bitcoin and the S&P 500 reached its highest level since October 2020. This is stated in the analytical report of Arcane Research. The statistical relationship between virtual gold and real gold, on the contrary, has become negative, since gold, unlike BTC, is a low-risk asset. Arcane Research has also noted that bitcoin spot trading volume on centralized exchanges has fallen to early December 2020 levels.

Bitcoin is commonly opposed to the dollar, being called insurance against inflation. But if you look at the charts of the last week, BTC is more likely an insurance within the market for risky assets: stock prices have fallen much faster since the outbreak of the war in Ukraine than the quotes of leading cryptocurrencies such as bitcoin and ethereum. The S&P500, Dow Jones, Nasdaq stock indices fell below the lows of a month ago in a few hours on the very first day of the bombing and rocket attacks, February 24. There is no need to talk about the Russian IMOEX index: it lost almost 50% in just a few hours, after which trading was stopped. Unlike all of them, the BTC/USD and ETH/USD pairs held their positions courageously above the January 24 low.

Of course, this is not a reason to rejoice. Expectations of a key rate hike by the US Federal Reserve and geopolitical tensions will continue to feed the pessimism of bitcoin investors, and therefore the likelihood of selling unprofitable coins will continue to grow. This is the conclusion reached by Glassnode analysts. The bearish trend is confirmed by on-chain indicators: the number of active bitcoin addresses has dropped to the lower boundary of the corridor. This indicates a decrease in demand for the asset. The share of bitcoin investors in profit is currently in the range between 65.8% and 76.7%.

Short-term speculators (coin holding period less than 155 days) have purchased 2.56 million BTC. The average acquisition cost is $47,200. Their unrealized loss is about 17%, with the price around $39.000. They are currently a source of sales pressure in the absence of an equivalent increase in demand. Glassnode believes that if the price rises, the pressure of sellers may increase, who will try to leave the market without losses or with a minimum profit.

According to Du Jun, CEO of Huobi crypto exchange, past price cycles indicate that a new bull market for bitcoin may not occur until late 2024 or early 2025. According to him, bitcoin's price cycles are closely related to halvings: periodic block reward halvings embedded in the algorithm, which occur approximately every four years.

The last halving took place in May 2020, and the quotes of the first cryptocurrency reached an all-time high above $68,000 a year later. A similar price movement was observed after the 2016 halving: bitcoin reached record levels in December 2017.

Then deep drops in the price of digital gold followed in both cases.

Based on the trend, Huobi CEO believes that “we are now in the early stages of a bear market” and expects a bullish trend for bitcoin to come only after the next halving in 2024. At the same time, he added that “it is difficult to predict accurately in reality, since there are many other factors that can affect the market, such as geopolitical issues, including war, or the COVID-19 pandemic.”

Kevin O'Leary, the star of the Shark Tank business reality show, also announced his forecast. He notes that many institutional investors cannot yet invest in the leading cryptocurrency, as this issue has not yet been resolved at the level of regulators.

O'Leary has noted that anyone who wants to speculate about the cost of BTC at $100,000, $200,000, $300,000 should understand that all this will become possible when institutionalists finally have the opportunity to purchase a crypto asset in accordance with regulatory standards. He notes that he can say this with confidence, as he works with "sovereign wealth funds and pension plans." And although there is a lot of buzz around BTC right now, none of them have a single token. Moreover, they do not even plan investments in this asset yet.

According to O'Leary, it is much better to think of BTC not as a coin, but as software. He has noted that the above institutions have shares in Microsoft and Google, so it will be easier for them to understand if they regard cryptocurrencies as software. At a time when the crypto sector begins to meet all the requirements, these financial institutions will be able to invest 1% to 3% of their capital in bitcoin, and this can happen within the next 2-3 years.

Against this not very joyful background, the interview given by Vitalik Buterin, co-founder of Ethereum, to Bloomberg, can be considered the height of optimism. First, he is not yet sure that the “crypto winter” has really arrived. And secondly, he believes that such a “winter” can help the industry become stronger. 

Buterin emphasized in the interview with the agency that in fact, people “deeply immersed in the cryptocurrency industry” welcome periods of the bear market. This allows to get rid of weak projects, and also reduces the level of "hype". It is in the “winter” that many weak and harmful projects disappear, and only reliable, important projects remain, that have well-thought-out business models and a close-knit team, the developer believes.

Looking to the near term, Arcane Research analysts believe that the strongest support range lies in the $28,000-$30,000 zone, as the "summer 2021 bear market bottom" is located there. They have named $40,000 as an important resistance level.

At the time of writing this review (Friday evening, February 25), the BTC/USD pair is trading around $39,000. The Crypto Fear and Greed Index has dipped a little into the Fear zone, falling from 30 to 27 points in a week, while the total crypto market capitalization has fallen from $1.815 trillion seven days ago to $1.755 trillion.


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 Forecast and Cryptocurrencies Forecast for February 21 - 25, 2022

EUR/USD: Waiting for War and Rate Hike

The period from February 10 to 14 was unexpectedly stormy. Panic moods were diligently warmed up by the leading media, actively discussing the statements of world leaders, primarily the President of the United States, regarding a possible Russian invasion of Ukraine. The White House even decided to relocate its diplomatic mission from Kiev, the capital of Ukraine, to Lviv, away from the zone of possible military operations and closer to the EU borders.

All this happened against the background of the US Federal Reserve's decision to convene an emergency meeting of the FOMC (Federal Open Market Committee). Rumors immediately spread that the refinancing rate would be increased by 50 basis points (bp) right now.

As a result, investors began to panic to get rid of risky assets, and the stock indices S&P500, Dow Jones and Nasdaq flew down.

The EUR/USD went down as well. The markets feared that the "hot" phase of the Russian-Ukrainian conflict would lead to further growth in energy prices and slow down the recovery of the European economy. According to JP Morgan strategists, if the price of oil rises to $150 per barrel, the global consumer price index (CPI) could soar to 7.0%. And according to Capital Economics, inflation in advanced economies could rise to 4.5%.

As a result, having started on February 10 at 1.1494, the war-terrified EUR/USD pair ended up at 1.1279 on February 14. That is, the euro returned to where it started north during Christine Lagarde's hawkish press conference, which she gave after the last meeting of the European Central Bank.

The results of the emergency FOMC meeting left many experts bewildered. There was no increase in interest rates. Perhaps the members of the Committee did not want to provoke further mass sales of shares and decided to wait for the outcome of the conflict between Russia and Ukraine. Moreover, there are signs of its peaceful resolution.

Investors began to calm down little by little. However, it was not possible to avoid a new wave of sales in the stock markets. And it followed on February 17 after another "apocalyptic" speech by US President Joe Biden.

Unlike equities, EUR/USD managed to stay neutral and ended the five-day trading session at 1.1324, within the 1.1260-1.1400 range it traded throughout December and the first ten days of January.

The European currency was kept from further falling, among other things, by multidirectional macroeconomic statistics from the USA. Thus, the number of initial applications for unemployment benefits there amounted to 248K, that is, it increased by 23K instead of the expected fall by 5K. But repeated requests, instead of decreasing by 2K, fell immediately by 26 K.

The dynamics of the EUR/USD pair in the coming days will certainly be influenced by how far the conflict between Russia and Ukraine will go, as well as how deeply European countries and the United States will be involved into it and what the rhetoric of their leaders will be. If there is no war, the topic of the energy crisis in Europe will fade into the background, which will support the European currency.

Support for the dollar is now largely dependent on the Fed. Yes, there are disagreements among FOMC members. But they are not about whether or not to tighten monetary policy, but how quickly to do it and to what extent. The hawkish statements of some members of the Committee give rise to forecasts of 6 or even 7 acts of monetary restriction in 2022. However, a number of leaders of the Federal Reserve Banks believe that it is necessary to act slowly and more carefully, since too aggressive steps could hit the US economy.

At the time of writing, the trend indicators on D1 are 90% red and only 10% green. Among the oscillators, 20% are green, 50% are red, and 30% are neutral.

Experts' forecast for the next week also looks very uncertain: 40% do not exclude the growth of the pair, 50% adhere to the opposite point of view, and 10% remain neutral. However, 65% of analysts support the strengthening of the dollar in a forecast for March.

Resistances are located at levels 1.1385-1.1400, 1.1480, 1.1525, 1.1570 and 1.1615. Support levels are 1.1300, 1.1275, 1.1220. This is followed by 1.1185 and the Jan 28 low at 1.1120.

As for the economic calendar for the coming week, we can note the release of data on business activity (Markit) in Germany and the Eurozone on Monday, February 21. Preliminary annual data on US GDP will become known on Thursday, February 24, and US statistics on orders for capital goods and durable goods will arrive at the end of the week, on Friday.

GBP/USD: Consolidation of the Pair, Consolidation of Experts


The macro data released last week supported the British currency. This applies to both the labor market and the consumer market. The unemployment rate in the United Kingdom remained unchanged at 4.1%, which was exactly in line with the forecast. At the same time, the number of applications for unemployment benefits decreased from 51.6K to 31.9K in January. Retail sales added 1.9% after a 4.0% dip in December and are above the long-term trend level. All this is a positive signal about the recovery of the country's economy.

Looking back a few years, we can see that the 2007-2008 financial crisis was followed by an eight-year period during which retail sales remained below the trend line. This was one of the reasons that prevented the Bank of England from raising rates. But now both inflation indicators and the state of the labor market can give it a free hand in tightening monetary policy. Moreover, the British regulator is still in the lead, raising interest rates faster than its counterparts on the other side of the Atlantic do.

However, this superiority is very shaky. The growth in sales may not be due to an improvement in the economic situation, but due to pent-up demand for goods and services, access to which was limited due to quarantine measures during the COVID-19 pandemic. So, the upcoming steps of the British regulator are likely to be very balanced. So as not to repeat the mistakes of the ECB, which rushed to raise the rate in May 2009, undermining the economic recovery.

In support of the forecast, it is enough to recall that only 4 out of 9 members of the BoE committee voted for a 50 bps rate increase at the last meeting. The majority, including the head of the bank, Andrew Bailey, decided to raise the rate by only 25 basis points, citing a slowdown in economic growth.

Economic indicators allow the pound to successfully repel the attacks of the US currency at the moment, and we can see the GBP/USD pair consolidating around 1.3600. We can say that experts' forecasts for the coming week are also consolidating: 25% of them vote for a sideways trend. 40% vote for moving north and 35% for moving south. (When moving to a monthly forecast, the number of bear supporters increases to 70%).

The overwhelming majority of indicators are aimed upwards D1. Among the oscillators, there are 70% of those. 20% have taken a neutral position, the remaining 10% side with the dollar. Among trend indicators, 90% are for the growth of the pair, 10% are for its fall.

Supports are located at 1.3570, 1.3500, 1.3425, 1.3355, the next strong support is 100 points lower. Resistance levels are 1.3600, 1.3650, 1.3700-1.3740, 1.3830 and 1.3900.

Of the events of the coming week, data on business activity in the services sector (Markit), which will be published on Monday, February 21, as well as the hearing of the UK Inflation Report on Wednesday, February 23, are of interest.

USD/JPY: Investors at a Crossroads

The USD/JPY was trading in a fairly narrow range throughout the past week, less than 110 pips (114.78-115.86). As already mentioned, investors are now most concerned about two issues: the expected Russian invasion of Ukraine and the increase in the refinancing rate by the US Central Bank. And, apparently, they have not yet decided what to do with such a safe-haven currency as the yen at this stage.

On the one hand, the increase in USD rates should push the pair up, strengthening the position of the US currency.

On the other hand, the escalation of the conflict in Ukraine may remind the markets of economic crises and a spike in inflation. In this case, one can expect a complete loss of risk appetite among investors and an influx of their capital into such a safe haven as the Japanese currency. Actually, this is happening now, although not on a very large scale: it is enough to compare the charts of stock indices and USD/JPY. This relationship is even clearer when compared to the EUR/JPY chart, since, unlike the US, the Eurozone is located in close proximity to the potential war zone.

Analysts' forecasts for the coming week are as follows: 25% of them are in favor of a sideways trend, 50% are in favor of the pair's growth and 25% are in favor of its fall.

Among the oscillators on D1, 30% are neutral gray, 10% are green, 60% are red (with a quarter of them in the oversold zone). Trend indicators have a 50-50 draw. The nearest resistance zone is 115.30, then 115.70. The main goal of the bulls is to renew the high of 116.34 and rise to where the pair has not been seen since January 2017. Support levels are at 115.00, 114.80, 114.15, 113.75, 113.45, 113.20, 112.55 and 112.70.

No significant economic events are expected in Japan next week.

CRYPTOCURRENCIES: Crypto Market Black Friday

BTC/USD is back where it was a month ago. The chart of the last two weeks resembled the chart of mid-January. The front line then lay at the $42,000 level, along which the bulls and bears fought with varying degrees of success. Last time, they ended with the pair falling to $32.945, and, according to a number of analysts, a similar outcome is possible this time as well. It depends not so much on the sales caused by a possible Russian invasion of Ukraine, but on the US Federal Reserve. Tightening monetary policy and rising interest rates could hurt all risky assets, including cryptocurrencies.

Bitcoin has acted as an inflation protector throughout the pandemic. This was one of the main drivers of its growth. But if inflation returns to normal, who needs such a protector?

There is no doubt that the US Central bank will try to curb inflation, which has already reached a 40-year high. But how successful its efforts will be is a question to which different experts give different answers. Bitcoin supporters continue to convince everyone (and themselves in the first place) that we are ahead of an endless rise in prices and serious financial turmoil.

According to Parallax Digital CEO Robert Breedlove, the same thing could happen to the dollar as to the currency of Venezuela. The US currency will hyperinflate by 2035, at which point the price of BTC in dollar terms will become astronomical: 1, 5, or 10 million USD per coin.

The legendary investor, founder of Miller Value Partners, Bill Miller almost half of whose fortune is now made up of cryptocurrency, also stood up to the defense of bitcoin. “It's like an insurance policy. You don't want your house to burn down, and you don't want to get into a terrible accident, but you pay for insurance every year in case it happens,” explained the billionaire.

Tom Lee, co-founder of the analytical firm Fundstrat, called $200,000 a target mark for bitcoin in an interview with CNBC and explained who will facilitate its achievement. And these are not institutional investors at all, but small investors. According to the analyst, the total net worth of US households exceeds $141 trillion. People will look for ways to protect them over the next decade in order not to lose their savings due to inflation, . Therefore, Lee says, the inflow of capital into cryptocurrency can be “huge”.

The high price of this asset is an obstacle to the mass adoption of bitcoin, in his opinion. Therefore, Tom Lee has supported the idea of switching to Satoshi, a millionth of BTC.

Jurrien Timmer, Director of Global Macroeconomics at Fidelity Investments, one of the largest asset management companies, is also optimistic. He is confident that the value of the first cryptocurrency will repeat the growth of Apple's market value. “I compared the network effect of bitcoin to the network effect of Apple computers. As Apple's earnings increase, its share price rises exponentially. I have reason to believe that bitcoin is following the same path. The price of this cryptocurrency will only increase as demand increases.” And according to Trimmer, it will reach $100,000 by 2023.

This expert believes that BTC benefits from its strong difference from all other crypto assets. “Perhaps other digital currencies will look more profitable against the background of bitcoin because of the better scalability, but at the same time they are likely to be less decentralized. For me, bitcoin is like gold, and other cryptocurrencies are more like venture capital.”

Analyst Willy Woo believes that the future of the US dollar in terms of inflation has not yet been determined. Bitcoin's capitalization is currently below $1 trillion, and breaking this mark will give the coin more resilience, and it will grow over the next five years. Further growth to the gold capitalization of almost $11 trillion will be relatively smooth, after which it will slow down. As for the final figure, Willy Woo believes that the capitalization of bitcoin could eventually grow to $40 trillion.

As for the immediate prospects, according to analyst Nicholas Merten, bitcoin is now giving signals of future growth and “its capitalization could reach $4 trillion potentially in October-December 2022.” That is, the asset will show a 220% increase in relation to the previous record high. The previous rally was 392% up and it was 359% up earlier.

“This is a really great signal,” says Merten. “The past resistance level is becoming an upward support. Investors are ready to pay more and more, which indicates the market is ready to return to the formation of another uptrend.”

The fact that BTC/USD was above the 50-day moving average for 10 days really looked like a trend reversal. A breakdown of the 200-day MA at $48,000 could be the next confirmation. Investors were also encouraged by the growth of the Crypto Fear & Greed Index. If at the same BTC price, it was in the zone of Extreme Fear at the level of 20 points a month ago, it reached 52 points on Thursday, February 17.

However, another wave of active sales on Black Friday, February 18 brought another portion of doubts about the bulls' near victory. The Crypto Fear and Greed Index fell into the Fear zone to the 30 mark. The 50-day MA has again turned from support to resistance, and the total crypto market capitalization has not managed to gain a foothold above the psychologically important level of $2.0 trillion, and it is $1.815 trillion at the time of writing.

In conclusion, it remains only to quote the words of Tom Lee from Fundstrat. “If there is no crystal ball, it is very difficult to be accurate in cryptocurrency,” he joked about the forecasts. According to a proverb, there is some truth in every joke. In this case, this proportion clearly exceeds 50%.


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 14 - 18, 2022

EUR/USD: Tsunami Due to US Inflation

Ancient Greeks began to declare a truce during the Olympic Games more than 2,800 years ago. It seems that the EUR/USD bulls and bears have decided to adopt this tradition during the current Winter Olympics in Beijing. We observed a complete lull for at least the first half of the week, and the pair moved eastward under slight pressure in a narrow channel not exceeding 60 points, 1.1400-1.1460.

This calm was interrupted by a small tsunami that swept on Thursday, February 10 after the latest US inflation data was published. Consumer prices grew by 7.5%, while core inflation reached 6.0% (against 5.5% a month earlier). Both values are the highest for the last 40 years, and this has not been observed since 1982. And it scared the markets.

To be completely accurate, it was not the numbers themselves that frightened them, but the possible reaction of the US Federal Reserve to them. Investors were concerned that the US Central bank would act even more aggressively than expected in order to curb inflation. The probability that the FOMC (Federal Open Market Committee) will raise interest rates by 50 basis points (bp) in March has jumped to 80%. There have also been rumors that the rate could be raised as many as seven times in 2022. Analysts at Goldman Sachs predict that federal borrowing costs could rise to 2.0% by early 2023.

As a result of the panic, the dollar began to rise, while stock indices (S&P500, Dow Jones, Nasdaq) and the EUR/USD pair rolled down. However, the situation changed very quickly: the markets were afraid of the general economic risks caused by such a strong increase in consumer prices. And, having bounced off the level of 1.1374, the pair soared up by almost 120 points, to a height of 1.1494. After that, it changed the course again by 180 degrees.

There were two reasons for this reversal, the third in a row. The first was those overall economic risks, on the contrary, could push the US Federal Reserve to raise interest rates more vigorously. The second reason was Christine Lagarde. The head of the ECB said last week that a sharp tightening of monetary policy will have a negative effect on the Eurozone economy. This suggests the conclusion that this regulator is still not ready to raise rates, even despite high inflation rates. And according to forecasts, the first rate increase by 25 bp. can only be expected in December 2022.

Divergence in the pace of monetary tightening by the Fed and the ECB has always been good for the dollar. The same happened this time: the EUR/USD pair flew down again without reaching the height of 1.1500, reaching the local bottom at the level of 1.1329. As for the final chord of the week, it sounded at the height of 1.1340.

Taking into account the dynamics of the last two weeks, the readings of indicators on D1 are as follows at the time of writing the forecast on the evening of Friday, February 11: 65% of oscillators are colored green, the remaining 35% are neutral. As for trend indicators, only 25% are colored green, the remaining 75% are red. As for the experts, of course, all of them will pick up signals from the US Federal Reserve, primarily regarding how much the rate will be raised at the FOMC meeting in March. But it is already now that 55% of them are voting for the strengthening of the US currency and the movement of the EUR/USD pair to the south. 30% vote for an uptrend, and 15% of analysts predict a sideways movement of the pair.

The nearest resistance is 1.1370, followed by 1.1415, 1.1480-1.1525, 1.1560 and 1.1625. Supports in zones and at levels 1.1275-1.1315, 1.1220, 1.1185 and January 28 low 1.1120.

As for the upcoming week, Eurozone GDP data will be published on Tuesday, February 15. High volatility can be expected due to the release of the next portion of data on the US consumer market the next day, on Wednesday, February 16. The publication of the February FOMC meeting minutes will also cause unconditional interest on this day. 

GBP/USD: The Trend Is Rising. Still Rising.

While the ECB is lagging behind the Fed, the Bank of England is so far ahead, raising interest rates faster than its peers across the Atlantic. Therefore, unlike the euro, the British pound managed to hold its ground so far last week, finishing the five-day period at 1.3551. The key word here is "so far": "so far ahead" and "managed so far." The superiority of the pound over the dollar is very shaky and it can quickly start retreating.

The main factors that could force the Bank of England to stop raising the rate, leaving it at a low level, are weak GDP and labor market growth, as well as low levels of consumer spending. According to the data published on Friday, February 11, the UK's GDP, instead of the expected 1.1%, grew by only 1.0% in the Q4 2021. And the situation in the labor market and the consumer marke will become known next week: statistics on the unemployment rate will be released on February 15, and that on the level of prices in the United Kingdom - on February 16.

When predicting the upcoming steps of the British regulator, it is appropriate to recall that only 4 out of 9 members of the Bank of England committee voted for a rate increase by 50 bps at the last meeting. The majority, including the head of the bank, Andrew Bailey, citing a slowdown in economic growth, decided to raise the rate by only 25 basis points.

The fact that this regulator will continue to act very carefully, which was confirmed by the Bank of England chief economist Hugh Pill. He said in an interview with Reuters that the bank expects "further moderate tightening in the coming months if everything goes as planned" and that "one needs to be careful in setting the rate level."

At the moment, most experts (60%) are betting on the strengthening of the dollar, believing that the GBP/USD pair will go down in the near future. The opposite position is taken by 30% of analysts, the remaining 10% remain neutral. Indicators on D1 look as follows: 90% of oscillators point to the north (10% of them are in the overbought zone), 10% look to the south. Among trend indicators, the ratio of forces is almost the same, 85/15%. Supports are located at 1.3500, 1.3425, 1.3365, the next strong support is 100 points lower. The resistance levels are 1.3585, 1.3600-1.3625, 1.3700, 1.3750, 1.3835 and 1.3900.

USD/JPY: The Pair Storms a Five-Year High Again

The correlation between US Treasuries and USD/JPY is not a secret to anyone. If the yield on US bills grows, so does the dollar against the yen. And the Japanese currency received a double blow last week: both the yield on 10-year treasury bonds, which reached peak levels since August 2019, and the USD DXY index, which soared sharply after the events described above on February 10, rose. As a result, the pair retested the multi-year high of 116.35, recorded on January 04, 2022. However, it failed to break this record, and completed the working week at 115.30.

Currently, most experts (60%) expect the USD/JPY pair to try again to update this high and rise to the point where it has not been seen since January 2017. All 100% of oscillators on D1 and 80% of trend indicators support this development. The nearest resistance zone is 115.70. The remaining 40% of experts and 20% of trend indicators side with the bears. Support levels are at 115.00 followed by 114.15, 113.75, 113.45, 113.20, 112.55 and 112.70.

Japan's GDP (Q4) data, which will be made public on Tuesday, February 15, may be able to provide some assistance to the yen. According to forecasts, the country's Gross Domestic Product may grow from minus 0.9% to plus 1.4% during the quarter. Although, in the current post-COVID situation, such economic growth may, on the contrary, play against its national currency, confirming the correctness of the super-dove policy of the Bank of Japan, which has frozen the interest rate at minus 0.1% for a long time.

CRYPTOCURRENCIES: Correction or Reversal?


The question of what we have seen the last three weeks, just a correction to a downtrend or the beginning of a new rise, remains open. Cryptocurrency quotes are going up along with the S&P500 and Dow Jones stock indices, and even slightly ahead of them.

Something similar could be observed a few months ago. But then, digital currencies outperformed stocks by almost two months with the transition from growth to collapse. The BTC/USD pair reached a high on November 10, 2021, after which it turned south. As for the S&P500, its high was on January 04, 2022. And this is logical: despite the correlation, the stock market is still much more stable than the cryptocurrency market. But both of them are very dependent on the monetary policy of the US Federal Reserve (and, in part, on the actions of other Central banks).

The stimulus program that kicked off the printing press flooded the US economy with cheap dollars and boosted risky assets. The Fed is currently tightening its policy. Based on this logic, we can predict a further decline in investors' interest primarily in cryptocurrencies.

We have already said that the movement of crypto quotes will depend in the near future (and already depends) on the mood of just a few governments and Central banks. But the expert community has not yet come to a consensus as to what their attitude will be.

For example, Johnny Liu, CEO of the KuCoin crypto exchange, has taken the “bright side”, believing that the authorities will gradually understand the advantages of cryptocurrencies. According to him, there is a trend in the mass adoption of cryptocurrencies at the state level, governments are exchanging experience in their legalization, so any restrictions are only a temporary measure.

The opposite view was expressed by the billionaire founder of Bridgewater Associates, Ray Dalio, who believes that this asset class is likely to be banned by the governments of a number of countries.

Ricardo Salinas Pliego, one of the richest people in Mexico and founder of the Grupo Salinas group of companies, also believes that governments are not interested in facilitating the use of bitcoin, since the decentralized nature of the first cryptocurrency makes it much more difficult to control its turnover.

The same opinion is shared by Parallax Digital CEO Robert Breedlove, who said that the authorities will try to make life as difficult as possible for cryptocurrencies, as a class that poses a threat to their financial systems. To do this, they will use all their tools, aiming to regulate digital assets as much as possible. This is what we have seen lately in countries such as China or Russia.

Some optimism is caused by the fact that quite a lot of representatives of large businesses already side with digital assets, recognizing the merits of cryptocurrencies to one degree or another. Of course, not all of them are ready to invest serious capital in this market right now. The aforementioned billionaire Ray Dalio, while stating that “cash is trash,” admitted that digital assets make up a “tiny percentage” of his personal investment portfolio. And that in general, given the small size of the cryptocurrency market, it "is given too much attention."

In terms of market size, Robert Breedlove believes that the market capitalization of bitcoin will increase dramatically over the next few years and exceed $5.0 trillion. Inflation in the US is at a 40-year high at the moment. And according to the head of Parallax Digital, the same thing can happen with the dollar as with the currency of Venezuela. The US currency will hyperinflate by 2035, at which point the price of BTC in dollar terms will become astronomical: 1, 5, or 10 million USD per coin. That is, the Fed's printing press can provide tremendous support to bitcoin. But the biggest threat to it, according to Robert Breedlove, comes from the same regulator.

All indicators of the crypto market look much more modest at the time of writing the review on the evening of Friday, February 04.  The total market capitalization is still slightly closer to $2.0 trillion and is at the level of $1.90 trillion ($1.85 trillion a week ago), the Bitcoin Dominance Index is 42.46%. The BTC/USD pair is trading in the $42,500 zone, and the Crypto Fear & Greed Index has left the Extreme Fear zone and, having gone up sharply, reached 50 points, which corresponds to the neutral state of the market.

A number of experts monitoring the dynamics of supply and demand for bitcoin are alarmed by the weak base for the current growth of the coin. As a result, in their opinion, the BTC/USD pair may return to the $40,000 zone within a month, and then fall even lower, to $29,000, in the medium term.

An even more pessimistic forecast was given by the author of the book "The Ascent of Money", historian of economics Niall Ferguson. He believes that if the historical dynamics of BTC fluctuations is repeated, the price of the first cryptocurrency will fall to a low of $11,515 by November 2022. This is 83% below the historic peak in bitcoin value reached in November 2021.

At the same time, Ferguson disagrees categorically with the opinion of the Nobel Prize winner in economics Paul Krugman, who draws a parallel between the volatility of the cryptocurrency market and the collapse of the US real estate market in 2007-2008. Which, as you know, was followed by the global economic crisis.

Niall Ferguson believes that “it is not worth waiting for a polar vortex or a giant ice cyclone. And a drop in the value of bitcoin to the lows of the 2010s is unlikely. However, this does not mean that crypto winter will bring less cold.”

Of course, there are much more optimistic forecasts. According to Sean Farrell, an analyst at financial research firm FSInsight, bitcoin’s dominance over altcoins will remain unshakable and its price, despite a “shaky start” in January, could reach $200,000 in the second half of 2022.

The FSInsight report also states that the ethereum platform is undervalued and the second largest cryptocurrency by capitalization may reach $12,000 this year. Sean Farrell is optimistic about the transition of ethereum to the Proof-of-Stake algorithm. And if the process goes smoothly, capital inflows into the ecosystem will increase, “regardless of bitcoin’s performance.” And the CEO of the KuCoin crypto exchange, Johnny Liu, believes that since most innovative projects are launched on the ethereum, it will break ahead of BTC in the long run.

The fact that the BTC/USD pair could overcome the $100,000 mark at the end of this year or at the beginning of 2023 is also indicated by the forecast of a crypto trader nicknamed Dave the Wave. However, this scenario also implies a “decent correction”. The trader notes that the $100,000 cyclical curve should be interpreted not as a support level, but as an average price trajectory that bitcoin can roughly follow.

In regard to the near future, Dave the Wave noted that while bitcoin's monthly chart may still look bearish, certain bullish signals are emerging on the weekly chart. In addition, bitcoin managed to break out of the narrow downward channel, which also indicates an upcoming increase.

And at the end of the review, our traditional heading of crypto life hacks. This time we will mention a trader nicknamed macromule who shared a very interesting trading algorithm. According to this trader, the signal to open a position is the tweets of the bitcoin skeptic and gold supporter Peter Schiff about the first cryptocurrency. The user recommended buying BTC every time after the next such tweet and closing the position after 72 hours. According to macromule, this strategy could have made 203 trades since last May, of which 65% 65% would have been in positive territory and brought about 1,000% per annum income.

Of course, we cannot recommend using this "strategy". But if someone still wants to test it, they can do it on a demo account without risking real money.


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 Affiliate Program and Social Trading Network Recognized as the Best in 2021

The Expert Council of the Forex-Awards.com named the Affiliate Program of the brokerage company NordFX and its Social Trading Network as the best at the end of 2021.

The Forex-Awards.com Expert Council is a unique team of professionals headquartered in Hong Kong. Based on the opinions of both independent experts and the trading community, the Expert Council honors the most remarkable solutions and innovations in almost 30 nominations and rewards market participants featuring breakthrough initiatives and excellent results in the Forex industry. A convincing victory was won by the brokerage company NordFX in two of them in 2021.

The victory in the Best Affiliate Program nomination was won thanks to NordFX's multi-level Flexible Partnership Program, which offers its IB partners payments up to 70% of the spread and most advanced CPA up to $700. Monthly monitoring showed that the total earnings of TOP-3 IB partners amounted to $351.853 in 2021. That is, the average earnings of each of them was $9.773 per month.

In total, over $30,000,000 has been paid to all IB partners of the brokerage company during the program's operation. At the same time, it must be taken into account that ΙΒ earnings are withdrawn instantly and without any restrictions.

NordFX Social Trading Network offers unique advantages to both novice traders and passive investors. Using Copy Trading and PAMM services, they get the opportunity to make a profit even with no independent trading experience and without any serious time spent. Experienced traders get additional earning opportunities by offering their services as signal providers and account managers.

In addition, the victory in the Best Social Trading Network nomination was facilitated by the wide information and educational work carried out by NordFX in various languages in all major social networks and hundreds of specialized Internet resources, forums and blogs.


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 07 - 11, 2022

EUR/USD: Another Surprise, from the ECB This Time


It's hard to resist when you're attacked from both sides. The dollar received two powerful blows last week: one from the Bank of England, the second from the ECB, and could not resist them. The USD DXY index flew down. While it was at the level of 97.36 on January 28, it dropped to 95.14 on February 04. This is not a knockout of course, but a knockdown from which it will be difficult for the US currency to recover quickly.

So, the Bank of England raised the interest rate by another 25 basis points (bp) to 0.50%, which was expected. But what shocked the markets was a shift in the direction of the ECB's monetary policy. The market was waiting for the regulator to start discussing such changes towards the end of the year. But it turned out that this could happen much earlier. Maybe already in the spring.

The data on unemployment in the Eurozone exceeded all wildest expectations: its level fell to 7.0%. But this is not all either. The growth of consumer prices in January accelerated from 5% to 5.1% and renewed its historical high. This is despite the fact that many expected the opposite. For example, Bloomberg experts predicted a slowdown in inflation to 4.4%.

It is known that unemployment and inflation are the main factors that determine the monetary policy of regulators in the current environment. And if the head of the ECB, Christine Lagarde, stated until recently that her bank would not copy the actions of the Fed, she was forced to admit at a press conference on Thursday, February 03 that "the situation has really changed."

“Inflation is likely to remain high longer than initially expected,” said Ms Lagarde. “Compared to our December estimates, current inflation risks are biased upwards. especially in the short term”.

The head of the ECB did not repeat the mantra about the “extremely low probability” of a rate hike in 2022. And, although the key rate remained unchanged at 0% at the last meeting, it became known from informed sources that the bank's officials are already discussing the possibility of raising it at the end of this year. According to some experts, it could rise by as much as 40 or even 50 bp.

So, apparently, the European regulator is abandoning the policy of patience and, together with the US Federal Reserve and the Bank of England, joins the "hawk" race to tighten monetary policy. It is appropriate to draw an analogy between Christine Lagarde's current statement and what her American colleague Jerome Powell said in June 2021. The head of the Fed said something similar then, after which the dollar began to sharply gain strength and won 1135 points  back from the euro, lowering the EUR/USD pair from 1.2255 to 1.1120. Now it seems that it is time for the euro to recoup its losses.

In addition to the frontal blows from the Bank of England and the ECB, the US currency also received backstabs from the “native” Fed. At least six representatives of the US Central bank made comments last week, and none of them mentioned that the FOMC (Federal Open Market Committee) could immediately raise rates by 50 bp at its meeting in March (although the market was waiting for this).

The result of all the events of the week, so painful for the dollar, was an impressive strengthening of the European currency. The EUR/USD pair has shown an active growth, which has not been seen since the beginning of the pandemic: it rose by 343 points in a week, from 1.1140 to 1.1483.

True, the dollar was slightly supported by statistics from the US at the very end of the working week, on Friday, February 04. Such an important indicator as the number of new jobs created outside agriculture (non-farm payrolls) was fixed at 467K, while the market expected it to fall to 150K. As a result, the dollar strengthened slightly, and the pair set the last chord at 1.1453.

Most of the indicators on D1 turned up by the end of the five-day period. Among the trend ones, there were 85% of them (15% are still colored red), among the oscillators - 80%, the remaining 20% took a neutral position. Among the experts, opinions are divided almost evenly, although the bulls have still got a slight advantage: 45% are in favor of continuing the uptrend, 35% are for moving down and 20% are for the sideways trend.

The nearest resistance is the highs of January 13 and February 04 in the zone of 1.1480, followed by 1.1525, 1.1560 and 1.1625. Supports are in zones and at levels 1.1365-1.1385, 1.1275, 1.1220, 1.1185 and Jan 28 low 1.1120.

As for the events of the upcoming week, the most important of them are related to inflation and will concern the consumer market. So, the values of the US Consumer Price Index (excluding food products and energy carriers) will become known on Thursday, February 10, and the values of the Harmonized Consumer Price Index of Germany and the Consumer Confidence Index of the University of Michigan USA will be published on Friday, February 11. 

GBP/USD: The Bank of England: Not a Dove Yet, No Longer a Hawk

Of course, the general weakening of the dollar affected the GBP/USD pair as well, which recorded the weekly high at 1.3627. However, as mentioned above, the increase in the interest rate by the Bank of England did not come as a surprise to anyone and had already taken into account by the market in quotations. In contrast to the statement of the head of the ECB, Christine Lagarde, which produced the effect of a bombshell. As a result, the European currency gained a significant advantage over the British one, and the EUR/GBP pair rose by more than 2.2%, from 0.82843 to 0.84650. As for GBP/USD, it finished well below the local high, at 1.3528 for the same reason.

The bulls on the pound were also disappointed by disagreements among members of the Bank of England committee. Only 4 out of 9 voted to raise the rate by 50 bps. The majority, including the head of the bank, Andrew Bailey, decided to raise rates by only 25 basis points, citing a slowdown in economic growth.

This regulator will apparently continue to act in an extremely balanced manner, which was confirmed by the chief economist of the Bank of England, Hugh Pill. He said in an interview with Reuters that the bank expects "further moderate tightening in the coming months if everything goes as planned" and that "you need to be careful in setting the rate level."

Strategists at Japan's MUFG Bank say this sneaky stance limits the prospects for a stronger British currency. MUFG does not expect a steady growth of the pound and believes that if the movement of GBP/USD to 1.4000 continues, the pair will encounter many pits and bumps along the way. And their colleagues from Scotiabank look in the opposite direction at all. In their opinion, due to the inability to gain a foothold above 1.3600, the British currency is now at risk of falling to 1.3400 initially and possibly to 1.3200 in a relatively short term.

The majority of experts (55%) are still set for further growth of the GBP/USD pair at the moment, the remaining 45% have taken the opposite position. The indicators on D1 look like this: 45% of oscillators point north, 10% point south, the remaining 45% remain neutral. Among trend indicators, 40% look up, 60% look down. Supports are located at 1.3500, 1.3425, 1.3365, next strong support is 100 pips lower. Levels and resistance zones: 1.3570-1.3600, 1.3640, 1.3700, 1.3750, 1.3835 and 1.3900.

Highlights of the coming week include a speech by Bank of England Governor Andrew Bailey on Thursday, February 10, and the release of UK GDP and industrial production data on Friday, February 11.

USD/JPY: Calm, and Calm Again

While most G10 Central banks are either raising rates or becoming more aggressive (like the ECB), the BOJ's slogan is still "calm and calm again". Safe haven should remain as quiet as possible with its perpetually negative (minus 0.1%) interest rate.

It is already clear that, since inflation in Japan does not show signs of approaching the target level of 2% set by the Japanese regulator, its actions will lag behind the actions of other Central banks. And this, according to analysts at CIBC Capital Markets, will continue to put pressure on the yen.

At some point, rumors began circulating in the market that the Bank of Japan could move to normalize its monetary policy this year. However, the Bank's statement released after the January meeting made it clear that this is nothing more than speculation. Since central bank Governor Haruhiko Kuroda keeps saying that it is far from reaching the inflation target of 2.0%, his organization is quite comfortable with the weak yen.

What has been happening to the USD/JPY pair over the past four months can be considered a sideways trend with a predominance of bullish sentiment. So the general weakening of the dollar practically did not help the Japanese currency last week: having fallen on February 02 to the level of 114.14, the pair returned to the same place where it started, to the zone of 115.20, by the end of the week.

At the time of writing, the majority of experts (55%) expect the USD/JPY pair to continue moving towards a multi-year high of 116.35, recorded on January 04. The remaining 45% believe that the weakened dollar will still put downward pressure on it. All 100% of the indicators are green, although 15% of the oscillators give signals of the pair being overbought.

Support levels and zones are 115.00, 114.55-114.80, 114.15, 113.75, 113.45, 113.20, 112.55 and 112.70. The nearest resistance zone is 115.50-115.70, the nearest serious target of the bulls is a new five-year high at 116.35.

No serious macroeconomic statistics from Japan are  expected either last or next week. We only note that Friday, February 11 is a day off in Japan. The country celebrates Kenko Kinen No Hi, the National Foundation Day. It is believed that the first emperor of Japan, Jimmu, ascended the throne on this day in 660 BC and founded the Imperial Dynasty of Japan and the State of Japan.

CRYPTOCURRENCIES: Who Is in Charge in the BTC/USD Pair? Answer: US Federal Reserve

Whatever crypto enthusiasts say, bitcoin has long ceased to be an independent asset. And  the decisive factor intheBTC/USD pair is the dollar. And the strength or weakness of the US currency depends, in turn, on the policy of the US Federal Reserve (and partly on the actions of other Central banks).

The same crypto enthusiasts crave an inflow of funds from institutional investors like manna from heaven. And the latter are waiting for the regulators to establish clear rules governing the work with digital assets. Therefore, the movement of quotes of leading cryptocurrencies will depend (and already depends) not on the mood of millions of small players, but on the mood of just a few governments and Central banks. Just look at the correlation between the cryptocurrency and stock markets. This link is becoming more and more rigid and is determined by the risk sentiment of large investors.

Of course, short-term fluctuations in BTC/USD can be affected by events such as bad weather that has suspended miners in Texas. But the main trends are set not by them, but by the actions of regulators.

Bitcoin is now perceived as a "money commodity". Analysts of Fidelity Digital Assets came to this conclusion, calling the first cryptocurrency not only a technology, but also a perfect form of money. And what kind of government will allow the flow of "perfect" money to pass it by? And there may be two solutions: either to ban them completely, as in China, or to take them under strict control.

The Central Bank of Russia wanted to follow the Chinese version. But Russia's President Vladimir Putin supported the proposal of the Ministry of Finance not to ban, but to regulate the cryptocurrency market, including their circulation and mining. This is a very serious decision, because, according to Bloomberg, residents of Russia possess a huge number of digital assets worth about $214 billion. In addition, according to the University of Cambridge, Russia became the third country in the world in bitcoin mining (11.23%) in the summer of 2021, after the USA (35.4%) and Kazakhstan (18.1%), where many miners migrated after the ban in China.

MicroStrategy founder Michael Saylor also believes that the current problems in the cryptocurrency market are caused, first of all, by the non-transparent regulation and regulatory uncertainty of the crypto industry. According to Saylor, many institutional investors are now tracking bitcoin, however, they are in no hurry to invest in it.

According to JPMorgan analysts, the persistence of high volatility, which limits the adoption of bitcoin by institutions, is also an obstacle.

Interestingly, analysts at another major investment bank, Goldman Sachs, agree that cryptocurrencies are unlikely to escape the influence of macroeconomic forces, such as the monetary policy of the US Federal Reserve. However, they believe that the mass adoption of cryptocurrency may not improve, but, on the contrary, worsen the chances for its long-term growth. Experts argue that the global popularity of digital assets will further increase their correlation with the traditional ones. This, in turn, will reduce the volatility of cryptocurrencies and reduce both their speculative attractiveness and their advantages as a diversifying asset in investor portfolios.

As for the current situation, despite a solid bounce off its 90-day low of $32,950, the main cryptocurrency has been unable to overcome the strong resistance in the $38,000-39,000 zone for a long time. However, the BTC/USD pair went on a breakthrough and reached $40,880 at the time of writing the review, on the evening of Friday, February 04.

The total market capitalization for the week has grown slightly: $1.85 trillion compared to $1.70 trillion seven days ago, and the Crypto Fear & Greed Index has deepened even more into the zone of Extreme Fear, falling from 24 to 20 points.

The latest JPMorgan report notes that “open interest in futures and the volume of exchange balances indicate less panic or liquidation of positions than in last May, especially in relation to large crypto investors”. At the same time, the bank’s specialists do not exclude a further decrease in bitcoin quotes, even in the absence of signs of capitulation of buyers. They seriously lowered the fair value of the first cryptocurrency from $150,000 to $38,000.

According to Business Insider, JPMorgan's model assumed that bitcoin's volatility would converge with gold's volatility and equalize their shares in investment portfolios. Now, the bank’s analysts have acknowledged that their previous forecast that the bitcoin-to-gold volatility ratio would drop to around 2/1 by the end of 2022 proved to be unrealistic, leading to the downgrade.

Peter Brandt, a well-known Wall Street trader with 45 years of experience, notes that most crypto enthusiasts are now in an extremely bearish mood. Most of the participants in the Laser Eyes flash mob are confident that the price of bitcoin will fall below $30,000 in the near future. According to the expert, this may be a signal to buy the first cryptocurrency. “When the bulls wear laser eyes, it’s time to sell. When bulls turn bears, is it time to buy?” Brandt asks.

Recall that the “Laser Eyes” flash mob started on Twitter in February 2021, when bitcoin reached a local high of $58,300. After that, many supporters of the first cryptocurrency, in anticipation of its growth to $100,000, posted photos with “laser eyes” as their profile avatar. Co-founder of Morgan Creek Digital Anthony Pompliano, TV presenter Max Kaiser, CEO of Binance crypto exchange Changpeng Zhao, Tesla CEO Elon Musk and other influencers were among the participants in the flash mob.

However, instead of rising to $100,000, the flagship cryptocurrency collapsed to $29,000 by June. So, Peter Brand's current remark about "laser eyes" in bears clearly deserves attention.

It is also worth paying close attention to the results of the round table organized by the Finder analytical website. The discussion was attended by 33 fintech experts, half of whom do not expect the cryptocurrency price to fall even against the backdrop of the upcoming increase in US interest rates. The average forecast given by the participants of the table says that bitcoin could soar to a high of $93,717 this year and is expected to be worth $76,360 by the end of 2022 and close to $193,000 by the end of 2025.

Vanessa Harris, director of the cryptocurrency startup Permission, was among the most optimistic participants in the discussion. She predicts that BTC will peak at $220,000 this year. A much more modest figure was voiced by the founder of the CoinFlip bitcoin ATM network, Daniel Polotsky. In his opinion, the cryptocurrency is unlikely to exceed $60,000 in 2022 as the bubbles created by the US Federal Reserve during the pandemic are now deflating.

Crypto analyst Jason Pizzino predicts BTC growth as well. According to his forecast, bitcoin will still enter an accumulation period in the medium term, when whales and investors with smart money will begin to invest in cryptocurrency, waiting for its next bullish trend. This may take a whole year, during which the BTC rate will rise. According to Pizzino's forecast, bitcoin is able to reach a new price high in the second half of 2022, but this will not be a sharp upward movement but a series of ascents.

Finally, the most cosmic forecast was given by Circle CEO Jeremy Aller in an interview with Business Insider. In his opinion, the worldwide adoption of bitcoin will certainly contribute to the growth of this coin to $1 million. The businessman admitted that he is not a "bitcoin maximalist", but he still believes in new cryptocurrency highs. At the same time, he prefers not to compare bitcoin with gold, believing that the digital asset is much more efficient than precious metals. According to the head of Circle, gold as money is simply useless in modern society.


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 January 31 - February 04, 2022

EUR/USD: Surprises from the US Federal Reserve


The meeting of the US Federal Reserve FOMC (Federal Open Market Committee) and the subsequent press conference of its management was certainly the main event of the last week. JP Morgan analysts called the speech of Jerome Powell, the head of the US central bank, the most “hawkish” of all during his tenure.

As for the first increase in the federal funds rate this year, there were no surprises: it is likely to take place in March, as planned. True, Jerome Powell did not answer the question of how much it will be increased, 25 or 50 basis points (bp). But at the same time, he made it clear that the Fed will be quite “agile” and “intractable” from now on. Apparently, the regulator will no longer pay attention to either the coronavirus omicron strain or the stock indices collapse and will focus on controlling inflation.

The number of possible increases in the refinancing rate in 2022 was a real surprise for the markets. Powell's speech led to the market upgrading the probability of three increases by June from 45% to 60%. In total, there can be five or six of them this year. For example, Deutsche Bank experts forecast a 25 bp rate hike in March, May, and June, and two more acts of monetary restriction before the end of the year. And their colleagues from BNP Paribas have set their sights on six raises. There may even be seven of them If inflation continues to be at a high level in the second half of the year. After all, the head of the Fed has made it clear that the main tool to fight inflation will be the federal funds rate.

In addition, the US Central bank has decided to double the pace of rolling back its quantitative easing (QE) program. The volume of government bonds repurchases will decrease by $20 billion per month from next month (now $10 billion), and of mortgages by $10 billion (now $5 billion).

All of these hawkish signals have shown that the regulator's stance has become much tighter and have made a huge impression on the derivatives market. The direct correlation between government bond yields and the DXY dollar index was restored, and the index jumped above 97.35.

Recall that the euro is the basis of the basket of 6 world currencies that form the DXY, with a share of 57.6%. Therefore, the European currency played a leading role in the growth of the index and the strengthening of the dollar in the current situation. The difference between the Fed's hawkish stance and the ECB's dovish stance has been repeatedly spoken about. The European Central Bank intends to only start raising the rate in 2023, while its counterpart overseas will already be completing this program. And such a divergence does not bode well for the Old World currency.

The EUR/USD pair lost more than 220 points at its high in the past week alone, which was a record for the last seven months. The local bottom was found on Friday, January 28 at the level of 1.1121, followed by a slight correction and a finish at 1.1148.

Of course, if the US Federal Reserve conducts an ultra-aggressive tightening of its monetary policy, it can lead to a sharp reduction in consumer demand, with all the ensuing problems. But this is not happening so far. And it will always be possible to soften the position even if it ever happens. Therefore, the probability of the pair falling towards 1.1000 is very high. This is the figure that sounds both in the forecasts of strategists and the Internationale Nederlanden Groep, as well as the Canadian Imperial Bank of Commerce.

At the time of writing, 100% of trend indicators and 100% of oscillators on D1 are red, though 30% of the latter are in the oversold zone. Among experts, the majority (60%) are in favor of further strengthening of the dollar, 40% believe that everything is not lost for the euro yet, and the pair will be able to temporarily return to the boundaries of the medium-term side channel 1.1220-1.1385. The nearest resistance zone is located at 1.1185, followed by 1.1220, 1.1275, 1.1355-1.1385 and 1.1485. The nearest support zone is 1.1075-1.1100 and then 1.0980-1.1025.

As for the calendar of the upcoming week, the attention of the market will be mainly focused on the ECB meeting on Thursday, February 03. It is not likely to present any special surprises, and the interest rate will remain the same, at the level of 0%. However, certain changes in the monetary policy of the European regulator are still possible. And investors expect to learn about them at the final press conference.

In general, the week will be full of macro-economic statistics. There will be data on the GDP of the Eurozone and the consumer market in Germany on Monday, January 31. The volumes of retail sales in Germany, the ISM business activity index in the US manufacturing sector, as well as the results of a study of the European banking sector will be announced on Tuesday. There will be statistics on the Eurozone consumer market and the level of employment in the private sector in the US on Wednesday. The value of the ISM business activity index in the US services sector will become known on Thursday. And in addition to data on retail sales in the Eurozone, we are traditionally waiting for a portion of statistics from the US labor market, including the number of new jobs created outside the agricultural sector (NFP) on the first Friday of the month, February 04.

GBP/USD: How Will the Bank of England Respond?

The Markit Services PMI for the UK released on January 24 came in below the forecast at 53.3 versus the expected 55.0. Further, the expected active increase in rates by the Fed, and then preliminary data on US GDP for the fourth quarter of 2021, played on the side of the dollar. They showed an increase that no one expected: 6.9% against the forecast of 5.5% and the previous value of 2.3%. Apparently, the US economy has not only recovered from the COVID-19 attack but has recovered so much that economic growth has even surpassed the 2019 figures.

All this has not benefited the British currency of course. And then there are the demands for the resignation of British Prime Minister Boris Johnson, which the market regarded as another bearish factor. As a result, the GBP/USD pair fixed a low at 1.3357, falling by almost 400 points in two weeks.

Can the pound return to growth even despite the US Fed's hawkish stance? We are likely to get an answer to this question soon enough.­ After all, in addition to the ECB meeting, there will also be a meeting of the Bank of England on Thursday, February 03. How can it respond to the Americans? Of course, by a faster rate increase: according to a number of forecasts, the pound rate may be increased by another 0.25 bp, up to 0.50%.

For how long will the British currency have such support? Many analysts doubt that the actions of the Bank of England will meet market expectations, and that the regulator will act as aggressively as the Fed this year. Based on this, economists at Rabobank, the second largest bank in the Netherlands, do not exclude that the GBP/USD pair may fall below 1.3000 by the middle of the year.

As for the current situation, the level 1.3400 (range 1.3360-1.3415 to be exact) is a very strong support/resistance zone and can serve as a springboard for the pair to bounce up. This development is supported by 30% of experts. The next resistances are waiting for the pair at levels 1.3440, 1.3500-1.3525, 1.3575, 1.3650, 1.3700 and 1.3750.

70% of analysts vote for the further fall of the pair. Supports are located at 1.3360, then 1.3275, 1.3200, followed by a strong December trend reversal zone 1.3160-1.3185.

The indicators on D1 look like this: only 10% of the oscillators point to the north, the remaining 90% point to the south, of which 20% give signals that the pair is oversold. Among trend indicators, all 100% look down.

In addition to the Bank of England meeting, we should pay attention to data on business activity (PMI) next week: in the manufacturing sector on Feb. 01, in the services sector on Feb. 03 and in the UK construction sector on Feb. 04.

USD/JPY: Yen Has Nothing to Answer

If the Bank of England has something to respond to the US Federal Reserve, nothing like this can be expected from the Bank of Japan with its forever negative (minus 0.1%) rate. The yen, as a safe-haven currency, is usually supported by investors running away from risky assets. But now the rising dollar and US Treasury bonds are a powerful obstacle in their way. And the Bank of Japan does not really need a strong national currency.

As a result, as most experts (60%) expected, the USD/JPY pair rushed north again. True, it failed to reach the high on January 04 at 116.35, but the rise still looks very impressive. If the pair was at the level of 113.46 on Monday, January 24, it reached the height of 115.68 by the end of the working week. The last chord of the five-day period was set at the level of 115.22.

At the time of writing, most indicators on D1 point north. Among the oscillators, there are 90% of them (10% of them give signals that the pair is overbought), the remaining 10% are colored red. Among the trend indicators, 100% recommend buying. Experts agree with the indicators: 70% of them side with the bulls, 20% with the bears, 10% are neutral. Support levels are 115.00, 114.45, 114.00, 113.75, 113.45, 113.20, 112.55 and 112.70. The nearest resistance zone is 115.50-115.70, the nearest serious target of the bulls is a new five-year high at 116.35.

Any serious macroeconomic statistics from Japan is not expected this week.

CRYPTOCURRENCIES: The Calm After the Storm

If we talk about cryptocurrencies, nothing terrible happened for them at the January meeting of the Fed. It had long been known that the regulator would tighten monetary policy and reduce monetary injections into the economy. As well as the fact that it will raise interest rates. Yes, this will hit risky assets, but it will draw money from the stock market in the first place. It is possible that things will not reach cryptocurrencies, as a super-speculative asset at all: the volumes are too small. 

The crypto market grew by leaps and bounds as the Fed flooded the fires of the pandemic with trillions of brand new freshly minted dollars. There will be no more inflow of this money, and it is probably not worth counting on a new crypto boom. Institutional investors will behave much more calmly, but they will not be in a hurry to part with their bitcoins and ethereums either. Everyone who wanted to sell them has already sold. Those who wanted to keep them, kept them as a long-term investment.

Of course, any surprises are possible in this industry: both pleasant and not so much so. In the meantime, the crypto market is recovering from the panic that arose before the Fed meeting. Having fallen on Monday, January 24 to $32.945, the BTC/USD pair grew a little and it is trading in the $37,000 zone on the evening of Friday, January 28 at the moment of writing this. The total market capitalization has risen from $1.51 trillion to $1.70 trillion, and the Crypto Fear & Greed Index has grown to only 24 points (11 points at the low of January 23), being stuck firmly in the Extreme Fear zone. So it is clearly premature to talk confidently even about the beginning of a recovery and a trend reversal. Moreover, the BTC/USD chart shows that the strong support that the pair relied on both in 2020 and 2021 is located in the $29,000-30,000 zone. So there is room to fall.

Goldbug and bitcoin skeptic Peter Schiff allowed the collapse of bitcoin below $10,000. But Mike Novogratz, the founder of the Galaxy Digital crypto bank, stood up for the flagship currency immediately, offering Schiff a $1 million bet. The banker promised to send these funds to charity or another purpose of the opponent's choice if BTC trades below $35,000 in a year.

At the same time, Novogratz believes that the bear market will be long enough, and therefore does not advise buying on drawdowns now. “It will be difficult for cryptocurrencies to start a rally until the stock market bottoms out. Nevertheless, digital assets have already experienced a significant sell-off and are beginning to receive support from buyers,” he explained.

Robert Kiyosaki, author of the best-selling book "Rich Dad Poor Dad", also recommends waiting with purchases, saying that he will buy more digital gold only if its price drops to $20,000. "Profits are made when you buy, not when you sell. Bitcoin is crashing. Great news. I bought BTC for $6,000 and $9,000. I will buy more if the price tests $20,000. The time to get rich is approaching,” he wrote.

Recall that Kiyosaki predicted a “giant stock market crash” last October and warned that the same fate awaits gold, silver, and bitcoin. This is exactly what we are seeing now.

Ton Weiss, a well-known trader, analyst and former vice president of JP Morgan Chase, does not rule out the completion of the bitcoin correction in the near future. According to him, the cryptocurrency has reached the 20-month moving average (MA), which is at the level of $34,000. Weiss claims that this is a "perfect opportunity" for a trend reversal and the asset's return to growth. According to the specialist, in the event of a rebound, the price of bitcoin will quickly return to the $40,000 level and consolidate above it.

Another cryptocurrency analyst, Nicholas Merten predicts that despite the current market conditions, bitcoin could rise almost 7 times to $200,000 by the end of the year. Merten stated on his DataDash YouTube channel (502,000 subscribers) that if bitcoin's capitalization stays above $600 billion, it will set the stage for the coin's bull run in the coming months.

The expert recalled that all rallies occur after corrections and are often spurred on by BTC purchases at heavily discounted prices. Understanding how big players buy is the key to navigating the highly volatile cryptocurrency markets, Merten says.

According to other market participants, bitcoin can visit the $30,000 area, and then it is likely to turn around. Charles Edwards, the founder of the crypto investment company Capriole, wrote that the signal of the NVT (Network Value to Transaction ratio) indicator shows that BTC is oversold: this situation is rare in the market. “We have entered an open buying zone,” Edwards commented on the current situation.

Recall that this indicator was proposed and is actively used by the well-known analyst Willy Woo. NVT is calculated by dividing bitcoin's market capitalization by its transaction volume (in USD) and is a popular metric to assess whether the coin is overbought or oversold.

Michael Saylor, founder of MicroStrategy, named two reasons for the current correction in the cryptocurrency market. The first of these is the non-transparent regulation and regulatory uncertainty of the crypto industry. The second is the imperfection and immaturity of the crypto industry. At the same time, the businessman believes that the current market conditions provide “an excellent entry point for institutional investors interested in cryptocurrencies, who have been on the sidelines so far.”

According to Saylor, a lot of institutional investors are now watching bitcoin and see that it is 40% below the all-time high and that it is consolidating. At the same time, they understand that bitcoin is supported by such serious investors as Bill Miller, regulators, senators and congressmen, as well as large public companies.

As for MicroStrategy itself, this software developer owns 124,391 BTC. The company has spent about $3.7 billion on the acquisition of cryptocurrency. Thus, the average purchase price is $30,100 per 1 coin. And if it falls below this level, it will result in multi-million or even billions in losses for the owners of MicroStrategy.

And now, a couple of soothing statements to conclude the review. The first is from Scott Melker, a trader, analyst and podcast host, who reminded his subscribers that there is nothing unusual about what is happening in the market now. “People have short memories. Bitcoin fell from $60,000 to $30,000 in 10 days in May. 10 DAYS!!! All this has already happened. And that was only 8 months ago. So why be so scared?" he wrote.

The second is from McDonald's fast-food chain, which offered owners of digital assets to get a job in the catering industry during the bearish trend. This is a joke of course. But, as they say, there is some truth in every joke. The McDonald's tweet was liked by the community and quickly gained almost 100,000 likes.



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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EUR/USD: FOMC Meeting: the Day the Markets Are Waiting For

The main event not only of the next week, but of the whole month will certainly be the meeting of the FOMC (Federal Open Market Committee) of the US Federal Reserve on January 26. Will the regulator raise interest rates now? Or in March? Or will it postpone the curtailment of incentives indefinitely? These questions remain unanswered.

Recall that the roadmap includes three main points at the moment: 1) curtailing the emergency stimulus program in March, 2) three increases in the key rate in 2022, the first of which may also occur in March, after which 3) the regulator will begin to normalize the balance. However, nothing lasts forever under the moon, the monetary policy of the Federal Reserve either. So, these points are not constant at all and can be changed.

Even ECB President Christine Lagarde said last week that the European Central bank has already begun to react and is ready to adjust its policy if facts and figures require it. Although it is not yet very clear what “it has already begun to react” is. And “ready” is a very loose concept.

According to the same Ms. Lagarde, a too rapid rate increase could slow down the growth of the Eurozone's GDP. So why then reduce monetary stimulus and raise the key rate, especially since, according to the bank's management, the surge in inflation is a temporary phenomenon? And inflation in the US is growing faster than in the Eurozone. So let the Fed have a headache about how to stop it. And the ECB can wait until 2023 to raise rates, and at the same time see how things go overseas.

A clear difference between the US Central Bank's hawkish stance and its European counterpart's dovish stance is a strong support for the dollar, pushing the EUR/USD down. However, there are times when the actions of investors are determined not by real economic and political factors, but by rumors spread by speculators.

Something similar seems to have happened on January 11th. Speaking in the US Congress that day, Jerome Powell stated once again that in order to combat the record for forty years inflation, the Fed is going to raise the refinancing rate at least twice this year, and that if necessary, it can be raised three times. That is, nothing new was actually said. But, thanks to rumors, the market for some reason was waiting for the number "four” and was disappointed because it did not sound. As a result, the DXY dollar index went into a deep peak, and the EUR/USD pair went north instead of moving south.

Due to inflation data in the US, the euro strengthened its positions even more the next day, January 12, and the EUR/USD pair went further up having broken through the border of the medium-term side channel 1.1220-1.1385. A nine-week high was reached on the morning of January 14 at 1.1482. After that, everything went back to normal. The market realized that there were no real reasons for the euro to strengthen, and the pair found itself within the 1.1220-1.1385 channel once again on Tuesday, January 18, reaching the local bottom at 1.1300 on January 21. The final chord was played at 1.1343.

At the time of writing, most (55%) of the D1 oscillators are red, 20% are green and 25% are neutral gray. Trend indicators have 90% red and only 10% green. Among experts, the majority (55%) support the strengthening of the dollar, 45% are for its fall. The nearest resistance zone is 1.1370-1.1385, then 1.1400-1.1435, 1.1480 and 1525. The nearest support zone is 1.1300-1.1315, then 1.1275 and 1.1220. This is followed by the November 24 low of last year at 1.1185 and the 1.1075-1.1100 zone.

As for the economic calendar for the upcoming week, besides the FOMC meeting of the US Federal Reserve and the subsequent press conference of its management, we can note the release of data on business activity in Germany and the Eurozone (Markit index) on Monday, January 24. Preliminary data on US GDP will be released on Thursday, January 27, as well as the volume of orders for capital goods and durable goods. (Since the purchase of such goods usually involves large investments, these data reflect the economic situation in the United States, including the inflationary component.) And, finally, data on German GDP will be published at the end of the working week, on January 28.

GBP/USD: Rate Up Bet

The dollar strengthened its position against the pound slightly over the past week. If the GBP/USD pair was at the height of 1.3748 on January 13, it fell to 1.3545 on the evening of January 21. According to some experts, it's all about he British currency being generally overbought. After the December decision of the Bank of England to raise the interest rate from 0.1% to 0.25% for the first time in three years, the pair showed an increase of about 575 points. So the current fall of 200 points may not mean a medium-term trend reversal, but only a temporary correction.

The pound has a lot of chances to return to growth, even despite the hawkish position of the US Federal Reserve. The CPI published on January 19 showed that inflation in the UK rose to its highs in more than 15 years, reaching 5.4% (previous reading 5.1%, forecast 5.2%). The continuing growth of inflationary pressure may force the regulator to raise the key rate as early as at the next meeting on February 03. It is possible that at the same time, against the backdrop of a moderate impact of the omicron strain on the economy of the United Kingdom, plans to reduce monetary stimulus (QE) introduced during the COVID-19 pandemic may also be revised.

A survey conducted by Reuters among 45 experts showed that most of them (65%) expect the Bank of England to raise rates again on February 03, to 0.5% this time. If this happens, then, according to Scotiabank strategists, the GBP/USD pair may return to levels around 1.3800.

More than 75% of analysts expect the rate to be raised to 0.5% by the end of March. Also, according to the median forecast, the British regulator will raise the rate by another 25 basis points in the Q3 (up to a quarter earlier than expected). After that, another increase will follow, up to 1.0%, approximately at the beginning of 2023.

However, as for the forecast for the next few days, 60% of experts side with the bears, expecting the pair to fall at least to the 1.3450-1.3500 zone. Most of the indicators on D1 agree with this forecast: 60% of oscillators point to sell (although 10% are already in the oversold zone), 20% recommend buying and 20% remain neutral. Among trend indicators, 40% look up, 60% look down.

The supports are located at 1.3525, 1.3480, 1.3430, 1.3375, the next strong support is 100 points lower. The levels and resistance zones are 1.3570-1.3600, 1.3640, 1.3700, 1.3750, 1.3835 and 1.3900.

The Bank of England meeting will only take place in early February, and there won't be much important macro data from the UK next week. The publication of the Markit business activity index may cause increased volatility on Tuesday, January 24. Although, most likely, investors will not pay much attention to it on the eve of the US Federal Reserve meeting.

USD/JPY: Yen as a Safe Haven

The meeting of another central bank, Japan, took place last week, on January 18. As expected, the key rate remained at the same negative level, minus 0.1%. As we wrote earlier, according to this regulator, the country does not need a strong currency, and a weak yen is more likely to help the economy, as it supports Japanese exports and corporate profits.

In general, last week's results for the USD/JPY pair can be assessed as neutral. First, it went up and rose to the height of 115.05 on Tuesday, January 18. Then the trend changed to a downtrend, and the pair dropped to where it was trading a week ago, to the zone of 113.60-114.00 by the end of the five-day period.

The Japanese currency was supported by the weakening of the risk appetite of the market. Investors began to abandon risky assets once again in favor of the yen, which plays the role of a "safe haven". The reasons for this change in sentiment were forecasts for rising inflation, uncertainty about the monetary policy of world central banks and the growth of geopolitical tensions.

The USD/JPY pair finished last week at 113.66, that is, within the trading range 113.40-114.40, where it has regularly been in the last three months. And although 60% of analysts vote for its growth, 25% for a fall and 15% for a sideways trend, the median forecast suggests that it will stay within this channel. Of course, provided that the US Federal Reserve does not present any surprises at its meeting. And you should not forget about the international political situation, there are also possible surprises, and very unpleasant ones at that.

Among the oscillators on D1, 100% are facing south, although 25% of them are already giving signals that the pair is oversold. Among trend indicators, 65% recommend selling, 35% recommend buying. Support levels are 113.50, 113.20, 112.55 and 112.70. The nearest resistance zone is 114.00-114.25, 114.40-114.65, then there are levels 115.00, 115.45, 116.00 and 116.35.

CRYPTOCURRENCIES: It Is Not Just Winter in the Crypto Market, It Is Polar Cold


Quotes of risky assets remain under strong pressure in anticipation of the US Federal Reserve meeting. The Dow Jones, S&P500 and Nasdaq stock indices have been losing their positions for almost the entire month of January. But as for the top cryptocurrencies, they have been quite successful in repulsing bear attacks for the last two weeks. If we talk about bitcoin, buyers did their best to keep the BTC/USD pair quotes from reaching the psychologically important horizon of $40,000. However, the bears managed to break through the defense on Friday, January 21 and lower the pair to $36,160. The total capitalization of the crypto market flew down as well, falling to $1.72 trillion, and the Crypto Fear & Greed Index was firmly stuck in the Extreme Fear zone, dropping to 19 points.

The situation, according to a number of experts, does not bode well for cryptocurrencies at the moment. The bubble is deflating, so the bitcoin price may fall to $30,000. This opinion was expressed by specialists from the investment company Invesco, drawing an analogy with the crash of 1929.

The decline from the $69,000 highs is exactly in line with the bubble pattern, analysts say. This trajectory assumes that the asset will lose 45% of its value within 12 months after the peak. That is, according to their calculations, the price will fall to $34,000-$37,000 by the end of October and to $30,000 by the end of 2022.

At the same time, Invesco admitted that they made a mistake with the forecast for 2021, when they predicted a fall in the BTC price below $10,000. Analysts explained their mistake by saying that bitcoin seems to be going through not one, but a series of bubbles. (Although, perhaps, Invesco experts were just in a hurry, and this forecast will come true this year).

Popular analyst PlanB had made a mistake with his forecast for the past year as well. Recall that he developed a model for predicting the behavior of the bitcoin rate (S2F), the signals of which indicated the prospects for BTC to rise to $100,000 in 2021. Despite the fact that the S2F forecast did not come true, PlanB continues to stick to his theory. He is confident that bitcoin has not yet realized the potential laid in it by the 2020 halving. According to the analyst, the coin is now near local lows and is preparing to renew all-time highs in March. According to the analyst, the peak value of bitcoin within the current cycle can be recorded in July-August 2022.

Another unsuccessful predictor was TV presenter and former trader Max Kaiser. He explained In another interview why his forecast of $220,000 for bitcoin was not realized last year. “As for 2021, I said we would get to $220,000 per coin, which is a typical four-year cycle. What we had in 2021 was a massive mining collapse in China, the hash rate fell by 50%. We have recovered since then and are about to reach a new all-time record hash rate. That's why I'm moving my goal from 2021 to 2022."

“There is a price, there is a hash rate and there is a complexity setting: these are three things you need to keep in mind,” Max Keiser explains. “I have always said that the price lags behind the hash rate, so once we see its new all-time highs, new all-time highs of the bitcoin price will follow.”

Guido Buehler, CEO of SEBA cryptocurrency bank, calls a three times more modest goal. He believes that digital gold could rise to $75,000 by the end of 2022. “Our internal valuation models point to a price between $50,000 and $75,000. I am quite sure that we will see this level,” he said, adding that the volatility of bitcoin will remain high, but the asset will be able to test new record levels, the only question is the timing.

Cryptocurrency analyst Justin Bennett's forecast can also be classified as optimistic, although the numbers here are even smaller. Bennett reviewed BTC historical price movement models that show that the asset is expected to rise by 20-30%. “It can be seen that starting from early 2021, bitcoin, finding the minimum below the liquidation level, then makes an upward movement. The average rate of such movement is about 63%, and the lowest was in April, about 27%. - the expert says. “If you take this data and look at the low around $40,000, then a minimum move of around 27% would take the market to around $50,000. This is highly likely given that the $50,000-53,000 range is very important, and sellers will defend this range as resistance.

There is no clear opinion on the future of ethereum either. Some still hope that the ETH/USD pair will meet 2023 around $7,000-10,000, while others expect the coin to crash after bitcoin. For example, Peter Brandt, a Wall Street trader with 45 years of experience, expects a further decline in the price of ethereum. In his opinion, from a technological point of view, this altcoin is “a very complex, costly, and user-inconvenient platform in terms of its use for NFTs, special tokens, and its involvement in the metaverse.” Based on this, Brandt concludes that ETH will lose points in the eyes of investors, giving way to competitors.

Peter Brandt's forecast is quite controversial. Indeed, the slow protocol has led to delays in transactions and a significant increase in fees. Sometimes a transaction costs more than $50, which is very expensive compared to the competition. For example, the commission is less than a cent in Solana. However, due to its high decentralization, ethereum is still the first in terms of the use of smart contracts. At the moment, this altcoin dominates the rest of the blockchains in the DeFi sector with $157 billion of blocked funds or 66% of the total market. Its lead is even greater in the NFT sector: here ETH is almost a monopoly as its share exceeds 90%.

It is possible that its share will decrease over time due to competition, but many experts still promise a bright future for this altcoin. The transition to the proof-of-stake protocol and the subsequent network scaling should help it maintain its leading position. The “X hour” for these steps is scheduled for the Q2 2022 at the moment. However, there is a certain risk that the date will be postponed again. This does not seem to scare investors much though. According to the Glassnode platform, they are buying up coins despite the drop in their value.

Ethereum has already lost about 50% of its value in two months. At the same time, the number of ETH wallets with a non-zero balance has reached a new high of 73,025,019. Network activity is also increasing, which indicates the desire of investors to take advantage of the correction and buy as many tokens as possible. The average daily number of transactions on the blockchain exceeds 1.2 million at the moment.

According to Glassnode analysts, ETH will trade in a narrow range until a clear vector of movement for the US stock market is formed. If the capital goes into risky assets again, then the ethereum will resume the rise along with bitcoin.

But when will this happen?

And will it happen at all?



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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EUR/USD: Rumors That Drive the Markets


The weather on the market is quite often determined by rumors which have very little to do with reality. Or nothing at all. But those who spread them can earn good money by speculating on them. Something similar seems to have happened last week.

Recall that the EUR/USD pair has been in a sideways trend since November, fluctuating in the range of 1.1220-1.1385. And most analysts voted for the continuation of such a movement a week ago, with a predominance of bearish sentiment. The US Fed's hawkish intentions to end the emergency stimulus program, raise interest rates, and start normalizing the balance sheet were an argument in favor of the dollar's strength.

Note that neither the head of the Fed, Jerome Powell, nor other officials of the American central bank have ever said or even hinted that the rate could be raised four times during 2022. It is unclear where this figure came from, but rumors about such an opportunity began to be actively exaggerated and, as a result, many investors believed in it.

Speaking in the US Congress on Tuesday, January 11, Jerome Powell just repeated what he had already voiced earlier. He said once again that the Fed is going to raise the refinancing rate at least twice this year in order to combat a record inflation in forty years, and that if necessary, it can be raised three times. That is, nothing new was actually said. But the market was waiting for the number "four” and was disappointed because it did not sound.

As a result, the DXY dollar index went into a deep peak, closing below the 50-day moving average, and the EUR/USD pair, instead of moving south, went north.

Thanks to US inflation data, the euro further strengthened its position the next day, on Wednesday, January 12, and the pair EUR/USD, having broken through the border of the medium-term sideways channel, went further up. The breakdown of resistance in the 1.1385 zone served as a trigger for a correction after the strengthening of the dollar that began in May 2021 and the subsequent month-and-a-half sideways trend. The weekly high was reached on the morning of Friday, January 14 at the height of 1.1482.

US retail sales and consumer confidence data released at the end of the week were much worse than previous figures, confirming the negative impact of the Omicron coronavirus strain on the US economy. It is not yet possible to predict exactly how much they will affect the next steps of the Fed. But, judging by the reaction of the market, investors decided that such statistics would push the regulator to take more decisive action. As a result, the EUR/USD pair finished at 1.1415.

Of course, the dollar may retreat a little more in the short term. However, the difference between the hawkish policy of the Fed and the dovish policy of the ECB should still support the USD. Moreover, the head of the Fed once again stressed in recent comments that the fight against inflation is a top priority for the US regulator, and expressed confidence that the US economy will cope with the rate increase.

Also, according to a number of experts, the increase in rates may occur more often than once a quarter, as was the case in the previous cycle of monetary tightening. However, this is just an opinion so far that can give rise to another wave of rumors and expectations. Investors expect to find out what will happen in reality following the results of the January FOMC (Federal Open Market Committee) meeting of the US Federal Reserve on January 26-27.

At the time of writing, 75% of D1 oscillators are green and 25% are giving signals EUR/USD is overbought. Trend indicators have 65% green and 35% red. Among the experts, the majority (75%) does not exclude the growth of the pair in the coming week. However, the weather vane of opinions turns 180 degrees in the forecast for February, and here it is already 75% of analysts who are in favor of the dollar strengthening. Resistances are located at the levels of 1.1450, 1.1480, 1.1525, 1.1570 and 1.1615. Support levels and zones are 1.1385-1.1400, 1.1300, 1.1275, 1.1220. This is followed by the November 24 low of last year at 1.1185 and the 1.1075-1.1100 zone.

As for the economic calendar for the coming week, we can note the release of data on the consumer market of the Eurozone on Monday January 17 and Thursday January 20. The ECB's statement on monetary policy and the issue of statistics on the US labor market are also expected on Thursday. The head of the ECB, Christine Lagarde, is to speak on Friday, January 21.

GBP/USD: Bank of England vs Fed: a Game to Stay Ahead

Naturally, in addition to the meetings of the FRS and the ECB, the meeting of the Bank of England will also take place in January. It should be borne in mind that, unlike its peers, this regulator started attacking rising prices back in December, and this made a strong impression on the market. After inflation in the UK rose to 5.1%, reaching a 10-year peak, the Central bank of the kingdom raised the rate from 0.1% to 0.25% for the first time in three years. The decision was made despite the worsening epidemiological situation due to a new coronavirus strain. And here the opinion of the head of the Bank of England, Andrew Bailey, coincided with that of Jerome Powell: for both, the No. 1 task was to reduce price pressure on the economy and society. But the position of the former looks more hawkish, although the rate increase by 15 basis points is not significant. But the first step has been taken, and the market expects a second rate hike in February.

Such expectations continue to support the British currency, thanks to which the GBP/USD pair was able to update the high of the last eleven weeks, reaching the height of 1.3748. However, it failed to break above the 200-day SMA, and the last chord of the five-day week, after the strengthening of the dollar in the second half of Friday, January 14, sounded at 1.3678.

According to 60% of analysts, the GBP/USD pair may make another attempt to rise above the 1.3800 horizon in the coming days. This scenario is supported by 90% of trend indicators on D1 and 80% of oscillators. The remaining 20% signal that the pair is overbought. However, as in the case of EUR/USD, the scales tilt in favor of the bears, when moving from a weekly to a monthly forecast, and here it is already 55% that are waiting for the pair to move down.

Supports are located at 1.3659, 1.3600, 1.3525, 1.3480, 1.3430, 1.3375, the next strong support is 100 points lower. The resistance levels are 1.3700, 1.3750, 1.3835 and 1.3900.

Important macro data from the UK will suffice next week. There will be data on unemployment and the average wages in the country on Tuesday, January 18. Then, the consumer price index will be known the next day. In addition, the Governor of the Bank of England, Andrew Bailey, will speak on Wednesday, January 19, and retail sales for December 2021 will be published on Friday, January 19. This is an important indicator of consumer spending, which also correlates with consumer confidence and is considered as an indicator of the UK economy development pace. According to forecasts, it is expected to fall from 1.4% to minus 0.6%.

USD/JPY: The Yen Strength Is the Weak Dollar

USD/JPY dropped from 116.35 high (high since January 2017) to 113.47 last week on the back of Jerome Powell's speech and lower US Treasury yields. However, the ultra-dove position of the Japanese regulator is unlikely to further strengthen the yen. The dollar seems to be gaining strength again, and the pair went up again at the end of the weekly session, rising to the level of 114.18.

With USD/JPY moving south for the last week and a half, most of the indicators on D1 turned red. Among the oscillators, these are 80% of them, 10% give signals of the pair being oversold, and 10% have already changed their color to green. Among trend indicators, 60% recommend selling, 40% recommend buying. Among experts, 50% vote for the growth of the pair, 40% for its fall, and 10% have taken a neutral position.

Support levels are 113.50, 113.20, 112.55 and 112.70. The nearest resistance zone is 114.40-114.65, then there are levels 115.00, 115.45, 116.00 and 116.35.

The decision of the Bank of Japan on the key interest rate will be announced on Tuesday, January 18. And it will highly likely remain at the same negative level as before, minus 0.1%. As we wrote earlier, according to this regulator, the country does not need a strong currency, and a weak yen is more likely to help the country's economy, as it supports exports and corporate profits.

CRYPTOCURRENCIES: And Here Too, Thank You Jerome Powell

Satoshi Nakamoto launched the bitcoin mainnet by mining the genesis block with 50 BTC in January 2009. Only some 13 years have passed since then,  and The National Development and Reform Commission of China declares crypto mining “obsolete” in January 2022. It follows from the official statement of this top economic planning body that preference will now be given to cleaner and less resource-intensive industries, and mining is on the list of "obsolete" technologies that will be banned from investment and must be eliminated.

William Shakespeare was right; nothing lasts forever under the moon. And after digital currencies were declared “persona non grata” in China, the center of influence on the crypto market shifted completely to the United States. Another proof of this was last week, when a few words from Fed Chairman Jerome Powell were enough to stop the fall of bitcoin and turn the trend of the crypto market upwards.

Speaking at the US Senate Banking Committee, Powell said that stablecoins can be used with the Central Bank official digital currencies CBDC (Central Bank Digital Currency is fiat money in digital form, which are issued and provided by the Central Bank). But this is not what allowed crypto quotes to move north, but the general weakening of the dollar and the return of investors' risk appetites.

As mentioned above, Jerome Powell made it clear that the Federal Reserve has not yet decided to reduce its balance sheet by almost $9 trillion, and that there will be no four rate hikes in 2022, but no more than three. As a result, the DXY dollar index went down, while stock indices and cryptocurrency quotes went up.

BTC/USD dropped to $39,660 on January 10. It has not fallen this low since September 2021. However, then, following the growth of the S&P500, Dow Jones and Nasdaq, it rose to $44,300  on January 12, and the total capitalization of the crypto market  exceeded the psychologically important level of $2 trillion once again, reaching $2.091 trillion. But the Crypto Fear & Greed Index did not get out of the Extreme Fear zone, although it rose from 15 to 21 points.

It is clear that it is too early to talk about the beginning of a new rally in the crypto market. The BTC/USD pair is 35% below its all-time high, and the total capitalization is still very far from the almost $3 trillion that it reached on November 10, 2021. And, if the dollar starts to gain strength again, we can expect digital assets to return to a downward trend.

Of course, crypto enthusiasts predict as usual that top coins will soon rise to new heights. Changpeng Zhao, CEO of the Binance crypto exchange, claims in an article for Fortune that global adoption of cryptocurrencies will jump from the current 5% to 20% in 2022. And Galaxy Digital founder Mike Novogratz sees the 35% drop as just a “healthy pullback.” In his opinion, the main cryptocurrency will find support around $38,000-40,000, after which it will return to growth. Nigel Green, CEO of consulting company DeVere Group, also states that now is the most convenient time to buy bitcoin in the current cycle.

However, some experts consider such sentiments to be too optimistic. Thus, the ENCRY Foundation predicts that bitcoin may return to growth only after its price drops to $28,000-30,000. “The flows of liquidity to the markets will decrease in the second half of 2022, after the completion of the asset repurchase program in the United States. Then bitcoin may fall to $30,000,” the company's specialists explain.

The current levels cannot yet be described as a market bottom. This is indicated by another expert, Viktor Pershikov, a leading analyst at 8848 Invest. According to him, conditions that have not yet been observed must be fulfilled for the formation of the bottom. This is a long flat (at least two months in the current circumstances) with the accumulation of long positions and an increase in open interest, a decrease in BTC sales by market participants as well as clarification of the speed and degree of tightening of monetary policy by world central banks.

“The current state of the crypto market is characterized by emotional selling to a large extent, including at a loss, which is typical for situations when retail participants are shaken out of the market. The current decline does not pose a threat for large BTC holders and is a normal market correction before further growth," Pershikov says. In his opinion, bitcoin will spend most of the year in the price range of $30,000-70,000.

It is clear that a serious growth of BTC is possible only with the same growth of interest in it from institutional investors. But they seem to be a problem for now. According to Bloomberg, only 5% of customers surveyed by JPMorgan believe that the bitcoin price will reach $100,000 by the end of 2022. More than 40% believe that it will only return to the $60,000 level. According to bank strategist Nikolaos Panigirtzoglou, the fair value of the cryptocurrency ranges from $35,000 to $73,000.

As for bitcoin's main competitor, ethereum, crypto analyst Justin Bennett believes that “as long as ETH is below $4,000, you need to be careful” against the backdrop of a downtrend in the entire market. If only ETH returns to this area in the coming weeks and months and can gain a foothold there, then we can talk about the continuation of the strong bullish trend observed in 2021."

The analyst also looks at ETH against BTC and believes that the ETH/BTC pair could start a long-term rally to 0.18 BTC ($7.388) for 1 ETH, but this would require holding the 0.075 BTC ($3.077) level as support.

All of the above shows that the situation is currently ambiguous. And then how do you make money on virtual currencies? The answer to this question is given in our humorous crypto life hacks column by San Francisco (USA) resident Siraj Raval, who uses his 2018 Tesla Model 3 car for ethereum mining. To do this, he launched the corresponding free software on the Apple Mac mini M1, connecting it to the car's center console. Five graphics cards are powered by the Tesla battery. According to Raval, he mined for about 20 hours a day this way and earned from $400 to $800 a month during 2021.

The numbers do look attractive. It only remains to find about $50,000 to buy such a car and find out if the Chinese authorities will not consider this method of mining harmful and obsolete.


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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EUR/USD: Awaiting the January FOMC Meeting

The EUR/USD pair has been in a sideways trend for seven weeks in a row, moving along the horizon 1.1300 in the 1.1220-1.1385 channel. Even the publication of the protocols could not get it out of this state of the December FOMC (Federal Open Market Committee) meeting of the US Federal Reserve, which confirmed the seriousness of this central bank's intentions to tighten monetary policy and strengthen dollars. Apparently, the regulator is frightened by the rate of inflation in the country. In addition, it did not expect the Omicron coronavirus strain to have a significant negative impact on economic activity in the United States.

To normalize the situation, the Fed decided to finally stop the printing press and move on to raise interest rates. The roadmap for the near future includes three main points: 1) the curtailment of the emergency stimulus program in March; 2) three increases in the key rate in 2022, the first of which may also occur in March, after which 3) the regulator will begin to normalize the balance.

These intentions of the Fed led to a sharp outflow of funds from risky assets. Stock indices and cryptocurrency quotes collapsed, while US Treasury yields and the DXY dollar index went up. Although, it should be noted that the strengthening of the US currency was insignificant: the dollar won back only 45 points against the euro, dropping the EUR/USD pair from 1.1345 to the Pivot Point 1.1300.

The release of data from the US labor market on Friday, January 7th could be another important event of the week. The number of new jobs outside the agricultural sector (NFP) was expected to grow from 249K to 400K. However, it fell to 199K instead. On the other hand, the unemployment rate fell from 4.2% to 3.9% against the forecast of 4.1%. Thus, investors did not receive any clear signals, and the pair completed the weekly session near the upper border of the side corridor, at 1.1360.

According to some experts, the difference in the hawkish attitude of the Fed and the dovish attitude of the ECB should eventually lead to a further strengthening of the dollar and the movement of the EUR/USD pair to the south.

Recall that the European regulator, although it raised the inflation forecast for 2022 at its last meeting in 2021, still considers it a temporary phenomenon, which is why it is not worth it yet to worry. It was announced once again that the refinancing rate will remain at the current level until inflation reaches the target level of 2.0% and will remain there for a long time. Eventually, the “main” result of the December meeting of the ECB was the head of the bank Christine Lagarde's statement that the rate hike in 2022 was “very unlikely”.

Strategists of the Dutch banking ING Group (Internationale Nederlanden Groep) have voted for the strengthening of the US currency. They believe that the EUR/USD pair will fall to the 1.1100 zone in Q2 and Q4 of this year, and it will be even lower at 1.1000 in Q4.  Analysts of one of the largest financial conglomerates in the world, HSBC (Hongkong and Shanghai Banking Corporation) are in solidarity with ING, predicting a downward trend of this pair as well.

CIBC (Canadian Imperial Bank of Commerce) designated the following route for EUR/USD: Q2 - 1.1100, Q3 - 1.1000, Q4 - 1.1000. The JP Morgan financial holding assessed the pair's prospects more modestly, pointing to the level of 1.1200.

 However, there is an opposite opinion among experts. For example, Barclays Bank already considers the dollar to be highly overvalued. Therefore, it is expected to depreciate moderately against the backdrop of rising risk appetites and commodity prices, caused by the recovery of the global world economy and cooling inflation. The Barclays scenario written for EUR/USD looks like this: Q1 - growth to 1.1600, Q2 - 1.1800, Q3 and Q4 - movement in the 1.1900 zone.

Morgan Stanley believes that the Fed's rate hike will proceed fairly smoothly, while other central banks will move from dovish to hawkish politics. This will lead to a convergence in the actions of regulators, put pressure on the dollar and raise the EUR/USD pair to 1.1800. The Goldman Sachs strategists call the same goal.

As for the near term, despite the poor NFP indicators, we can expect that the pair will continue to move along the level of 1.1300 until the January Fed meeting, fluctuating in in the range of 1.1220-1.1385 with the predominance of bearish sentiment. 70% of analysts agree with this forecast. 15% have taken a neutral position and another 15% side with the bulls.

The readings of the indicators on D1 are inconsistent as they are under the influence of a multi-week sideways trend. Among the oscillators, 60% point to the north, but 20% are already signaling that the pair is overbought, 20% point south, and 20% point east. Trend indicators have 55% green and 45% red.

The nearest resistance level is 1.1385, then 1.1435-1.1465 and 1525. The nearest support level is at 1.1275, followed by 1.1220. This is followed by the last November 24 low of 1.1185 and the zone 1.1075-1.1100.

The economic calendar of the coming week is highlighted by the publication on January 12, 13 and 14 of a whole pool of macro-statistics from the USA. It will include consumer price indices and retail sales indices, producer price indices, and retail sales volumes in December 2021.

GBP/USD: BoE Hawks vs Fed Hawks

The fact that, unlike the Fed and the ECB, the Bank of England launched an attack on rising prices in December made a strong impression on the market. After inflation in the UK rose to 5.1%, reaching a 10-year peak, the regulator raised the rate for the first time in three years from 0.1% to 0.25%. The decision was made despite the worsening epidemiological situation due to the new coronavirus strain. According to the head of the Bank of England, Andrew Bailey, the number one task is to curb price pressure on the economy and society.

Of course, the rate hike by 15 basis points cannot be called significant, but, most importantly, the first step has already been taken, and the market expects the second rate hike in February.

Such expectations continue to support the British currency, and the GBP/USD pair updated its eight-week high on January 05, reaching 1.3598. The finish of the five-day period took place slightly lower, at 1.3590.

Strategists at the British investment Barclays Bank believe that the pound is still very undervalued, and that the policy of the US Federal Reserve will eventually lead to a moderate depreciation of the dollar. They do not exclude that due to the new wave of COVID-19 and difficulties in relations with the EU due to Brexit, the pair may drop to 1.3300 in Q1. However, then it will go up again (Q2 - 1.3700, Q3 - 1.4000) and will return to the 2021 highs by the end of the year (Q4), rising to the level of 1.4200.

Capital Economics, one of the leading independent research centers in the UK, has taken the opposite position. Its specialists, on the contrary, expect the pound to weaken, and refer to a combination of 1) weak economic growth, 2) slowdown in inflation and 3) slowness of the Bank of England. These three factors, in their opinion, may lead to the fact that the UK regulator decides to raise the rate only to 0.5% in the coming months, instead of 1.0%, which will greatly disappoint the markets.

But, in addition to the growth and fall of the British currency, there is a third scenario. ING Group analysts predict that the pound will be 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, the GBP/USD pair will move sideways along the horizon of 1.3400.

If we talk about the near future of the pair, 40% of analysts vote for its growth above the level of 1.3600, 50% vote for a fall below 1.3400 and 10% for a sideways trend.

The indicators on D1 have a pretty summery mood. Among the oscillators, 100% is colored green, although 25% of them are already in the overbought zone. Among trend indicators, 90% are green and only 10% are red.

The supports are located at 1.3525, 1.3480, 1.3430, 1.3375, the next strong support is 100 points lower. Resistance levels are 1.3600, 1.3735, 1.3835.

Important macro-statistics from the UK will be scarce next week. We can only note the data on the volume of production in the manufacturing industry, which will become known on Tuesday January 11 and Friday January 14.
 
USD/JPY: Pair at 5-Year High

The color of the indicators for this pair is also predominantly green. However, unlike GBP/USD, this does not indicate a weakening of the dollar, but, on the contrary, its strengthening.

We wrote a week ago that Japan needs a weak national currency. Thus, the head of the Bank of Japan, Haruhiko Kuroda, has recently said that a weak yen would rather help the country's economy than harm it. According to the senior official, if the yen falls, it will support exports and corporate profits. And if you look at the USD/JPY chart, his words do not differ from the deeds: the pair updated its high on January 04 and rose to the point where it has not been seen since January 2017, to the height of 116.35.

According to ING Group experts, the growth will not stop there, and we will see the pair at a height of 120.00 by the end of the year. Morgan Stanley also prefers the dollar, expecting growth to 118.00. On the contrary, Goldman Sachs believes that the pair will fall to 111.00 by 2023.

The pair finished last week at 115.55. As already mentioned, despite the slight correction, most of the indicators on D1 point north. Among the oscillators there are 90% of those (10% of them are signaling the pair being overbought), the remaining 10% are colored neutral gray. Among trend indicators, 85% recommend buying, 15% - selling. Experts also agree with the indicators: 80% of them side with the bulls, 0% for the bears, 20% choose neutrality. Support levels are 115.50, 115.00, 114.25, 113.75, 113.20, 112.55 and 112.70. The nearest resistance level is 116.35.

CRYPTOCURRENCIES: A Full Crypto Winter? Or Temporary Freezes?


it is the middle of winter in the northern hemisphere of the planet Earth. And the weather on the crypto market is corresponding, below zero. Quotes are falling, and there is not even a hint of warming so far. Another cold wave arose after the news appeared on the night of January 06 that the US Federal Reserve is ready to raise the key interest rate earlier and at a faster pace than was expected. This became clear from the published minutes of the December meeting of the Federal Open Market Committee (FOMC).

Inspired by this news, the bears went on the attack again. Anti-government unrest in Kazakhstan added anxiety to investors. Recall that a part of the miners immigrated there after the ban on mining in China, as a result of which Kazakhstan took the 2nd place in the world in BTC production (TOP-3: USA - 35.4%, Kazakhstan - 18.1%, Russia - 11.23%). The Internet was cut off due to the unrest in Kazakhstan, which led to a significant decrease in the hash rate on the BTC network.

These two events caused the BTC/USD pair to break through support around $46,000, where the 200-day moving average was passing, and fell below $42,000. Bitcoin's Crypto Fear & Greed Index fell to the Extreme Fear zone, hitting 15 points out of 100, indicating panic reigning in the market. The Bitcoin Dominance Index fell to 39.65%, hitting the May 2021 lows. (Recall that it was 95.88% at the maximum in 2013). Naturally, the collapsed bitcoin pulled the entire crypto market along with it. If its total capitalization was $2.439 trillion on December 27, it lost almost 19% by January 7 and fell to $1.980 trillion, breaking through an important psychological level of $2 trillion.

It should be noted that the attack of bears on the eve of the next meeting of the US Federal Reserve on January 26 was predictable. Our weekly crypto news review quoted economist Alex Kruger as saying that “investors should be expected to exit risky assets ahead of the Fed meeting.” Which is exactly what happened.

The next line of active defense of the bulls, according to a number of experts, awaits bears in the $39,500- $41,900 zone. It is there, near the low of last April 12, is the range of high liquidity, according to the TradingView publication. It was not withdrawn even before the last wave of the asset's rally, when the price of bitcoin hit an all-time high.

Despite the fact that the crypto market is falling for the eighth week in a row, many experts and investors are hoping for the imminent arrival of the crypto spring. For example, Block.One co-founder, former actor and former US presidential candidate Brock Pierce is confident that bitcoin could reach $200,000 this year. Governments are printing excessive amounts of money, thereby fueling inflation, and this will be the main reason for BTC to take off. “I wouldn't be surprised if bitcoin trades for $100,000. It is quite possible that it can jump over $200,000 for a moment,” this influencer said optimistically.

Antoni Trenchev, co-founder and managing partner of Nexo, a major cryptocurrency lender (more than $6 billion), heralds a stellar future for the main digital asset. “I think bitcoin will reach $100,000 this year, perhaps by the middle of this year,” he predicts.

The head of the investment company Ava Labs, John Wu, expressed the opinion in an interview with CNBC that the capitalization of the crypto market will exceed $5 trillion in 2022. According to Wu's forecast, digital assets have the potential to at least double their market value in the next year.

According to the head of Ava Labs, cryptocurrencies will be the only asset class that can withstand both the actions of the Fed and the record increase in inflation, which reached its maximum values in the US in almost 40 years in early December 2021. Wu also claims that the share of bitcoin will fall below 30% with the growth of the crypto market, although the price may exceed $75,000 per coin.

An interesting way to assess the prospects of the flagship cryptocurrency was proposed by analyst Benjamin Cowen. In his opinion, bitcoin has already bottomed out, although its decline may continue, somewhere up to $40,000. According to Cowen, it can be more revealing sometimes to value bitcoin not in the BTC/USD pair, but in comparison with other assets. As an example, he suggests looking at BTC paired with the S&P500 index. According to the expert, bitcoin has already reached critical support here, as “it is testing levels that were tested back in September”.

The experts of Glassnode are in solidarity with Benjamin Cowen, although they use completely different methods of market analysis. According to their estimates, the BTC market indicators paint a fairly positive picture, since an increasing amount of this asset is becoming illiquid. Glassnode examined the dynamics and the supply performance of bitcoin in its report dated January 03, 2022. The results showed that the growth of illiquid asset supply accelerated last year, which now accounts for 76% of the total. Glassnode defines illiquidity as moving BTC to a wallet with no history of spending. The liquid stock of BTC, which is 24%, is in wallets that regularly spend or trade coins.

The figures indicate that more and more bitcoin is being transferred to storage, which indicates an increase in accumulation. The reduction in highly liquid supply also hints that there is no need to expect a major sell-off or surrender to the bears in the near future.

It will not be long to wait until the Fed meeting on January 26. We will see then whether such estimates are right. In conclusion, we just recall the words of the aforementioned Benjamin Cowen.  “Anything is possible in the case of investment,” he writes. “All models can be wrong, although some can be useful...”


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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The third and final draw of the Super Lottery by the brokerage company NordFX took place on January 3. The lottery was launched nine months ago, in April 2021, and anyone could participate in it, it was enough to fulfill just a few simple conditions.

Interim draws were held every three months. Like the final one, they were held online, and all interested persons could follow them on the Internet. The videos of all the draws runs are available now on the company's official YouTube channel.

The final draw took place immediately after the New Year holidays, on January 03, 2022. And it drew a substantial amount of $60,000 divided by 30 prizes of $500, 10 of $1,000, 6 of $2,500 and 1 super prize of $20,000.

The winners are the holders of the following lottery tickets:

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According to the rules, the prize funds can be used by the lottery winner in trading or withdrawn from the account at any time by any of the available methods and without any restrictions.

Summing up the results of our super lottery, we would like to wish all its participants and all NordFX clients a Happy New Year. May luck always be with you in 2022. We wish happiness, health and prosperity to you and your loved ones!


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 brokerage company has summed up the performance of its clients' trade transactions in the last month of 2021. The services of social trading, PAMM and CopyTrading, as well as the profit received by the company's IB-partners have also been assessed.

Among traders, the best result of the month was shown by the holder of account No. 1045XXX from China, whose profit amounted to 33,105 USD and was received due to bitcoin transactions (BTC/USD). It is worth noting that the flagship cryptocurrency either fell or was in a flat for most of December, so it seems that it took a lot of effort to get such a significant profit. 

The second place in the top three most productive NordFX clients belongs to a trader from India (account No. 1583XXX), who earned 25,413 USD on gold transactions (XAU/USD) and British Pound (GBP/USD).

And finally, the third step of the podium is taken by another representative of China (account No. 1549XXX) with a profit of 22,256 USD, who traded the major forex pair, EUR/USD.

The NordFX passive investment services:

- while analyzing the CopyTrading showcase during 2021, we paid maximum attention to long-lived signals. And now we have decided to change “traditions” and pay attention to “startups”. These signals have appeared quite recently, which is why they can be classified as risky. However, the current profit/drawdown ratio makes them quite interesting: if not for short-term investments, then at least for careful monitoring. Since there are many such signals, we will form not TOP-3, but TOP-5 of them.

AURISTELA - the signal has existed since October 25, 2021. It brought a profit of 93.23% during these 65 days (in December - 39.53%) with a maximum drawdown of just over 35%. Almost all (99%) transactions have been made with gold (XAU/USD).

The next signal is called Hada. It started on November 20, 2021, a little more than a month ago. The total yield for this period was 27.74%, for December it was 14.72%, the drawdown was only 4.39%, the traded pairs were USD/JPY, XAU/USD, GBP/USD, EUR/USD.

Number 3 on the list is the Darto Capital signal, it is only 10 days old, while the capital gain due to transactions on the GBP/USD, EUR/USD, BTC/USD, XAU/USD pairs amounted to 32.79% with a drawdown of 4.80%.

And the TOP-5 startups are closed by two signals, which, judging by the life expectancy, set of tools and volume of transactions, belong to the same author. These signals are Sriniwas (lifetime 45 days, profitability during this time 23.22%, for December - 14.38%, drawdown 8.38%) and Rekha Dubey (lifetime - the same 45 days, profitability during this time 30.05%, for December - 21.16% , drawdown 8.80%). The traded pairs are XAU/USD, USD/JPY, GBP/USD, EUR/USD, BTC/USD, US500. Gold is the leader in both cases (more than 70% of the total trading volume), which is not uncommon. But the transactions with the stock index Standard & Poor's 500 (US500) can be seen as exotic. However, this tool took a little more than 4% in the basket of this trader.

- As for the PAMM service, we have repeatedly noted the manager under the nickname KennyFXPRO. This manager increased their capital by 65% on their KennyFXPRO-The Multi 3000 EA account in 11 months, with a fairly moderate drawdown - less than 16%. The arsenal of their trading instruments is quite diverse and includes such not very popular pairs as, for example, NZD/CAD, AUD/CAD and AUD/NZD.

The account TranquilityFX - The Genesis v3 also attracts attention among the PAMM accounts. It has existed for 272 days and has brought a profit of 45% with a drawdown of 16% during this time. The set of traded currency pairs on this account is similar to that of KennyFXPRO-The Multi 3000 EA, which suggests that the same trader is managing both accounts.

NKFX - Ninja 136 is very similar to the two previous accounts as well. Its lifespan is 172 days, the gain is 34%, the maximum drawdown is about 15%.

Among the IB partners, NordFX TOP-3 is as follows:

- the largest commission, 5,236 USD, was credited in December to a partner from Vietnam, account No.1371ХXХ;
- the next is a partner from China, account No. 1336xxx, who received 4,578 USD for the month;
- and, finally, a partner from India, account No.11570ХХХ, who received 2,904 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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We talked a week ago about what experts from the world's leading banks and agencies think about the behavior of the EUR/USD pair in the coming 2022. And the fact that we paid attention to it in the first place is quite logical: after all, this pair is the most traded on the Forex market, and the European currency itself leads by a huge margin in the formation of the US Dollar Index DXY, with 57.6%.

Recall that DXY was developed by the US Federal Reserve in 1973 and shows the ratio of the US dollar to a basket of 6 major world currencies. This basket includes euro (57.6%), Japanese yen (13.6%), British pound (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%) and Swiss franc (3.6%).

In our opinion, the economic situation in the world has changed quite a lot over the past almost half a century since the inception of DXY. And at least the Chinese yuan should have appeared in the basket. Therefore, below we will look at the prospects for both the currency pairs that form the dollar index: USD/JPY, GBP/USD, USD/CAD, USD/SEK, USD/CHF, and some other, AUD/USD, NZD/USD, EUR/GBP and USD/CNH.


USD/JPY: Japan Needs a Weak Yen

It is known that inflation, along with the recovery of the labor market, is one of the two main factors that central banks focus on in their monetary policy.

The positive GDP gap is also called the inflation gap, because it indicates that the growth of aggregate demand outstrips the growth of aggregate supply and accelerates inflation. This, according to the IMF, will be observed in the United States (+ 3.3%) and Canada (+ 0.8%) in 2022. And regulators will have to take active steps to tighten their monetary policy in order to contain inflation. And this, according to experts from the Dutch banking ING Group (Internationale Nederlanden Groep), will give the currencies of these countries, primarily the USD, an advantage over the currencies of those countries where GDP has negative gap. It is also called recessionary, since the excess of supply over demand is the path to deflation.

The recession gap has been observed since 2008 in Japan and is likely to repeat in 2022. That is why the policy of the Bank of Japan is one of the most dovish among the central banks of other countries, and the interest rate on the yen has been held at a negative level for a long time, minus 0.1%.

The head of the Bank of Japan, Haruhiko Kuroda, has recently said that a weak yen would rather help the country's economy than harm it. According to the senior official, if the yen falls, it will support exports and corporate profits.

ING Group believes that such a differentiation between the approaches of the US Federal Reserve and the Japanese regulator will strengthen the dollar's position against the yen. Their quarterly forecast for USD/JPY for this year is as follows: Q1 - 114.00, Q2 - 115.00, Q3 - 118.00 and Q4 - 120.00.

The French financial conglomerate Societe Generale estimates the probability that the pair will rise to 116.00 in the Q2 at 50%, and up to 118.00 - 25%. Experts bet the remaining 25% on a bearish scenario and the fall of the pair to 110.00.

Analysts from other leading global banks also prefer the dollar. However, unlike their colleagues from ING, a number of forecasts has the peak not at the end, but in the middle of the year. Barclays Bank's forecast looks like this: Q1 - 115.00, Q2 - 116.00, Q3 - 116.00 and Q4 - 115.00. The CIBC (Canadian Imperial Bank of Commerce) forecast paints a similar picture: Q1 - 115.00, Q2 - 116.00, Q3 - 115.00, Q4 - 114.00.

Reuters interviewed the largest banks represented on Wall Street and published the opinion of their experts regarding the values of the USD/JPY pair in the second half - late 2022. For the most part, forecasts point to a strengthening dollar: JP Morgan Q3 - 114.00, Amundi Q4 - 116.00, Morgan Stanley Q4 - 118.00. On the contrary, Goldman Sachs believes that the pair will fall to 111.00 in 2023.

 
GBP/USD: At the Crossroads of Three Roads

Regarding the future of the British currency, British investment Barclays Bank has taken a very patriotic stance. His strategists consider the pound to be highly undervalued and predict that the GBP/USD pair will return to the 2021 highs and rise to 1.4200 by the end of the year.

Unlike most investment banks, Barclays believes that the policy of the US Federal Reserve does not provide strong support for the US currency at all, and this will lead to its moderate depreciation. The Bank expects other central banks to take a more aggressive stance than the Fed, with higher interest rates, thereby limiting the attractiveness of the dollar. First of all, of course, we are talking here about the Bank of England.

As for the short-term outlook for the pound, Barclays’ analysts are more cautious here, as the impact of high inflation will neutralize the potential support from a slight increase in interest rates. In addition, concerns about the new wave of COVID-19 and the difficulties with the EU due to Brexit need to be considered. As a result, Barclays' quarterly forecast is as follows: Q1 - 1.3300, Q2 - 1.3700, Q3 - 1.4000 and Q4 - 1.4200.

Capital Economics, one of the leading independent research centers in the UK, took the opposite position. Its specialists, on the contrary, expect the pound to weaken, and refer to a combination of 1) weak economic growth, 2) slowdown in inflation and 3) slowness of the Bank of England. These three factors may lead to the fact that the regulator of the United Kingdom may raise the rate to only 0.5% in the coming months instead of 1.0%, and thus disappoint the markets.

But, in addition to the growth and fall of the British currency, there is a third scenario. ING Group analysts predict that the pound will be 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, the GBP/USD pair will move in a sideways trend: Q1-1.3300, Q2-1.3400, Q3-1.3400 and Q4-1.3400.


Other Currency Pairs 

- If Barclays Bank believes in its national currency, CIBC (Canadian Imperial Bank of Commerce) specialists are quite pessimistic about the future. In their opinion, the Canadian dollar may become weaker this year. “Markets overestimated the possible actions of the Bank of Canada in 2022,” says CIBC, “and underestimated the Fed in 2022. Recalibration will leave CAD out of favor with investors.” The bank's forecast for the USD/CAD pair is as follows: Q1-1.2800, Q2-1.2900, Q3-1.3000 and Q4-1.3000.

- Experts at HSBC (Hongkong and Shanghai Banking Corporation) believe that some currencies will still be able to hold their ground against the stronger US dollar, including the Australian dollar. HSBC believes that the Reserve Bank of Australia may take a more hawkish position, given the rather strong macroeconomic data.

- ING strategists do not exclude that the Australian dollar may benefit from undervaluation and being oversold either. However, taking long positions on the AUD/USD pair, in their opinion, still carries a high risk.

-In addition, according to ING experts, together with the euro (EUR/USD) and the Japanese yen (USD/JPY), the Swiss franc will also lag significantly behind the dollar (USD/CHF) in 2022 as well as Swedish Krona (USD/SEK).

- Barclays Bank's forecast for other currency pairs included in the palette of trading instruments of the brokerage company NordFX is as follows: EUR/GBP : Q1 - 0.87, Q2 - 0.86, Q3 - 0.85, Q4 - 0.84 | USD/CHF : Q1 - 0.91, Q2 - 0.90, Q3 - 0.90, Q4 - 0.90 | AUD/USD : Q1 - 0.75, Q2 - 0.76, Q3 - 0.77, Q4 - 0.78 | NZD/USD : Q1 - 0.73, Q2 - 0.73, Q3 - 0.73, Q4 - 0.73 | USD/CAD : Q1 - 1.23, Q2 - 1.22, Q3 - 1.21, Q4 - 1.21 | USD/CNH : Q1 - 6.35, Q2 - 6.30, Q3 - 6.40, Q4 - 6.50.


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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It is always interesting to know whose predictions came true and whose predictions did not. Exactly a year ago, we published forecasts given by experts from leading world banks regarding the EUR/USD rate for 2021, and now we can decide which of them was right and to what extent. Or, on the contrary, which one was wrong.



Last Year's Forecast: They Were Wrong after All

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. Colleagues from Citigroup were supported then by analysts at the Swiss bank Lombard Odier, as well as one of the world's largest investment companies, BlackRock.

As the pandemic raged on, this scenario began to prove its case. Since the last decade of March, the dollar began to lose ground, and the EUR/USD pair crawled up. Starting on March 22, 2020, from 1.0630, it met the new 2021 at 1.2300.

The Fed was in full swing implementing its monetary stimulus program on the eve of 2021, and the printing press was working at full capacity, filling the American market with new, unsecured dollars. There were no plans to curtail monetary stimulus and, moreover, to raise the interest rate.

Based on this and looking back at the dynamics of the dollar over the last three quarters of 2020, experts were making their forecasts for the coming months. Most of them were inclined to believe that money would actively flow to Europe in 2021, and the dollar would face a deep devaluation. True, different analysts assessed the depth of a possible fall in the USD differently.

 For example, one of the largest investment banks, Goldman Sachs, predicted a drop in the weighted USD rate by only 6%, and Morgan Stanley expected the EUR/USD pair to rise to 1.2500. (By the way, the figure of 1.2500 was also sounded in many other moderate forecasts).

But there were also those who predicted a catastrophic fall in the American currency. Prominent economists, Euro Pacific Capital President Peter Schiff and former Morgan Stanley Asia head and Fed Board member Stephen Roach estimated the likelihood of a dollar collapse in 2021 at 50%. At the same time, Roach believed that the devaluation of the dollar could reach 35%. A slightly smaller but also impressive devaluation of 20% was forecast by analysts at Citigroup. That is, in their opinion, now that you are reading this review, the EUR/USD pair should have been in the 1.4000-1.4400 zone.

The pair did start 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 the onset of summer, the country's economy was recovering, and confidence in the imminent tightening of the FRS monetary policy began to grow among investors. And this means a reduction in asset repurchases and an increase in the interest rate on federal funds in the long term. Investors began to recall the "bread" times of the summer of 2019, when the rate was equal to 2.25%, and not the current "beggarly" 0.25%.

The American currency went into steady growth (minor corrections do not count) after that, and is now completing 2021in the 1.1200-1.1300 zone. That is, it is very far from 1.2500, as had been predicted by respected experts. It's not even worth talking about 1.4000-1.4400.

 
What Experts Expect in the New Year

If the forecasts for the dollar for the past 2021 were more like obituaries, the prospects for the USD in the eyes of some experts look much more optimistic now. And all due to the fact that the US Federal Reserve, unlike the central banks of many other G20 countries, has actively embarked on curtailing its QE program, the US economy, including the labor market, is recovering well, GDP growth is projected at 5%, and now, according to the Federal Reserve, it is time to curb inflation. The fact that the interest rate will rise to at least 1.5% by the end of 2023 is now almost beyond doubt.

 In this situation, according to experts of the Dutch banking ING Group (Internationale Nederlanden Groep), the dovish position of the Central Banks of the EU, Japan and Switzerland, more tolerant of price increases, will cause their national currencies to fall significantly behind the dollar in 2022. ING strategists believe that the EUR/USD pair will fall to the 1.1100 zone in Q2 and Q4 of next year, and it will be even lower at 1.1000 in Q4.

 Analysts of one of the largest financial conglomerates in the world, HSBC (Hongkong and Shanghai Banking Corporation) are in solidarity with ING. “Our main argument,” their forecast says, “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. These two forces are likely to remain decisive and should support the gradual appreciation of the dollar in 2022.” HSBC analysts also believe that the trend of the EUR/USD pair will be downward, as the ECB does not plan to raise the key rate until the end of 2022.

CIBC (Canadian Imperial Bank of Commerce) specialists also side with the US dollar, marking the following route for the EUR/USD pair for the coming year: Q2 - 1.1100, Q3 - 1.1000, Q4 - 1.1000. The JP Morgan financial holding assessed the pair's prospects more modestly, pointing to the level of 1.1200. That is, in this case, we can already talk about a sideways trend.

 It should be noted that not all the authorities in the financial world are betting on the strength of the dollar. Many analysts have taken the opposite position and, on the contrary, expect a weakening of the US currency “In 2022, - writes FXStreet, - the Federal Reserve System may return to dovish positions that will put pressure on the dollar.”

 Barclays Bank already considers the dollar to be highly overestimated. Therefore, it is expected to depreciate moderately against the backdrop of rising risk appetites and commodity prices, caused by the recovery of the global world economy and cooling inflation. The Barclays scenario written for EUR/USD looks 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, Wells Fargo, as well as Europe's largest asset management company Amundi.

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

Goldman Sachs strategists call the same goal of 1.1800. Although, in this case, this can be considered a success for the US currency. The fact is that an earlier forecast of this investment bank pointed to a much higher mark of 1.2500. 

Amundi believes that the Fed “has little to do to surprise market expectations” and, although a moderate normalization of monetary policy “will remain generally positive for the dollar” by the end of the year, the pair will reach 1.1400.

The most unexpected forecast was given by the strategists of the Wells Fargo investment institute. They just named a wide range from 1.1000 to 1.1800. And it is quite possible that this prediction will prove to be the most correct one.

 There is such a proverb, “Man believes, and Life has”. Its meaning is that human plans, even the most thoughtful ones, are imperfect and changeable. Life, however, puts everything in its place over time. So we will only be able to understand at the end of next year who of the influencers was right. In the meantime, on the eve of the new year, we wish you success in your work, financial well-being, good health and excellent mood. Happy New Year!

***

In the next review, in a week, we will tell you what experts think about the future of the Japanese yen (USD/JPY), the British pound (GBP/USD), the Canadian (USD/CAD) and the Australian (AUD/ USD) dollars, Swedish kronor (USD/SEK), Swiss franc (USD/CHF) and Chinese yuan (USD/CNH). 


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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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CryptoNews of the Week


- After the mining ban in China, local bitcoin miners still generate up to 20% of the total hashrate of the cryptocurrency network, CNBC reports with reference to experts.
One of the miners, who identified himself as Ben, told the TV channel how local industry players work illegally. He has been mining since 2015 and has 6,000 devices. After the repressions started, Ben distributed equipment across multiple sites so as not to show too high power consumption. Ben installed 1000 units throughout the country, wherever he could get the capacity. And 5,000 miners are connected directly to two small hydroelectric power plants in Sichuan province.
He explained that mining is being monitored for suspicious traffic by one of the largest telecommunications companies, China Telecom, which transmits information to the government.
 
- Regulatory clarity and an influx of institutional capital are needed to continue the growth of the cryptocurrency market, and 2022 "promises to be interesting for the industry." This opinion was expressed by one of the partners of the investment company The Spartan Group known as SpartanBlack.
“Investors have asked me repeatedly in the past few weeks when the crypto winter is coming,” he writes. "The last three crypto winters have traumatized the collective psyche of investors so much that everyone has become cautious after the powerful year 2021." According to the observations of the financier, many cryptocurrency holders took profits after each strong upward price movement. Therefore, there was no FOMO (Fear of Missing Out) and no parabolic movement of quotes, as in the previous three phases of the bull market.
The expert expressed the opinion that a powerful catalyst is needed for a parabolic price movement: for example, the introduction of crypto-friendly rules by American regulators. This will open up access to digital currencies for large financial institutions.
 
- Investor interest in existing crypto projects will continue in 2022, and exchange operators and data providers will benefit the most. This forecast was given by Larry Cermak, an analyst and vice president of The Block.
In his opinion, the market will continue to grow, but it will become more thoughtful. And the focus will be on Layer 2 protocols enabling faster and cheaper transactions on top of blockchains. The key to this will be the existence of decentralized applications.
 
- Co-founder and CEO of Kraken exchange Jesse Powell had previously predicted bitcoin would rise above $100,000 by the end of the year. Now he does not exclude a further decline in the cryptocurrency market. Powell said in a conversation with Bloomberg that he believes the onset of a new crypto winter is possible and that the bitcoin market has historically been characterized by cyclical behaviour, with halving as its starting point.
That being said, Powell believes that if bitcoin falls below $40,000, investors will seize the opportunity to buy. “I think a lot of people see values below $40,000 as a buying opportunity. Personally, I was buying when the market approached $30,000 a few months ago. I think many are just waiting for a reliable minimum," the Kraken CEO said.
 
- Founder of the investment company Bridgewater Associates, billionaire Ray Dalio, called traditional currencies a problem asset in a comment to Yahoo Finance. “Most investors consider fiat money to be the safest investment. And I think this is the worst investment,” he said. According to Dalio, you should not judge the profitability of your assets in nominal terms, but you need to make an adjustment for inflation. So, investors lost 4-5% due to the inflation of the US dollar in 2021. 
Dalio also admitted that he invested in ethereum, but did not give an exact figure, he only said that he holds part of the portfolio in cryptocurrencies in order to diversify. “I see them as alternative money. It is impressive that digital currencies have lasted 10-11 years: they have not been hacked and they have a level of acceptance. "
 
- An American private National Bureau of Economic Research published a study that claims that 10,000 accounts, or 0.01% of all bitcoin holders, own 5 million BTC, or 27% of all coins in circulation (18.9 million). This suggests that bitcoin is not as decentralized as people think. “Despite 14 years of existence and the buzz it has made, it is still a very concentrated ecosystem,” said Professor Antoinette Shoar of the MIT Sloan School of Management.
According to the founder of Quantum Economics, Mati Greenspan, a significant part of the BTC turnover is still controlled by the anonymous creator of bitcoin Satoshi Nakamoto. “Satoshi's own coins alone account for more than 5%,” Greenspan told Cointelegraph.
 
- Cryptocurrency analyst Justin Bennett spoke about the possible exit of bitcoin from the correction phase and the return of the bullish trend. After retesting the Dec 4 lows close to $40,000, he said, bitcoin could form a double bottom structure and then rally to above $60,000.
Bennett continues to give bitcoin a bullish outlook, even if it plunges below the important psychological level of $40,000. “I’m not against BTC falling below $40,000,” he says, “although many believe that in this case, we may face a bearish market. Yes, we will lose support for the December 4 low, but everyone wants to see higher highs. Even if the retesting of the $35,000 level happens, you need to understand that you could already see a similar situation at the beginning of 2021."

- Cryptanalyst and trader Benjamin Cowen told his 663,000 YouTube subscribers what he thinks ethereum will have in 2022. To do this, he looked at the consolidation phases in 2016 and 2017, which preceded massive upward breakouts. Cowen noted that the leading altcoin is likely to have a combination of the two phases in the near future.
The analyst believes that the ethereum consolidation could last until mid-2022, but the likely end result will be a breakout. “I believe ethereum will hit record highs in 2022 and may continue to grow in 2023, but it’s hard to count on at the moment,” he says. “I imagine the sideways movement will continue for a while, especially with bitcoin looking somewhat weak at the moment,” continues Cowen. “I don’t know how high ETH can go up afterwards. I think $10,000 is a reasonable goal, we could even reach $20,000. "
 
- Michael van de Poppe, trader at the Amsterdam Stock Exchange, has released another review in which he talks about what will happen in the cryptocurrency market in the coming months and years.
The analyst believes that bitcoin will still bottom in the $40,000 area in the winter, after which it will go up again. From Van de Poppe's point of view, the main sign that the bullish cycle has not yet reached its top is the fact that we have not yet seen a phase of euphoria in the market, and we are not currently seeing massive selling from long-term coin holders. This means that we are in the middle of a bullish cycle.
“I think bitcoin will copy the rally that was seen in 2020 and 2021,” said the famous trader. According to this scenario, the vertical take-off of 2020 and 2021 will repeat in the Q1-2 of 2022, ending at around $530,000. After that, there will be a long bearish market until a new bullish phase in 2024. This bearish market may coincide with the global economic crisis.
But there is another scenario as well. It suggests that bitcoin remains “relatively calm” with ethereum as the key trigger. In this case, periods of bitcoin growth will be interrupted by periods of consolidation. The growth of the main cryptocurrency will not be as pronounced as in the first case, and it will reach "only" the height of $100,000-120,000 in 2022.


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EUR/USD: Old News from the Fed And the ECB

The past week was the week of the Central Banks. The US Federal Reserve met on Wednesday, December 15, for the last time this year, the ECB and the Bank of England on December 16, and the Bank of Japan at the end of the working week, on Friday, December 17.

There is a trading model, FIFO: short for “first in, first out”. So, we will follow it, and we will begin to consider the results of the meetings in order in which they took place.

The first, as already mentioned, was the meeting of the FOMC (Federal Open Market Committee) of the US Federal Reserve. Some investors expected any radical decisions from it, and the rhetoric of representatives of the Federal Reserve on Wednesday was more hawkish than expected. This pushed the EUR/USD pair towards the lower limit of the three-week side channel. However, having reached the level of 1.1220, it turned around and the dollar began to lose ground.

The market realized that, in fact, almost all parameters of the monetary policy remained unchanged. Only the quantitative easing (QE) program was revised: the rate of reduction in asset purchases increased from $15 billion to $30 billion per month. The program can be completely closed in March-April 2022.

The outlook for the labor market was slightly improved but was accompanied by concerns about the possible emergence of "new virus variants". Core inflation in 2022 may also be slightly higher: not 2.3%, as previously expected, but 2.7%. Inflation for 2023 is projected to grow by only 0.1%, and it will remain unchanged in 2024.

According to the Financial Times, despite aggressive statements, the Fed still considers inflation a temporary phenomenon, and expects to return it to the target range within two years, gradually raising federal funds rates.

The key interest rate was left unchanged at 0.25% at the last meeting. As for the regulator's plans for next year, if it was about two or three rate hikes earlier, the Fed's dot chart showed that there should be three of them now. But this is just a declaration of intentions that can be realized if the macroeconomic situation develops as expected by the regulator.

In general, all statements of the American central bank were devoid of any specifics this time. Markets learned what they already knew before. Therefore, their reaction was appropriate: the EUR/USD pair turned around and went north. Having passed 140 points on Thursday, December 16, it was already at the upper border of the side channel, at the level of 1.1360.

(Of course, this was not without the help of the pound, which, thanks to the decision of the Bank of England, put a lot of pressure on the dollar. We will talk about this in more detail below).

The results of the meeting of the European Central Bank did not surprise investors either. Like the Fed, the European regulator also raised its inflation forecast for next year. And it also considers it a temporary phenomenon. It declares this openly though and does not consider it necessary to fight it now. It was announced Once again that the refinancing rate will remain at the current level until inflation reaches the target level of 2.0%, at which it will remain for a long time. As a result, the “main” result of the meeting was the statement of the head of the bank, Christine Lagarde, that “it is very unlikely that we will raise rates in 2022”. And this was already known to everyone.

The dovish position of the ECB did not allow the EUR/USD pair to rise above the borders of the side channel, and anxiety about the Omicron strain pushed it sharply down, and it ended week trading session at the level of 1.1238.

As for the coming week, it is pre-Christmas. And seven days after Christmas, it's New Year's Eve. In the absence of large players, the market these days is quite thin, liquidity is low, which can be fraught with all sorts of surprises. This is increased volatility, gaps with serious gaps in quotations, and what traders call the “Santa Claus Rally”. Although, of course, the opposite option is also possible: with "lazy" movement of pairs in a narrow range.

As for the experts, 50% expect further strengthening of the US currency and the fall of the EUR/USD pair, 30% are betting on the growth of the euro. The remaining 20% have taken a neutral position.  Among the oscillators on D1, 80% point to the south (although 15% of them are in the oversold zone), 10% point north, and 10% point east. 100% of the trend indicators side with the bears.

Resistance levels are in the zones and at the levels 1.1265, 1.1300, 1.1355, 1.1380, 1.1435-1.1465 and 1525. The nearest support level is 1.1225, then 1.1185 and 1.1075-1.1100

The economic agenda of the year is practically exhausted, and no extra-important news is expected in the coming week. As for the reasons for breaking the trend or increased volatility, we can note the publication of annual data on US GDP on Wednesday December 22, and data on orders on capital goods and durable goods published by the U.S. Census Bureau the next day, December 23.

GBP/USD: The Bank of England's First Step


We noted in the previous review that the No.1 task for the GBP/USD bulls is to overcome the key resistance in the 1.3285-1.3300 zone. And we predicted that if the Bank of England did raise the interest rate on December 16, it would not be a problem. This is exactly what happened.

While the Fed and the ECB are only swinging, the Bank of England has moved to attack rising prices. After inflation in the UK rose to 5.1%, reaching a 10-year peak, the regulator raised the rate for the first time in three years from 0.1% to 0.25%. The decision was made despite the worsening epidemiological situation due to the new Omicron coronavirus strain. However, according to the head of the Bank of England Andrew Bailey, it is more important to curb the price pressure on the economy and society.

Of course, the rate hike by 15 basis points cannot be called significant, but, most importantly, the first step has already been taken, and the market expects the second rate hike in February.

It is difficult to say why many financial publications write that the current decision of the Bank of England came as a complete surprise. If you look at our previous forecast, 40% of experts predicted a rate hike and, as a result, the subsequent strengthening of the pound.

But the British currency failed to consolidate the victory. Having risen on Thursday December 16 to the high of 1.3373, the GBP/USD pair turned sharply and went down. Investors began to sell off the pound due to growing concerns about Omicron. Risk aversion contributed to the strengthening of the safer dollar and, accordingly, dealt a blow to the stock indices and quotes of the euro and the British pound, which ended the five-day period at 1.3235.

The experts' forecast for the coming week looks rather pre-holiday, that is, uncertain. 35% of them side with the bulls, the same number side with the bears, and the remaining 30% prefer not to take sides. Among the oscillators on D1, the situation is similar: 30% of them indicate buying, 45% are selling, and the remaining 25% advise to take a break and do nothing for now. The trend indicators have a fundamentally different mood: 100% are colored red.

The supports are located at 1.3210-1.3220, then 1.3170-1.3190, 1.3135, 1.3075. In case of a breakout of the latter, the pair may fall down to the horizon of 1.2960. Zones and resistance levels - 1.3285-1.3300, 1.3340, 1.3370, 1.3410, 1.3475, 1.3515, 1.3570, 1.3610, 1.3735, 1.3835.

There will also be little macro-statistics important for the pound next week. Of particular interest are the UK GDP data for the Q3, which will be released on Wednesday, December 22. But the markets will focus on the situation with the spread of the new COVID-19 wave.

USD/JPY: The Sideways Trend Continues

The one that is not afraid of risk aversion is the yen. On the contrary, it is only happy with this. Giving the previous forecast, the overwhelming majority of experts (80%) expected that with the help of the US Federal Reserve, the USD/JPY pair would go up and, perhaps, break the upper boundary of the 113.40-114.40 channel. This is exactly what happened: the dollar began to advance, and the pair was noted at the height of 114.25 on December 15. Then, due to the panic of investors, it managed to win back losses and found a local bottom, dropping to 113.13, and the final chord sounded in the center of the weekly trading range: at the level of 113.70.

It is difficult to predict what will happen with Omicron and how the situation will affect the panic in the markets. So far, the US currency is leading with a slight margin in the struggle between the yen and the dollar: 55% of analysts have voted for the growth of the USD/JPY pair, 45% for its fall.

The readings of technical indicators just confirm the sideways movement of the pair along the horizon 113.50 for almost 10 last weeks. Among the oscillators, 30% look south on D1, 35% remain neutral, and the remaining 35% look north. Among trend indicators, green has a slight advantage, 60% to 40%.

Support levels are 113.20, 112.70, 112.00, 111.60 and 111.20. Resistance levels are 114.00, 114.25, 115.00 and 115.50.

And now the promised information about the meeting of the Bank of Japan, which, it seems, is not at all interested in strengthening its currency. And although the regulator reduced the volume of emergency financing related to the pandemic on Friday, December 17, it, as expected, left the interest rate unchanged, at the previous negative level, minus 0.1%.

The bank retained its ultra-soft policies and measures to support small businesses, and its head Haruhiko Kuroda said at the press conference that a weak yen would rather support the Japanese economy than harm it. According to the official, if the yen falls, it will support exports and corporate profits. So we can confidently say that the monetary policy of this regulator will remain one of the most dovish in the foreseeable future.

CRYPTOCURRENCIES: Everything Is Complicated: It will be Either Winter, Or Spring Straight Away

Things are ambiguous in the crypto market. The total capitalization has remained almost unchanged over the past 7 days and amounts to $2.270 trillion ($2.215 trillion a week ago). The Crypto Fear & Greed Index made only a small step up from 24 points and shifted from the Extreme Fear zone to the Fear zone, up to 29 points.

In this situation, some experts hope for the recovery of the upward trend of major coins, while others, on the contrary, predict a further fall. And then the end of 2017 comes to mind. Then, having conquered the $19,270 high in December, bitcoin collapsed instead of breaking above the iconic $20,000. It was already at $5,900 at the beginning of February 2018, losing 70% of its value and plunging investors and crypto enthusiasts into a state of deepest depression. And then long months of expectations and hopes followed, dubbed "crypto winter". The first hints of warming appeared only in March 2019, and the real crypto spring came a year later, in March 2020.

It isprecisely the possible onset of a new "ice age" that pessimists are talking about. We have already quoted renowned investor and economist Louis Navellier. According to him, a large bubble has been inflated in the stock market, which could lead to a strong correction of risky assets, as a result of which bitcoin could fall to $10,000. Navellier, as well as another specialist, legendary trader and techno-analyst Peter Brandt, warned investors that a dangerous “double top” pattern is observed on the chart of the first cryptocurrency. “A fall below $46,000 (200-day moving average) will be a bearish signal,” he writes. “Bitcoin must fall to $28,500 to complete the double top figure, and such a decline may indicate a fall below $10,000.”

According to Nikita Soshnikov, director of Alfacash crypto service, the market will face a long period of depressed sentiment if the double top pattern is confirmed. However, “there is no question of bitcoin for $5,000 or even $15,000,” the expert reassures. “You can simply forget about such cryptocurrency prices. But it may well fall below $40,000 and stay at this level for several weeks. I even admit a decline in the rate to $35,000 but going below this mark is unlikely”.

According to Michael van de Poppe, creator of the Material Indicators analytical resource, bearish sentiment still prevails among whales. "They haven't bought a single drawdown since early October," he says, "and have only been selling lately." And if you look at the chart of the past two weeks, you can clearly see how the bears are trying to push the BTC/USD pair below the $46,000 zone, where the 200-day moving average passes.

At the time of writing, the struggle continues. It seems that the initiative returned to the bears at the end of the working week. The markets were hit by another wave of panic caused by the Omicron coronavirus strain, and the sale of risky assets, including cryptocurrencies, began. The pair dipped to $45,525 late on Friday, December 17 but then rallied back to $46,500. According to IntoTheBlock specialists, BTC has a lot of chances to fall to the $43,000 zone in such a situation. It is only at this level that the coin will be able to find the local bottom. About 344,000 wallets purchased 395,000 coins at prices in the area of this support. It is these investors who must prevent further pullback so as not to go into the red.

A slightly different support zone is emerging based on the analysis of the order book of the Bitfinex exchange. Its data indicate that a significant amount of orders to buy bitcoin was placed in the range of $44,500-$46,000.

Christmas and New Year are still kind and happy holidays. Therefore, on their eve, we would like to complete the forecast on a more or less positive note. The appearance of a “double top” pattern on the chart, according to a number of experts, does not at all mean that it will eventually be fully formed and that the market will go into a deeper correction.

The analytical department of Bestchange believes that despite the high risks of continuing the local fall, the main cryptocurrency is able to go up powerfully in the medium term. “The situation is extremely ambiguous today, but mid-term forecasts until mid-2022 are still positive. Bitcoin needs to lose at least half of its capitalization and securely gain a foothold at levels below $28,000-30,000 in order to abandon most positive scenarios. Until this happens, the hope for $100,000 continues to be relevant,” Bestchange believes.

Weiss Crypto rating agency also points to this magic figure. Despite the protracted correction, it still adheres to the optimistic scenario. Agency analysts support the forecast of colleagues from Bloomberg, who previously announced a high probability of a coin breakthrough to $100,000 in 2022.

The chances of reaching this psychological mark exceed the risks of a further fall, according to the Weiss Crypto review. Against the backdrop of the confrontation with China, the United States will accelerate the legalization of the crypto sphere, which will positively affect the value of digital currencies.

The authors of the study emphasize that cryptocurrency will be the main beneficiary of the fall of the stock market in the context of tightening the monetary policy by the Fed. Investors can abandon stocks in favor of digital currency as a hedging tool. In addition, the decline in the yield on US Treasury bonds may also have a positive effect on the quotes of BTC and ETH.


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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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EUR/USD: Ahead of the Fed and ECB Meetings

We titled this section of the review “Employment and Inflation Decide Everything” last week. It is these two parameters that determine the monetary policy of central banks in the current situation. The next meeting of the US Federal Reserve will take place on Thursday, December 16, and the markets expect the regulator to speed up the procedure for curtailing incentives, and, perhaps, even increase the interest rate. Undoubtedly, these decisions will be influenced by the macro statistics released in recent days.

The report from the US labor market published on December 09, looks pretty good overall. The number of initial applications for unemployment benefits was expected to grow by 3,000, but it fell by 43,000 to 185,000 instead. This is the minimum in more than half a century, since 1969. On the other hand, the situation with repeated applications turned out to be worse than forecasted: their number increased by 38 thousand  instead of falling by 72 thousand. But if we sum up both indicators, we get a reduction in applications by 5,000, which confirms the trend towards the recovery of the labor market. Moreover, the number of open vacancies has grown by 431 thousand: there is already a shortage of labor in the United States.

As for inflation, the higher it is, the greater the chances that the Fed will begin to tighten its monetary policy even faster. And we are talking not only about reducing the repurchase of assets, but also about raising the key rate, which can lead to a further strengthening of the dollar.

Inflation in the United States has currently reached record levels in more than forty years and, judging by the data released on December 10, continues to grow. The consumer price index (CPI) rose to 6.8% on an annualized basis in November from 6.2% in October. As for the core index (Core CPI), it was 4.9% YOY, which is also higher than the previous value (4.6% in October). And the market will be now waiting to see how the Fed will react to these numbers at the upcoming meeting. The head of this organization Jerome Powell and his colleagues convinced investors earlier of their readiness for aggressive monetary restrictions.

About 70% of Financial Times experts believe that the return of monetary policy to the pre-Covid level will proceed quite smoothly, and the interest rate will reach 1.5% by the end of 2023 (it is 0.25% now). At the same time, only 10% of the surveyed analysts expect that the first stage of the rate hike will occur in the Q1 of 2022, 50% are betting on the Q2. As for the complete curtailment of the $120 billion quantitative easing (QE) program, more than half of the respondents believe that this will happen by the end of March of the coming year.

The next meeting of the European Central Bank will be held on the same day as the Fed meeting on Thursday, December 16. We have already written that, unlike the Fed, the ECB plans to take its first step in this direction only in 2023. It will calmly watch the record price increases in the Eurozone countries until then. But there are chances that the European regulator will nevertheless decide to accelerate, following the example of its overseas colleague, and turn from a dove into a hawk. This will be a pleasant surprise for the EUR/USD bulls. And this cannot be ruled out, especially since the hawkish statements of such authoritative officials as Isabel Schnabel are beginning to sound from the depths of the ECB.

This member of the Bank's Governing Council said the other day that asset purchases were an important tool during market shocks and recessions, but the balance of QE advantages and disadvantages deteriorates during the period of economic growth, increasing the risks of financial instability. And the market reacted by albeit short-term, growth of the European currency even to this, in general not binding statement of Mrs. Schnabel.

In anticipation of the Fed and ECB meetings, the EUR/USD pair revolves around Pivot Point 1.1300 for the second consecutive week. This time, it completed the five-day period near this line at 1.1316. Among experts, 75% expect further strengthening of the US currency, 20% are betting on the growth of the euro. The remaining 5% have taken a neutral position.

But the two-week sideways trend causes confusion and discord among the indicators on D1. As for trend indicators, 60% are colored red, 40% are green. As for oscillators, 40% point to the south, 30% to the north and another 30% to the east. Resistance levels are located in the zones and at levels 1.1355, 1.1380, 1.1435-1.1465 and 1525. The nearest support level is 1.1300, then 1.1265, 1.1225, 1.1185, then 1.1075-1.1100

As for the events of the coming week, in addition to the meetings of the Central Banks and subsequent comments of their management, the release of statistics on retail sales in the US on Wednesday December 15, as well as the publication of data on business activity in Germany and the Eurozone on December 16 should be noted. In addition, a meeting of the European Council will take place on Thursday and Friday.

GBP/USD: Ahead of Fed and Bank of England Meetings

December 16 will bring a lot of excitement to traders: in addition to the Fed and the ECB, the Bank of England will also make a decision on further monetary policy and interest rates on this day. The value of the business activity index in the UK services sector Markit will become known the same day. In addition, data on unemployment will be released on Tuesday December 14 and inflation in the UK consumer market on Wednesday 15 December.

The pound weakened last week after the UK government introduced new quarantine measures due to a new strain of COVID-19. According to statistics, the number of infections with the Omicron strain doubles every two to three days. Simple calculations show that with such dynamics, the number of infections may exceed 1 million by the end of the month (10.6 million cases have been recorded in the country since the beginning of the pandemic). The situation is of concern for investors, and therefore they do want to receive information from the Bank of England whether the Omicron coronavirus strain has influenced the plans to curtail the stimulus program.

The bulls for the GBP/USD pair were not pleased with weak macro-economic statistics, which turned out to be worse than forecasted. Also, the pound continues to be under pressure from the consequences of Brexit and significant disagreements between the EU and the UK over the Northern Ireland Protocol, due to which, according to British officials, the country is faced with a shortage of goods and supply disruptions.

At the same time, 40% of analysts still hope for the pair to grow. But if the Bank of England does not raise rates again, their hopes will melt like the morning fog over London. And given the government's position on quarantine, the regulator is highly likely to leave the rate unchanged at least until February 2022. The majority (60%) of the experts vote for this outcome of the meeting.

Pending regulatory decisions, the GBP/USD pair completed the session in the same way it traded a week ago: in the 1.3265 zone. However, despite this, 75% of the trend indicators on D1 still support the bears. Among the oscillators there are 80% of them, the remaining 20% turned upward.

Task No.1 for the bulls is to overcome the key resistance in the 1.3285-1.3300 zone. And this will not be a problem if the Bank of England does raise the interest rate on December 16.  Subsequent resistances are located at levels 1.3360, 1.3410, 1.3475, 1.3515, 1.3570, 1.3610, 1.3735, 1.3835. The nearest support is located in the 1.3210-1.3220 zone, followed by the levels 1.3195, 1.3160, 1.3135, 1.3075. In case of a breakout of the latter, the pair may fall down to the horizon of 1.2960.

USD/JPY: The Yen Holds Defense. It holds it so far


If the EUR/USD pair revolves around 1.1300 for the second week, USD/JPY does the same, only around 113.30.  The risk appetites that returned to the market and pushed up the stock indices, could not have any significant effect on the Japanese currency, which was supported by the statement of the member of the Board of the Bank of Japan Hitoshi Suzuki. He said commenting on the COVID-19 situation that if the US Federal Reserve starts to cut QE and raises interest rates faster than expected, the Bank of Japan could also raise long-term rates. According to Hitoshi Suzuki, rates may rise as soon as the coronavirus uncertainty disappears, which will help the Japanese economy continue to recover. It is certainly not worth expecting that the increase will take place at the next meeting of the regulator on Friday, December 17. The rate is most likely to remain at the previous negative level of -0.1%.

The deputy head of the Bank Masayoshi Amamiya tried to add optimism to investors. The country's economy was in stagnation, but, according to the regulator's calculations, it should recover during 2022, even despite the Omicron strain. The official’s comments came after the very weak data on Japan's GDP for the Q3 were released on Wednesday, December 8. They showed a drop of 0.9% against the previous value of minus 0.8% and a positive forecast of +0.4%.

Giving the previous forecast, most experts expected the USD/JPY pair to make another attempt to return to the 113.40-114.40 channel. This is exactly what happened: the dollar began to advance, and it rose to the height of 113.95 on December 8, although then there followed a trend reversal a finish at the lower border of the channel, at 113.40.

As for the forecast for the coming week, 80% of experts believe that the pair will go up again with the help of the US Federal Reserve and, possibly, even break through the upper border of the 113.40-114.40 channel. The resistance levels are 113.70, 114.00, 114.40, 114.70, 115.00 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. Only 20% of analysts vote for the bearish scenario. The nearest support level is 112.55, then 112.00 and 111.65.

Among the oscillators on D1, 60% are still facing south, 30% remain neutral, and the remaining 10% have turned north. Trend indicators have a 50-50 draw.

CRYPTOCURRENCIES: Overnight Crash in the Thin Market

There is still no definite explanation why bitcoin fell below $42,000 on the night of December 04. However, it is worth paying attention to the fact that the fall of the crypto market took place together with the fall of the stock market and the flight of investors from risky assets. The reason for this was the news about the largest real estate developer in China Evergrande. The media reported that its founder was summoned to the government because of the possible bankruptcy of the company, which could create serious problems for the entire world economy.

Galaxy Digital Research analysts believe that is not the case. The triggers for the collapse, in their opinion, were the general nervousness due to the new COVID-19 strain Omicron and the statement by Fed Chairman Jerome Powell about a possible faster curtailment of the QE program.

Be that as it may but having set a record on November 10 at the height of $68,780, the flagship cryptocurrency is rolling down for the fifth week in a row. And the optimism of experts and investors also decreases along with its value.

Bitwise Asset Management Chief Investment Officer Matt Hougan believes that bitcoin is now unlikely to have time to update the highs and reach $100,000 before the end of 2021. “I think this level could be the goal for 2022,” said the top manager in an interview with Bloomberg. Growth should be driven by growing support from institutions, and for this, in his opinion, there are “fundamental driving forces”.

Louis Navellier, a famous investor and economist, believes that the “driving forces”, on the contrary, are directed downwards. A large bubble has been inflated in the stock market, which could lead to a strong correction of risky assets, as a result of which bitcoin could fall to $10,000.

Navellier recalled that a serious drop in the rate of the main cryptocurrency also followed during a similar correction in February-March 2020. This time, in his opinion, the situation could be even worse, and bitcoin could lose up to 80% of its capitalization. And this may be facilitated by the actions of the US Federal Reserve to tighten monetary policy.

“A fall below $46,000 (200-day moving average) would be a bearish signal. Bitcoin must fall to $28,500 to complete the double top pattern, and such a decline could indicate a drop below $10,000. This is an 80% decline and bitcoin has already shown similar behavior,” the investor said, referring to the end of 2017.

Recall that then, a prolonged fall followed after a dizzying rise to $19,270. It lasted about a year and was called the crypto winter, during which the BTC/USD pair lost almost 85%.

A sharp turn to the south occurred not only in 2017, but also in the second half of 2019. And, of course, one cannot but recall a very recent example: April-July of this year, when bitcoin quotes sank 55% in three months.

These bearish waves hit the pockets and wallets of speculators hard and made us talk about a possible complete and final collapse of the crypto market once again. 99bitcoins calculated: the year is not over yet, and BTC has already been predicted death 41 times. The opponents of the coin were even more active only in 2017 and 2018: the premature death of the asset was reported 124 and 93 times then.

The latter of the current obituaries is by economist Bill Blain. Blain calls bitcoin a Ponzi scheme incapable of fulfilling the function of money, and argues that cryptocurrency accelerates inflation. Moreover, unlike a number of other crypto critics, Blain also doubts the blockchain technology: “From time to time, I dig through the myriad of garbage that disguises itself as the genius of the blockchain, mathematics and computational logic underlying cryptography... This is 10% fascinating and 90% complete nonsense,” he writes.

Well-known analyst and trader Ton Weiss, unlike Bill Blain and Louis Navellier, believes that it is too early to bury cryptocurrency. In his opinion, bitcoin has a better chance of reaching a new all-time high this year  after the current collapse. The coin needs to gain a foothold above $53,500 for the bulls to seize the initiative. “I think it will be like a V-turn. We will not have another chance to buy bitcoin below $50,000,” Weiss believes.

If, under negative circumstances, the decline still continues, it will certainly attract the interest of long-term holders. Every time a pullback occurs, investors begin to buy out the fall in anticipation of a new rise in price, and do not allow the crypto market to fall into an uncontrolled collapse.

So large bitcoin holders (from 100 to 10 thousand BTC) have already bought 67,000 coins last week. Of course, this is not a lot. Therefore, there is no need to talk about a return to the bullish trend yet. On the contrary, the advantage is still in the hands (or rather, in their paws) of the bears who are trying to push the BTC/USD pair below the $46,000-48,000 zone, where the 200-day moving average passes.

At the time of writing the review (on the night of December 10 to December 11), the total capitalization of the crypto market is $2.215 trillion (minus 25% compared to the historical maximum of November 10). The Crypto Fear & Greed Index is still in the Extreme Fear zone at 24 points. But the bitcoin dominance index dropped to 39.88%, yielding more and more "territory" to its main competitor, ethereum, whose market share reached 22%. (For comparison, 71.86% for BTC and 10.63% for ETH at the very beginning of the year).

The ETH/USD chart shows clearly that ethereum is recovering significantly better than bitcoin after falling on December 04. And if the BTC/USD pair has grown by a little more than 55% over the past five months, the increase in ETH/USD was more than 130%.

The main driver of its growth in recent months has been the burning of coins for transactions on the network and the fact that the rate of their burning outstrips the rate of their production. The ethereum network has already burned more than 1 million coins since the activation of the London hard fork.

Rahul Rai, the manager of the cryptocurrency fund BlockTower Capital, believes that the versatility of the ethereum blockchain will be the main factor that will attract both developers and investors. He is confident that if ethereum manages to restart the global financial system, its market will be much larger than that of bitcoin in the future. The crypto millionaire predicts that it may be as early as mid-2022. ETH will be the first cryptocurrency in terms of capitalization.

Analysts of the American investment bank JPMorgan made a similar statement in April. In their opinion, bitcoin is a consumer commodity. It can compete with precious metals and be seen as a store of value, but it will give way to ethereum in the long run, which is the pillar of the cryptocurrency economy.

Director of Bitwise Asset Management Matt Hougan predicted an "explosion of activity based on ethereum" in his forecast for 2022 as well.  “Investors will look at Ethereum, Solana or Polygon. They are beginning to understand that cryptocurrency is more than just bitcoin,” says Hougan.

***

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EUR/USD: Employment and Inflation Decide Everything

Markets are now ruled by two factors: fear of the new COVID strain and monetary tightening by central banks. It is not yet very clear how dangerous the Omicron strain is and how it will affect the economy. Therefore, the main focus is shifting towards central banks and, first of all, the US Federal Reserve. Thus, 19 Reuters experts have named the difference in interest rates as the main market driver, while 15 have pointed to Omicron.

Fed Chairman Jerome Powell's speech in the US Senate on November 30 had a bombshell effect on the markets. And all because analysts and commentators saw a harsh hawkish attitude in his words. As a result, stock indices, Dow Jones, S&P500, Nasdaq, flew further down, while the DXY dollar index rushed up.

The dollar played back 147 points against the euro in less than an hour, lowering the EUR/USD pair from 1.1382 to 1.1235. However, then the markets calmed down as quickly and, in anticipation of data from the US labor market, the pair went up.

Inflation and employment: these two indicators are defining in the current policy of central banks.

The ECB continues to insist that the increase in inflation is temporary, so it makes no sense to take measures to contain it now. Although some people believe that the Bank's Governor Christine Lagarde's speech on December 02 hinted at an imminent tightening of monetary policy, however, nothing was said about specific steps. Although it would be possible to tackle this problem already. The data on producer prices released last week look frightening: their growth rates accelerated from 16.1% to 21.9% (against the forecast of 18.3%). These figures indicate that inflation in the Eurozone, which has already reached 4.9%, will not stop there and will continue to grow. As for the European labor market, the progress here ­is more than modest: unemployment fell by only 0.1%, from 7.4% to 7.3%.

Statistics from the US labor market look much better. The number of initial applications for unemployment benefits rose less than expected: to 222 thousand against the forecast of 245 thousand, and the four-week moving average of the indicator fell to the lows of March 2020. At the same time, the number of people receiving benefits for the first time since the beginning of the pandemic fell below 2 million, to 1,956 thousand. 

But the number of new jobs created outside the US agricultural sector (NFP) was only 210 thousand, which is significantly less than both the forecast (550 thousand) and the previous value (546 thousand). However, this fall does not look so dramatic against the background of the country's labor shortage. Suffice it to say that, due to a shortage of personnel, the number of laid-off people in the United States dropped to a 28-year low.

The unexpectedly low NFP data is unlikely to have a strong impact on the Fed's decisions. There are many reasons to believe that the Federal Reserve may accelerate the pace of curtailing the monetary stimulus (QE) program at its meeting on December 14-15. Cleveland Fed President Loretta Mester and her colleagues Mary Daley of San Francisco and Rafael Bostic of Atlanta actively support the idea of accelerating this process. And Randal Quarles, outgoing vice chairman of the Fed, considers such fiscal and monetary incentives harmful to the economy. In his opinion, they have inflated demand so much that it has exceeded the pre-pandemic level, and the high inflation is no longer temporary, but permanent.

Fed Chairman Jerome Powell and US Treasury Secretary Janet Yellen also believe that the time has come to drop the word "temporary". This means that the inflation forecast will be revised upwards, and the schedule for raising interest rates will become more intense.

Most likely, the difference in monetary policy between the Fed and the ECB will continue to put pressure on the EUR/USD pair, pushing it further down. 50% of experts agree with this forecast, while 35% of analysts have taken the opposite position. The remaining 15% vote for the sideways trend.

The trend indicators on D1 have a predominantly red color, these are 65%. But there is confusion and disparity among the oscillators: 40% of them point to the south, 35% to the north and another 25% have taken a neutral position.

Resistance levels are located in the zones and at levels 1.1380, 1.1435-1.1465 and 1525. The nearest support level is 1.1260, then 1.1235, 1.1185-1.1200, then 1.1075-1.1100.

As for the events of the coming week, it should be noted that the data on GDP of the Eurozone for the Q3 will be issued. Increased volatility can be expected on Friday, December 10, when the German and US CPIs, as well as the University of Michigan Consumer Confidence Index will become known. This indicator is an indicator of the US consumers’ confidence in economic growth and assesses their willingness to spend money.

GBP/USD: Back on the Bear Trail?

The behavior of the GBP/USD pair last week was similar to that of EUR/USD. It reacted similarly to Jerome Powell's speech in the Senate and to data from the US labor market, and as a result it ended the five-day week at 1.3225.

Concerns about Brexit remain the main factor of pressure on the pound. Irish Foreign Minister Simon Coveney said on December 03 that there are still significant differences between the EU and the UK on the application of the Northern Ireland Protocol. The politician added that there was no breakthrough in the negotiations, and that these differences are unlikely to be overcome before the end of this year.

The GBP/USD pair failed to gain a foothold above the 1.3300 horizon. According to analysts at Singapore's United Overseas Bank (UOB), the British currency may continue to decline in December, although it will be difficult for it to overcome strong support at 1.3195 (November 30 low). If successful, the pair will open the way to support at 1.3135. For the bulls, task No.1 is to overcome the key resistance in the 1.3300 zone. And if the Bank of England does raise the interest rate on December 16, this will not be a problem.  Subsequent resistances are located at levels 1.3360, 1.3410, 1.3475, 1.3515, 1.3570, 1.3610, 1.3735, 1.3835.

30% of analysts hope for the pair's growth in the near future, 45% expect it to fall further, and 25% have taken a neutral position. But the indicators on D1 definitely support the bears. 100% of trend indicators point to the south. The same could be said about oscillators, but 15% of them give signals that the pair is oversold.

USD/JPY: Yen Won't Retreat

The USD/JPY pair went beyond the trading range 113.40-114.40 at the end of November, and, as most experts expected (55%), continued to move south, reaching the local bottom at the level of 112.52 and having updated the seven-week low. This was followed by a trend reversal, several unsuccessful attempts to return the pair to the 113.40-114.40 channel and a finish at 112.80.

The yen is supported as a safe haven currency by investor fears regarding the spread of the Omicron coronavirus strain. However, now that the initial wave of panic has passed, this advantage over the dollar is gradually fading away.

It should also be borne in mind that Japan is in a difficult position because the country's debt to GDP ratio is too high. And according to a number of experts, it is necessary to adopt a new package of monetary stimuli, which will put additional pressure on the yen, in order to increase the pace of economic recovery.

Until that happens, UOB analysts believe the pair may retest the 1.1250 support, but the chances of breaking below are slim. If it does manage to do so, it will face the next obstacle in the 111.85-112.00 area. According to experts at Credit Suisse, the pair needs to rise above the 113.70-114.00 zone to implement the bullish scenario, and then overcome the resistance at 114.80. This will be a good start for a move to the five-year high of 115.52, which was recorded on November 24.

Most of the experts (55%) are currently on the side of the bulls, 25% side with the bears and 20% expect a sideways movement of the pair. 90% of the oscillators are still facing south, but a quarter of them are in the oversold zone, the remaining 10% have turned north. The ratio is 65% to 35% among trend indicators in favor of the reds.

The resistance levels are 113.40, 113.70, 114.00, 114.40, 114.70, 115.00 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. The nearest support level is 112.50, then 112.00 and 111.65.

As for macro-economic statistics, data on GDP of Japan for Q3 will be released on Wednesday December 08. This indicator is expected to move from a decline (minus 0.8% in Q2) to a modest growth of 0.4%.

CRYPTOCURRENCIES: Overnight Crash in the Thin Market


There were no significant changes on the crypto front throughout the working week. Bitcoin and ethereum, along with stock indices and investor risk appetites, even went up at the beginning of the week. But it was only a temporary respite. The cryptocurrency market went down during the night from Friday to Saturday, dipping by about 20%. The BTC/USD pair returned to levels ten weeks ago, falling to $41,620, while ETH/USD fell to $3,510. And this despite the fact that ethereum tried to renew its all-time high just three days before that, rising to the height of $4.771.

The true reasons for what happened are not yet clear at the time of writing the review, but it all looks like someone's speculative combination on a thin night market, when major investors are asleep ahead of the weekend days. This version is also supported by the fact that the quotes of the main cryptocurrencies jumped up within a few minutes after the fall. Bitcoin went up 15%, rising to $48,000. It is possible that it was those who were behind this drop that who replenished their stocks of coins very quickly at a "discount" price. Although, this is only a guess.

The President of El Salvador managed to take advantage of the drawdown of the flagship cryptocurrency. Nayib Bukele acquired another 150 BTC, increasing his wallet to 1,370 coins. True, at the same time he complained that he slept through the moment of the collapse for only 7 minutes, so he had to pay about $48,000 per coin.

At the time of this writing, on the afternoon of December 4, the total crypto market capitalization is at $2.2 trillion, and the Crypto Fear & Greed Index has shifted from the neutral center of the scale to the Extreme Fear zone, to 25 points mark (47 weeks ago).

According to Nigel Green, CEO of the consulting company deVere Group, investors should buy this cryptocurrency right now, as its rate will double in a year. “Panic is the right time to buy BTC,” Green said.

Mark Yusko, CEO of Morgan Creek Capital Management, who believes that investors should not be fooled by the daily fluctuations in the price of bitcoin, agrees with him. According to the financier, it's not that bitcoin is getting better over fiat currencies. They are getting worse than bitcoin. “There is a global race to the bottom,” says Martin Yusko. Therefore, BTC is an ideal savings asset in a world where governments are in a race to devalue their currency.

Much the same thought was expressed by Anthony Scaramucci, founder of SkyBridge Capital and former director of communications in the Donald Trump administration. “If you believe in long-term fundamentals like we do, then now is the time to buy. The volatility of bitcoin and other cryptocurrencies is knocking people out of the game. It also flushes out some of the leverage, which, in my opinion, creates a springboard for a good Q1," the financier explained, adding that not only fundamental factors, but also the monetary policy of the US Federal Reserve, indicate further growth in cryptocurrency quotes.

Time will tell whether these optimistic influencers are right or wrong. For example, cryptanalyst and trader Benjamin Cowen has recently argued that the value of bitcoin will not fall below $50,000. But it did. At the same time, we cannot but mention another negative signal for investors: option traders are betting on bitcoin's decline for six months for the first time since May. The price ratio for weekly, monthly and three-month contracts also shifted to the “bears” earlier this month.

And in conclusion of the review, a traditional and not very serious rubric of crypto-life hacks. We will tell you how some are trying to make money on cryptocurrencies. But at the same time, we strongly advise you NOT to follow their example.

Police in the Spanish city of Tarragona arrested a 33-year-old man and a woman who installed hidden miners on computers... in stores. The criminals infected at least 16 devices in electronics stores Mediamarkt and El Corte Ingles department stores. According to available information, the woman distracted employees and asked for help to start the laptop, which she allegedly bought in their store. Meanwhile, her companion was installing the Nicehash miner and the Anydesk program for remote access to computers on display sample laptops.

The new laptops running at full capacity have raised suspicion among consultants. Mediamarkt's CCTV cameras filmed the accomplices visiting the store three times, and the police were able to identify them from the video.

It is probably appropriate to cite here one more figure concerning the criminal mining of cryptocurrencies. According to the Cybersecurity Action Team experts, 86% of the hacked accounts on the Google Cloud platform were subsequently used for mining, and the software required for this was loaded on average 22 seconds after the hack.

In many cases, attackers gained access to accounts due to poor protection on the part of the users themselves. Therefore, dear readers, be as vigilant as possible.

***

Clients of the brokerage company NordFX continue to accumulate lottery tickets: the New Year's draw of this Super Lottery will take place soon. And the more tickets, the more chances you have to win one or more prizes ranging from $500 to $20,000.

This money will be useful to you, won't it?

It is very easy to participate. All the details are available on the NordFX website.


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.

[You must be registered and logged in to see this link.]

NordFX Brokerage company has summed up the performance of its clients' trade transactions in November 2021. 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 leader by the end of the month was a trader from India, account No. 1596XXX, who earned USD 207,329 during the month. Such a solid profit was made on transactions with a variety of currency pairs, primarily with the British pound: GBP/USD and GBP/JPY. Other trading instruments of the leader include EUR/NZD, EUR/AUD, and AUD/JPY.

- A client from Vietnam, account No. 1416XXX, occupied the bottom line with a result of 37,116 USD in the October TOP-3. A month later, in November, they improved their result more than four times, and climbed to the second step of the podium with a profit of 153,572 USD.

- The third place is taken by a trader from India, account No. 1560XXX, whose profit was obtained from transactions with GBP/USD and amounted to 56,254 USD.

The passive investment services:

- Two signals are currently highlighted in CopyTrading: USD Trading and GFS_FX. The first of them showed an increase of 408% in 43 days of life. 100% of transactions were conducted with the GBP/USD pair, which is favorite of many traders. Such a high result achieved in such a short period can attract many investors. However, the maximum drawdown of 47% indicates the need to be as careful as possible.

As for the second signal, GFS_FX, it looks less aggressive. It exists for a little more than six months (196 days) and brought a profit of 135% during this period. The bulk of transactions (more than 70%) is also related to the British pound: these are the GBP/USD, GBP/AUD, and GBP/JPY pairs. The maximum drawdown was 34%, so those wishing to subscribe to it should also be very careful.

The lifespan of these signals is rather short and is calculated in months. But, of course, there are long livers in the CopyTrading service. For example, signal MF989923. It has existed for about 7 years, and as a result, it showed an increase of 515%. The signal had serious drawdowns several times during this time, reaching 66%. However, this happened a long time ago for the last time, in March 2020. But trading has since become much less aggressive and less profitable.

- KennyFXPRO-The Multi 3000 EA account in 10 months with a fairly moderate drawdown, less than 16%.

Among the IB partners, NordFX TOP-3 is as follows:

- the first position is still held by a partner from Vietnam, account No. 1258XXX, whose commission in November amounted to USD 8,447;
- the next, with a slight lag, is also a representative of Vietnam, account No. 1371XXX, with a result of 7, 225 USD;
- and, finally, the third step of the podium is taken by a partner from India, account No. 1504XXX, who received 6,523 USD as a commission.


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.

[You must be registered and logged in to see this link.]

EUR/USD: Panic Named B.1.1.159

The past week can be divided into two parts: before and after Thanksgiving. Let us remind you that the day Thursday, November 25 was a day off in the United States. And since the lion's share of capital is controlled by banks and funds located in this country, the lull comes in financial markets around the world on this day.

So, what happened before November 25? And there was everything, as predicted by most experts. Divergence in the economic growth of the US and the EU, as well as in the monetary policy of the FRS and the ECB, the energy crisis in Europe continued to push the EUR/USD pair further down. The reanimation of the Brexit theme contributed to its fall. As a result, the pair reached a local bottom at 1.1185 on the evening of November 24. This was followed by holiday Thursday and… the markets woke up on Friday.

And they not just woke up but woke up panicked by the news that a new dangerous strain of coronavirus has been discovered in South Africa that may be insensitive to existing vaccines. WHO convened an urgent meeting, noting that almost 100 cases of infection with the new strain B.1.1.159, which has a "large number of mutations", have already been recorded.

Against the backdrop of this alarming news, investors' expectations for an early increase in the Fed's interest rate went down, and pessimism, on the contrary, rose. According to experts from CME Group, if the likelihood that the rate will remain unchanged until June 2022 was 18% on Thursday, it rose to 34% on Friday.

Compared to November 24, the yield on 10-year Treasuries dipped by almost 10%. Stock indices and cryptocurrency quotes flew down. The markets began to run away from risks. Investor panic and falling US Treasury yields helped EUR/USD bulls to raise the pair to 1.1321, where it ended the working week.

In fact, it is difficult to predict to which of the American or European economies the new wave of coronavirus may do more harm. According to ING Group analysts, it is now important to understand whether the new COVID strain has already reached Europe (which is geographically closer to Africa). This could further worsen sentiment in the Eurozone and put pressure on the euro.

The difference in the monetary policy of the Fed and the ECB will undoubtedly continue to influence the behavior of the EUR/USD pair. Several representatives of the European regulator have recently made it clear that the central bank intends to complete the Pandemic Emergency Purchase Program (PEPP) in March 2022. The pair barely reacted to these comments. But the meeting of the ECB Governing Council on December 2, dedicated to monetary policy, may become the main event of the coming week. Markets expect not just words and hints, but specific decisions on the timing of the completion of the emergency PEPP program and adjusting the volumes of the main Asset Purchase Program (APP), QE analogue. Moreover, the volume of APP can be increased to compensate for the folding of PEPP. It is also possible that the regulator will raise inflation forecasts for 2021-2023.

It is logical to assume that the Fed's hawkish policy and the dovish policy of the ECB will continue to push the EUR/USD pair south in the coming months. Goldman Sachs experts predict that the key USD rate will rise in June, September and December 2022, and the Fed will increase the volume of QE reduction to $30 billion per month starting from January. The rate may be raised twice more in 2023 and will reach 1.5%. The ECB, on the other hand, plans for 2023 to take only the first step. Until then, it will be easy to watch record price growth in the Eurozone countries.

However, it is possible that the December 02 meeting of the Governing Council of the European regulator will bring investors some hawkish surprises. Therefore, the most cautious of them will begin to close short positions in advance, fixing profits, which in the short term will lead to further growth in EUR/USD.

35% of experts who vote for the growth of this pair in the coming week agree with this development. The opposite position is taken by 55% of analysts who believe that the ECB will not make any significant changes to its monetary policy now. The remaining 10% vote for the sideways trend.

Indicators on D1 have a predominantly red color. There are 75% of them both among oscillators and among trend indicators. As for the oscillators, 15% give signals that the pair is oversold, and another 10% have taken a neutral-gray position. As for trend indicators, 25% changed from red to green by the end of the week.

Resistance levels are located in the zones and at levels 1.1300-1.1315, 1.1360, 1.1435-1.1465 and 1525. The nearest support level is 1.1300, then 1.1230, 1.1185-1.1200, then 1.1075-1.1100.

As for the events of the coming week, apart from the ECB meeting, the publication of numerous statistics on the consumer markets of Germany and the Eurozone should be noted. These data will be released on November 29 and 30, December 01 and 03. As for the US, we are expecting a speech by the head of the Fed, Jerome Powell, who held this post for a second term, on Tuesday, November 30, the ADP report on the level of employment in the US private sector and the ISM Manufacturing PMI will be published on Wednesday December 01. And investors traditionally wait for data from the American labor market on the first Friday of the month, including such an important indicator as the NFP: the number of new jobs created outside the US agricultural sector.

GBP/USD: Pound Rescue Is in the Rate Growth

The GBP/USD pair also followed the forecast of the overwhelming majority (75%) of experts until Friday, November 26, falling to 1.3275, the lowest point for the last 5 months. The last chord of the week sounded at 1.3350.

Concerns about Brexit remain the main factor of pressure on the pound. Lord David Frost, the UK minister responsible for implementing the EU deal, said that while there was a desire to find a negotiated solution to the Northern Ireland problem, the gap between the positions of the UK and the EU was very large. The British Government is therefore prepared to use article 16.

As a reminder, the Northern Ireland Protocol was signed two years ago as part of the treaty on the withdrawal of the United Kingdom from the European Union. According to London's statements, it was precisely because of the shortcomings in this document that the country faced supply disruptions and a shortage of goods. For this reason, the British government offered Brussels a new version of the protocol, which European officials saw with hostility.

As for article 16 of the current document, it allows either party to unilaterally take "protective measures" in the event that the protocol leads to "serious economic, social or environmental problems" that persist for a long time.

Fears about a new strain of COVID, which caused investors to flee from risks, are also unlikely to help the British currency. Yes, the GBP/USD pair grew slightly on Friday due to the general weakening of the dollar (the USD DXY index fell to 96.037). But the pound has long been considered a riskier asset than the dollar. And expectations about the increase in interest rates were revised by the market not only in relation to the American, but also the British currency.

Threats of recession and stagflation, combining weak GDP growth and high inflation, are very dangerous for the British economy. According to forecasts of experts from the Bank of England, the annual inflation rate will accelerate to about 5% by April 2022 and will decrease to the target level of 2% as late as by the end of 2022.

These are very high rates, and shortly before the meeting of the Bank of England on November 4, its head Andrew Bailey said that with such indicators, it may be necessary to raise interest rates more quickly than planned. The markets believed that the regulator would raise the key rate in November, and... they were deceived. The Bank of England did not raise the rate, and the GBP/USD pair went further down. And Andrew Bailey told disappointed investors that "we never promised a November rate hike" and that "it's not my job to rule the markets."

Now, in addition to all other worries, there are also concerns about a new wave of the pandemic and the impact of the B.1.1.159 strain on the country's economy. And we are talking about raising the Bank of England rate not in November, but in December. And this is not at all great: while the probability of a rate hike by 15 basis points was estimated at 75% on Wednesday, November 24, then it fell to 55% two days later.

If, following the results of the December meeting, the British regulator still raises the rate, this will push the GBP/USD pair up. 70% of analysts hope so. As for the next week, their opinions are divided equally: 50% expect growth from the pair, 50% expect a fall.

But the indicators on D1 clearly support the bears. 100% of trend indicators point to the south. The same could be said about the oscillators, but 15% of them have reached the oversold zone.

Support levels are 1.3300, 1.3275, 1.3200, the target of the bears is 1.3135. The resistance levels and targets of the bulls are 1.3410, 1.3475, 1.3515, 1.3570, 1.3610, 1.3735, 1.3835.

The head of the Bank of England will make a speech on Wednesday, December 01. Investors hope that Andrew Bailey will clarify the situation with what the future monetary policy of this regulator will be.

USD/JPY: Who Benefits from COVID: Yen Takes Revenge


What is bad for risky assets, is good for the yen. This immutable rule worked this time too. The Japanese currency gained 230 pips in just one day, dropping the USD/JPY pair to 113.043. True, it once again renewed its multi-year highs  two days earlier, on November 24, reaching a height of 15.514. The pair bulls were hoping this stellar rally would continue. But this didn't happen. We can only guess how many Stop-loss orders were knocked out after such a rapid reversal.

“This is a typical scenario: the flight of investors to the quality of the yen and the Swiss franc due to a new strain of the virus,” analysts from Societe Generale explained the incident.

The USD/JPY pair completed the trading session at 113.112. And now there is an intrigue: whether it will return to the trading range 113.40-114.40 or continue falling.

There are slightly more supporters of further movement to the south among experts, 55%. The remaining 45% expect at least a correction in this direction if not returning to a full-fledged upward trend. The indicators do not have even the slightest hint of unity either. As for the oscillators, 25% are colored green, 40% are red, 20% give signals that the pair is oversold, and 15% have taken a neutral position. The trend indicators have the same discord: 50% of them point to the north, the same amount - to the south.

Resistance levels are 113.40, 114.00, 114.40, 114.70, 115.00 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. The nearest support level is 113.00, then 112.70, 112.00 and 111.65.

As for macroeconomic statistics, retail sales data are due Monday November 29, followed by labor market and industrial production data in Japan the next day.

CRYPTOCURRENCIES: Nobel Prize for Satoshi Nakamoto

We cited the opinion of specialists from the Kraken crypto exchange two weeks ago, according to which the BTC/USD pair could fall to $55,000. The cryptocurrency analyst Altsoin Sherpa called the same figure, $55,000. Another well-known journalist and expert, Willy Woo, cited a wider range ­from $50,000 to $60,000 as a reliable support. In addition, according to Willie Woo, bitcoin is not yet ripe for impulse growth and renewal of all-time highs.

Now, after a while, we can say that all these experts were generally right: the main cryptocurrency was moving, relying on support in around $55,500 and fixing the local maximum at $60.030 for all the following days, until Friday, November 26. And there was a panic in the markets on Friday. Frightened by the new strain of COVID, investors began to get rid of risky assets, including cryptocurrencies.

The total capitalization of the crypto market fell to $2.460 trillion ($2.590 trillion a week ago). And the Crypto Fear & Greed Index has risen from the fear zone to the center of the scale, up to 47 points. The BTC/USD pair was trading in the $54,350 zone at the time of this writing, on the evening of November 26, having found a local bottom at $53,600 before that.

A report by analyst firm Glassnode (which was released before November 26) showed that the market is not showing massive profit-taking. Analysts point out that the total supply of short-term bitcoin holders is at a multi-year low below 3 million BTC. This, in turn, means that the amount held by long-term holders is at a multi-year high. At the same time, they are constantly building up their positions. The total number of wallets with a non-zero BTC balance in the second half of November also reached an all-time high of 38.76 million.

The data obtained by Glassnode indicates that there are no signs of serious surrender, and that the flagship cryptocurrency may still have a rather long upward rally.

A similar opinion to Glassnode was expressed by the CEO of CryptoQuant Ki Young Ju. Despite the fact that bitcoin has been getting cheaper since the middle of last week, holders are in no rush to sell it. In parallel, there is a steady trend towards the withdrawal of cryptocurrency for autonomous storage. According to CryptoQuant, trading floors currently have the lowest amount of bitcoins since mid-2018.

Moreover, investors are withdrawing not only BTC, but also ethereum, which reduces the supply of the asset and eases the pressure on the market. In the long term, according to Ki Young Ju, this trend will drive the value of leading digital currencies upward.

A well-known trader and analyst known as Credible argues that the current correction of bitcoin is a necessity to continue the bullish trend and rise above $70,000. According to the expert, the first cryptocurrency is in the phase of a healthy correction at the moment.

The bitcoin price may fall to $52,000-53,000 in the near future, where the bottom of the current correction is located, Credible predicts. According to him, the $69,000 mark that bitcoin reached on November 10 cannot be the top of the current bull market, as historically each subsequent cycle of growth has lasted longer than the previous one.

Chief commodity strategist of Bloomberg Intelligence Mike McGlone, as well as Willy Woo, believes that the main support is slightly lower, at $50,000. At the same time, according to the expert, bitcoin will continue to grow in 2022, where it will face strong resistance around $100,000.

Founder of Skybridge Capital investment company Anthony Scaramucci expects that the flagship cryptocurrency “will eventually eclipse gold”, and its price will easily reach $500,000. “I think bitcoin is likely to be ten times better than gold... I would not be surprised if bitcoin grows exponentially and gold grows in line," said Anthony Scaramucci.

Mike Novogratz, CEO of investment firm Galaxy Digital Holdings, echoed him saying that gold "was just crushed by bitcoin."

The same target level for BTC, $500,000 was named by the CEO of ARK Invest Katie Wood, confirming her previous forecast. True, at the same time, she made a reservation that such a price could be achieved provided that institutional investors allocate 5% of their portfolios for bitcoin.

So far, 5% is out of the question. Indeed, the interest in digital assets among big business representatives is growing. So, over a quarter of super-wealthy families around the world have already invested in cryptocurrencies. This is evidenced by the results of a survey of the British consulting company Campden Wealth, conducted among representatives of 385 family offices. The average capital managed by such offices is estimated at $1.6 billion.

31% of wealthy households in North America and 28% in Europe invest in cryptocurrencies, while this share is lower in the Asia-Pacific region, 19%. But at the same time, the share of cryptocurrencies in the portfolios of billionaire families is on average only 1%. The majority of those surveyed (68%) said they plan to keep the volume of crypto investments at the current level next year, 28% are going to increase them, and only 4% are going to reduce them.

And at the end of the review, news for Satoshi Nakamoto fans. According to Daniel Leon, COO of the crypto platform Celsius Network, the creator of bitcoin should receive the Nobel Prize in Economics for this invention. "This guy [Nakamoto] has brought hundreds of thousands of people more financial benefits than the bulk of economists in academia," said Daniel Leon.

Now the little thing to do is to find out if Nakamoto really existed. After all, the Nobel Committee is unlikely to decide to reward a person who has never existed...

***

Clients of the brokerage company NordFX continue to accumulate lottery tickets: the New Year's draw of this Super Lottery will take place soon. And the more tickets, the more chances you have to win one or more prizes ranging from $500 to $20,000.

This money will be useful to you, won't it?

It is very easy to participate. All the details are available on the NordFX website.


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.

[You must be registered and logged in to see this link.]

EUR/USD: Closer to Parity


We made a short equation in the title of the previous review on the EUR/USD pair: “Inflation growth = USD growth”, and last week's events confirmed its fairness. Strong data on retail sales in the US, released on Tuesday, November 16, allowed the dollar to rally again, and the USD DXY index to return to the values of one and a half years ago and renew the highs of 2021. With the forecast of 1.4%, retail sales in October increased by 1.7% (the growth was twice less in September, 0.8%). The retail control group indicator went up as well, showing an increase in October by 1.6% (forecast 0.9%, growth a month earlier - 0.5%). Recall that this indicator represents the volume of retail trade in the entire industry and is used to calculate the chain price index for most goods.

Investors were also pleased with the data on industrial production and the housing market in the United States. As a result, the EUR/USD pair dropped to 1.1263 on Wednesday, November 17.

 It is clear that in the current situation the market is most interested in how this or that macro statistics will affect the rate of curtailing monetary stimulus (QE) and the rise in interest rates by central banks.

Thus, the data published last week gave investors another argument in favor of an earlier rate increase by the US Federal Reserve. According to John Williams, President of the Federal Reserve Bank of New York, the country's economy is recovering at a steady pace, the US has a huge growth in employment, and unemployment is falling very quickly. St. Louis Fed President James Bullard also added fuel to the fire when he said that the Fed should become more aggressive. If it accelerates the pace of QE reduction to $30 billion a month, this could provide an opportunity for raising rates in Q1 2022. Another "hawk", the head of the Federal Reserve Bank of Atlanta Rafael Bostic, believes that the Fed may start increasing rates in the middle of next year. And even such a famous “dove” as Chicago Fed President Charles Evans agreed that “raising rates in 2022 may be appropriate.”

As for analysts, Bank of America believes that rising prices and wages will push the US central bank to raise the federal funds rate in the summer of 2022, and maybe even earlier. The most conservative aggregate forecast is given by Reuters experts. According to them, the rate will rise for the first time in the Q4 2022, followed by two more increases, in Q1 and Q2 2023, as a result of which it will reach 1.25-1.5% by the end of the year.

Unlike the United States with its economic growth, things are not at all so rosy in the Eurozone with its energy crisis and the impending economic war with Great Britain. The preliminary data on GDP of the Eurozone for the Q3 published on Tuesday, November 16, showed the absence of even minimal growth. Well, at least there's no fall.

ECB President Christine Lagarde said speaking to the European Parliament that the increase in interest rates in 2022 does not correspond to the plans of her bank, since the conditions for monetary restriction will not be implemented in the coming year. According to the regulator, tightening monetary policy in such a situation will do more harm than good.

The euro weakened not only against the dollar, but also against other currencies after such statements by the head of the ECB. Great Britain helped the European currency a little. A record rise in inflation in this country pushed the GBP/USD pair up, and it pulled EUR/USD along with it. Two more factors also played into the hands of the euro. The first is the 66th update by the S&P 500 of its all-time high for this year. The second one is the possible resignation of Fed Chairman Jerome Powell and the appointment of Lael Brainard, who is considered to support a softer monetary policy, in his place.

A number of investors, influenced by the above factors, decided to take profit on short positions. But this only briefly helped the European currency. Having risen to 1.1373, the EUR/USD pair turned around and continued its southward movement, updated the local low at 1.1250 and closed the trading session at 1.1288.

If we translate what is happening on both sides of the Atlantic into the language of the military, then things have not yet come to real military clashes: neither side has yet raised the interest rate. The matter is limited to the maneuvers and statements of the chiefs of the "general staffs", that is, of the Central Banks. Although, of course, divergences in economic growth, as well as in the monetary policy of the Fed and the ECB, are likely to push the EUR/USD pair further down. Moreover, there is still room for it to fall. Recall that the quotes were at the level of 1.0635 in March 2020, 1.0352 in December 2016, and the pair was even below the parity line at 0.8225 in October 2000.

Indicators at D1 confirm the bearish forecast, pointing south. These are 100% among the trend indicators. The same can be said about oscillators, although 15% of them are in the oversold zone.

35% of experts vote for the correction and growth of the pair in the short term, 50% vote for its further fall, and 15% expect a sideways movement. Resistance levels are located in the zones and at levels 1.1315, 1.1360, 1.1435-1.1465 and 1525. The nearest support level is 1.1250, then 1.1175 and 1.1075-1.1100, then 100 points lower.

As for the upcoming release of macroeconomic statistics, preliminary data on business activity (Markit) in Germany and the Eurozone will be released on Tuesday, November 23. And the volumes of orders for capital and durable goods in the United States, as well as preliminary data on US GDP for the third quarter, will become known the next day. And finally, the minutes of the meeting of the US Federal Reserve Committee (FOMC) will be published on Thursday, November 25, from which investors will try to understand how strong the "hawkish" attitude among the leadership of this regulator is.

GBP/USD: Awaiting the Rate Hike on the Pound

As mentioned above, inflation in Britain hit 4.2%: the highest level since 2011 (it was 3.1% in September). The jump came amid rising energy prices and worsening supply problems. However, the core consumer price index (CPI), which excludes volatile food and energy prices, showed an increase of 3.4% (2.9% a month earlier). According to many economists, consumer prices will continue to rise further in the coming months.

The released statistics increased the likelihood that the Bank of England will decide to raise the interest rate on the pound this December. This contributed to the rebound of the GBP/USD pair from November 12 low of 1.3352, to which it fell after the US recorded its highest growth in 30 years inflationary pressure.

In general, the macroeconomic statistics of the United Kingdom looked quite optimistic last week, supporting the pound.

It became known last Tuesday that the number of jobs in the country increased by 160K in October. This figure is especially important against the background of the fact that the state program for subsidizing wages, which was in force during the COVID-19 pandemic, was completely phased out in September. Many experts expected employers to start cutting jobs after the end of support. However, this did not happen and the labor market, on the contrary, continues to recover. The UK unemployment rate fell to 4.3% in the Q3.

Recall that the Governor of the Bank of England, Andrew Bailey, speaking of curbing inflation on November 4, did not rule out the possibility of raising interest rates more quickly than planned. And now the published indicators allowed the bulls to seize the initiative and raise the pair to a height of 1.3513 on Thursday, November 18. However, this was followed by a rebound, and it completed the five-day period at 1.3444.

If the key rate for the pound increases in December, we can expect the GBP/USD pair to grow to the 1.3800-1.3900 zone. However, while this has not happened, most analysts (75%) expect the pair to fall further. Only 25% bet on a quick victory for the bulls.

As for the oscillators on D1, 80% are red, 10% are green and 10% are neutral gray. Trend indicators are still 100% red. Support levels are 1.3400, 1.3350, 1.3200, the target of the bears is 1.3135. The resistance levels and targets of the bulls are 1.3475, 1.3515, 1.3570, 1.3610, 1.3735, 1.3835.

As for the macro statistics for the coming week, it is worth noting the publication of the UK Services Business Activity Index (PMI) on Tuesday November 23. This indicator, published by the Chartered Institute of Procurement and Supply in conjunction with Markit Economics, is an indicator of the economic situation in the field of sales and employment in this sector. However, it is not as important as the country's manufacturing PMI

USD/JPY: Still East

While the US Federal Reserve cuts monetary stimulus, the ECB has frozen QE at the previous level, the Japanese government announced an unprecedented program of economic stimulus for the total 55.7 trillion yen ($487 billion) on Friday November 19. Tokyo hopes that this measure will increase the country's GDP by 5.6%. As stated, the Bank of Japan will pursue an appropriate monetary policy, closely monitoring market movements and the impact of the coronavirus pandemic on the economy.

“We hope that the Bank of Japan is clearly aware of the urgency of the measures and continues to coordinate closely with the government to achieve a proper mix of fiscal and monetary policy,” the Cabinet of Ministers of Japan said in a statement.

In what way did the USD/JPY pair react to this event? well, actually... in no way. A safe harbor should remain calm no matter what.

In general, the dynamics of the pair fully followed the forecast given the previous week. Most analysts expected the pair to rise, break through the upper border of the 113.40-114.40 channel and try to update multi-year highs. This is exactly what happened: the pair was noted at a height of 114.96 on November 17. However, then the strength of the bulls dried up, and the pair returned to the mid-term trading range, putting the last chord in its central part, at the level of 114.00.

Given the ultra-soft monetary policy of the Bank of Japan and the expansion of control over the yield curve, it is highly likely that the weakening of the yen and the growth of the pair will continue. And that USD/JPY will not only reach the 115.00-116.00 range, but will also consolidate there, updating the 2017 highs. Of course, the decisions of the US Federal Reserve regarding interest rates as well as the yield of American treasuries will also affect the dynamics.

As a result of the backward movement that the pair demonstrated last week, the oscillators on D1 are completely confused: 20% of them point north, 40% - south and 40% - east. There is no unity among trend indicators either: 60% look up, 40% - on the contrary, down.

The picture is similar among analysts. 40% of them expect the growth of the pair, the same amount expect its fall, and the remaining 20% just shrug their shoulders.  The resistance levels are 114.40, 114.70, 115.00 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. The nearest support level is 113.40, then 112.70, 112.00 and 111.65.

CRYPTOCURRENCIES: Where Will Bitcoin Fall and Rise?

Bitcoin updated its all-time high, reaching $68,917 on Wednesday, November 10. Ethereum also set a record, rising to $4,856. The total capitalization of the crypto market at the maximum reached $2.972 trillion. At the same time, the Crypto Fear & Greed Index rose to 84, being in the Extreme Greed zone, which indicated that the main cryptocurrency was strongly overbought and the need for a correction that was not long in coming.

We cited the opinion of specialists from the Kraken crypto exchange in the previous review, according to which if the current growth of bitcoin stops at strong resistance around $70,000, a correction of up to 20% can be expected. That is, the BTC/USD pair may fall to $55,000.

The cryptocurrency analyst Altcoin Sherpa called the same figure. Another well-known journalist and expert, Willy Woo, cited a wider range ­from $50,000 to $60,000 as a reliable support.

In addition, Willie Woo argues that bitcoin is not ready for impulse growth and renewal of all-time highs at the moment. Woo identified three factors that hinder the rise in price of the main cryptocurrency.

The first factor is bitcoin's high speculative activity. Woo argues that while long-term investors continue to accumulate cryptocurrency, a large number of positions are being opened for short-term speculative purposes.

Another factor that can hold bitcoin back is the launch of the first US exchange-traded fund (ETF) based on bitcoin futures. According to Woo, most institutional investors prefer to buy fund stocks and futures at the moment instead of buying the coin itself.

Recall that the first US exchange-traded fund based on bitcoin futures began trading on the New York Stock Exchange (NYSE) on October 19. Its assets exceeded $1 billion two days after the start of trading. Thus, the fund broke the record growth rate to $1 billion, which was held for 18 years.

The third factor is the overly optimistic sentiment of investors who are confident in the further growth of bitcoin and the entire cryptocurrency market. “Whenever most investors are bullish, it is very difficult for the price to go up because there are a lot of speculative longs in the markets,” Woo explains.

Analyst Nicholas Merten is also skeptical about the near future of the flagship cryptocurrency. “We won't get $100,000 or $150,000 in this Q4 or next Q1,” he says. “I'm sorry, but I'll have to say that. I think that many experts are mistaken. Bitcoin is aiming for growth, but we will only see around $100,000 or $150,000 by the fall of next year.”

At the time of writing the review, the BTC/USD pair is around $58,000, the local minimum was recorded on November 19 at $55,638. The total capitalization of the crypto market fell to $2.590 trillion. At the same time, the Crypto Fear & Greed Index fell by as much as 50 points, to 34, being in the zone of Fear.

The news background is neutral. More precisely, it is ambiguous. On the one hand, for example, the Bitcoin Taproot network was updated on November 14 - the first major change in functionality since 2017. The main cryptocurrency needs to become more efficient, scalable and confidential. On the other hand, US President Joe Biden signed a bill to upgrade the infrastructure. Depending on the interpretation of this document, it may turn out that miners, wallet developers, liquidity providers in DeFi-protocols and other players in the digital market may be required to report to the tax office. The crypto community is also concerned about another amendment to the infrastructure plan, which will oblige recipients of digital assets worth more than $10,000 to verify the sender's personal information.

No confidentiality!

A very good reason is needed for bitcoin to rise sharply again. And if it does not appear, the BTC/USD pair has many chances to stay stuck for a long time in the zone ­$50,000 to $60,000, sagging from the maximum by 15-30%. However, the current drawdown does not prevent many crypto enthusiasts from maintaining remarkable optimism.

Thus, Anthony Scaramucci, the founder of SkyBridge Capital investment company, is confident that bitcoin will “easily” reach the price of $500,000. He gave such a forecast, referring to the limited emission of the first cryptocurrency and the potential number of wealthy investors. He noted that according to JPMorgan, there are at least 49 million dollar millionaires, but the supply of digital gold is limited to 21 million coins. “You don’t have enough bitcoins for every millionaire in our society to have at least one coin,” Scaramucci said.

In his opinion, the current price level is still an early opportunity to enter the asset, and the price of the first cryptocurrency will reach the specified $500,000 mark by the end of 2024 or mid-2025. However, this requires that Ark Invest's forecast come true, according to which the number of bitcoin wallets should reach 1 billion by this time.

***

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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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EUR/USD: Rising Inflation Equals to Rising USD

All US macroeconomic statistics turned out to be worse than forecast. But despite this, the American currency continues to grow. The DXY dollar index, which measures it against a basket of six other major currencies, hit 95.26 on Friday, November 12, gaining about 2% over the past two weeks. It would seem that everything should be the other way around. So, what is the reason for this strange situation? It turned out to be the rapid growth of inflation.

According to the Labor Department, the US CPI rose 6.2% in October, a record in more than 30 years. Inflation was higher only in November 1990. Compared to September, the price growth rate has accelerated by 0.8%, while core inflation (excluding energy and food prices) has accelerated to 4.6%, which is also the highest in three decades. And, apparently, this is not the limit. Inflation in the US is forecast to continue to rise in the coming months on the back of housing, utilities, energy and car prices. The CPI, which reflects the change in the cost of living in the country, has surpassed the 5% mark for the fifth month in a row. And this makes us doubt the assurances of Fed Chairman Jerome Powell that high inflation is temporary. However, not only investors are in doubt, but also the Fed itself.

According to classical economic theory, the dollar should have weakened significantly in such a situation. However, the COVID-19 pandemic has turned everything upside down, forcing regulators to implement monetary stimulus (QE) programs in the spring of 2020, flooding markets with cheap money and lowering interest rates.

Finally, the Fed reported that it is gradually beginning to curtail $120 billion of the asset purchase program starting this month. As for the rate hike, according to Jerome Powell, the time has not yet come for this, since the labor market has not fully recovered and, according to forecasts, this will happen by mid-2022. The Fed will be patient until then.

However, many investors felt that with such a galloping inflation, the Fed's patience could quickly run out and the regulator would be forced to raise rates before the summer of 2022.

An analysis of the Chicago Mercantile Exchange (CME) derivatives shows that there is a 64% chance that rates may rise even before June. Previously, the market was confident that the regulator would raise interest rates at least once next year. Now the likelihood that it will happen twice has increased from 63% to 80%, three times - from 29% to 49%. And some hotheads believe that the US Central Bank will take the first step in this direction this year.

All these expectations made the dollar continue to grow. It was further supported by the soaring yields on US government bonds. Growing inflation reduces the purchasing power of the coupons paid on them, and there are few people willing to invest in securities, the yield on which covers inflation by only a third.

As for the data on the US labor market published on November 9, the inflation-shocked market practically ignored them. But they also turned out to be much worse than forecasts. The number of repeated claims for unemployment benefits was expected to decrease by 50K, and it rose by 59K instead.

The growing dollar pushed the EUR/USD pair to the lows of July 2020. It dropped to 1.1432 on Friday, November 12 and ended the week at 1.1446. The American currency has gained almost 900 points against the euro since the beginning of this year. And if the situation continues to develop as it is now, it will not stop there.

Indicators on D1 confirm this forecast, pointing to the south. These are 100% among the trend indicators. The same can be said about oscillators, although a quarter of them are in the oversold zone.

In anticipation of a correction, 40% of experts vote for the growth of the pair. 60% vote for its further fall. The nearest support level is 1.1435, then 1.1350 and 1.1250. Resistance levels are 1.1525, 1.1575, 1.1615, 1.1665, 1.1715.

As for the upcoming release of macroeconomic statistics, there will be preliminary data on the Eurozone GDP for the Q3 on Tuesday, November 16. Data on retail sales in the United States will be released on the same day, they are very important for assessing the impact of inflation on the country's consumer market. The working week will end with a speech by ECB President Christine Lagarde on Friday, November 19.

GBP/USD: Another Victory for the Dollar


The dollar, pushed by inflation in the US, continues to put pressure on the British currency, as a result, the GBP/USD pair has been falling for the sixth month. It updated another low last week and settled in the zone of long-term support/resistance, where it has been periodically since 2016. The local minimum of the week was fixed at 1.3352 this time, and the last chord sounded at 1.3421.

The macro statistics released on Thursday; November 11 did not help the pound either. And it seems that GDP for the Q3 turned out to be higher than the forecast, but the growth rates of the UK economy slowed down by more than 3.5 times, from 23.6% to 6.6%, and the industrial production growth rate fell from 4.0% to 2.9% (against the forecast of 3.4% ).  Such a sharp slowdown, especially noticeable against the background of smoother similar indicators of the Eurozone and the United States, disappointed greatly, and even scared investors.

The threats of recession and stagflation, combining weak GDP growth and high inflation, are very dangerous for the British economy, which is still under pressure from the Brexit effects. According to forecasts of experts from the Bank of England, the annual inflation rate will accelerate to about 5% by April 2022 and will decrease to the target level of 2% as late as by the end of 2022.

This is a very high rate, and shortly before the meeting of the Bank of England on November 4, its head Andrew Bailey said that with such indicators, it may be necessary to raise interest rates earlier than planned. The market reaction was similar to the one that strengthened the dollar last week. The markets believed that the regulator would raise the key rate in November, and... they were deceived. The Bank of England did not raise the rate, and the GBP/USD pair went further down.

UK unemployment data are due out on Tuesday November 16, followed by October CPI data the next day. Naturally, the state of the labor market and inflation will have an impact on market sentiment and the dynamics of the pound. In the meantime, analysts' opinions are almost equally divided: 35% of experts bet bears on the victory, 35% support the bulls, and the remaining 30% have taken a neutral position.

As for the oscillators on D1, 85% is colored red, 15% indicates that the pair is oversold. Trend indicators are 100% red. Support levels are 1.3350, 1.3200, the target of the bears is 1.3135. The resistance levels and targets of the bulls are 1.3510, 1.3570, 1.3610, 1.3735, 1.3835.

USD/JPY: Treasuries Strike

Giving a forecast for the previous week, most analysts expected the USD/JPY pair to return to the upper border of the 113.40-114.40 channel. At first, it seemed that this forecast would not come true: the pair continued its corrective movement to the south, reaching the level of 112.70. However, it then turned and soared to 114.30, confirming the expectations of experts. The week finished at 113.90.

The reason for this reversal was the “inflationary” strengthening of the dollar and, of course, a sharp increase in the yield of US Treasury bonds, with which the USD/JPY pair has a long-standing friendship. In other words, there is a direct correlation dependence.

Given the soft monetary policy of the Bank of Japan and the expansion of control over the yield curve, it is highly likely that the weakening of the yen and the growth of the pair will continue. Of course, the decisions of the US Federal Reserve regarding interest rates will also affect the dynamics.

A number of experts consider the rise of the USD/JPY pair to 114.00 as a return to the bullish trend that began back in January 2021. Although, the charts in the interval between March 10 and September 27 show that in the absence of strong drivers, the sideways movement can drag on for several months. Unlike the euro and the pound, the yen is a safe haven currency, and therefore is able to withstand storms in financial markets for a long time.

55% of analysts currently expect the pair to continue to rise, break through the upper boundary of the 114.40 channel, rise to a range of 115.00-116.00 and renew its multi-year highs. The opposite point of view is held by 35% of experts, and the remaining 10% expect the USD/JPY pair to stay in the 113.40-114.40 side channel for some time.

As for oscillators on D1, 80% face north, 10% face south, and 10% turn gray neutral. Among the trend indicators, 100% are on the green side. The resistance levels are 114.40, 114.70 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. The nearest support level is 113.80, then 113.40, 112.70, 112.00 and 111.65.

Monday, November 15, can be noted in the calendar for the coming week. Data on Japan's GDP for the Q3 will be published on this day, and, according to forecasts, this important indicator will decrease from + 0.5% to -0.2%.

CRYPTOCURRENCIES: Where Will Bitcoin Fall and Rise?

Bitcoin updated its all-time high, reaching $668,917 on Wednesday, November 10. Ethereum also set a record, climbing to $4,856. The total capitalization of the crypto market at the maximum reached $2.972 trillion.

The Crypto Fear & Greed Index climbed from 73 to 84, entering the Extreme Greed zone, indicating that the main cryptocurrency was heavily overbought, and a correction was needed. Which then followed: setting a record, the BTC/USD pair turned around and rolled back into the $63,000-64,000 zone.

With regard to bitcoin, the sentiment among retail investors is "extremely bullish". This is reported by the analytical resource Santiment with reference to the off-chain BTC indicators. But the situation is not so clear-cut among the "bitcoin whales". On the one hand, the total volume of coins on addresses with balances of 100-10,000 BTC has decreased by almost 60,000 BTC over the past 10 days. On the other hand, it has grown significantly on addresses with balances of more than 10,000 BTС. According to experts, this may indicate that large whales are buying coins from smaller ones, protecting bitcoin from a sharp drop.

The correction that took place on November 10 was only about 8.5%. "Only", because with the typical volatility of bitcoin, this is not much. The current situation can be defined as "irrational confidence" in this coin on the part of investors, which can lead to a much stronger price correction.

The specialists of the Kraken crypto exchange agree with this. The review they published notes that November has historically been volatile, resulting in the highest monthly returns. But if bitcoin's current rally stops at strong resistance around $70,000, a correction of up to 20% can be expected, meaning the BTC/USD pair could drop to $55,000.

The cryptocurrency analyst Altsoin Sherpa calls the same figure. “There is the possibility of a short-term hike to $ 55,000,” he writes. “But I don’t care about these minor movements. I continue to accumulate BTC, and when it starts to move up, it will be rapid."

Another well-known expert, Willie Woo, came to the conclusion that the zone from $50,000 to $60,000 is more than reliable as a support. Bitcoin has secured a capitalization of $1 trillion, and it is difficult to imagine that it will fall below this zone, he said, referring to data from the analytical company Glassnode.

Bitcoin is a hedge against inflation, and the US has currently seen a record rise in consumer prices, which is a strong argument in favor of the flagship cryptocurrency. Despite the curtailment of the QE program and the expectation of an increase in interest rates, signs of a possible sharp devaluation of the dollar frighten investors, forcing them to invest in alternative assets in the stock and cryptocurrency markets. As a result, both BTC and stock indices update their historical highs over and over again. And forecasts for bitcoin will be in the green zone until the US Federal Reserve moves on to a broader tightening of its monetary policy.

The top of bitcoin's current bull cycle may be the price of $96,000. This conclusion was reached by analysts of the Kraken crypto exchange. According to their research, the current Q4 has dynamics most similar to the Q4 of 2017 (correlation 0.88), which showed a yield of +220%. In general, cryptocurrency exchange experts predict that BTC will reach heights around $300,000.

A respected cryptanalyst known as PlanB said that bitcoin could rise by 700% in early 2022. “If you look at the signals along the chain right now, I dare say that the price will reach the top in almost 6 months, this will be the end of Q1 of next year. - he thinks. - I believe that we will have a BTC rate of $100,000 at the end of the year, and then, perhaps, the currency will continue to grow up to model X (S2FX) and reach the level of $288,000, and possibly more. I would not be surprised if I saw the price rise to $400,000 - 500,000 in Q1 and Q2 of next year."

Unlike many optimists, crypto strategists Benjamin Cowen, on the contrary, believes that bitcoin will not please its supporters with explosive growth. “We started with about $28,000 to $29,000 and this was the start of 2021,­” writes Cowen. “What have we seen so far? Not much, right? Will it be able to show more significant results by the end of the year? Maybe, but I'm not sure that 2021 will be the year of a parabolic rally for bitcoin."

While the distance between the low and high of the annual range may seem significant, Cowen noted that bitcoin holders are unlikely to be thrilled with such profits: “Look what happened to bitcoin in 2021: nothing special. The profitability was about 130%, and I am sure that most holders will not even get up from the couch for 130%." “We have returned to the top of the range, so there may be some euphoria, as it was from January to March 2021,” the expert continues to reason. - There are chances of a sharp leap, but the data shows that the cycle should last at least through 2022. Looking back to 2021, I think it was, for the most part, a year of long-term re-accumulation.”

Ethereum, the main competitor of bitcoin, showed significantly higher profitability, it grew 6.7 times in 2021.  And the year is not over yet. Rahul Rai, the manager of the cryptocurrency fund BlockTower Capital, believes that the versatility of the ethereum blockchain will be the main factor that will attract both developers and investors. He is confident that if ethereum manages to restart the global financial system, its market will be much larger than that of bitcoin in the future. The crypto millionaire predicts that it may be as early as mid-2022. ETH will be the first cryptocurrency in terms of capitalization, which could reach several trillion dollars.

Analysts of the American investment bank JPMorgan made a similar statement in April. In their opinion, bitcoin is a consumer commodity. It can compete with precious metals and be seen as a store of value, but it will give way to ethereum in the long run, which is the pillar of the cryptocurrency economy.

And at the end of the review a warning from the billionaire, founder of Duquesne Capital and one of the most successful managers on Wall Street, Stanley Druckenmiller. The value of any asset can collapse at any moment, he warns. According to the financier, "cryptocurrencies, meme stocks, art, wine, securities ... There is a bubble in everything, in every asset on the planet." And bubbles, as you know, often burst.

“Every event in the world affects a certain amount of security,” explains Druckenmiller. "I try to imagine the world as it is today, and then I try to see if there are any seismic changes and what the world might look like in 18 months. And if this is true, then what securities will be worth very differently than now? I think that many investors live only in the present. It might work in the short term, but it's a disaster in the long term.”


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.

[You must be registered and logged in to see this link.]

EUR/USD: Focus on the US Labor Market

The central events last week were the meetings of two regulators, the US Federal Reserve and the Bank of England. Traders were also certainly interested in data from the US labor market, including such an important indicator as the NFP, the number of jobs created outside the US agricultural sector.

As expected, the Fed announced the curtailment of $120 billion quantitative easing (QE) program starting this month. The purchases of treasuries will decrease by $10 billion to $70 billion in November, mortgage bonds - by $5 billion, to $35 billion. The total reduction in the volume of asset repurchase will remain at the same level of $15 billion In December.

Commenting on the results of the last meeting, the head of the Federal Reserve Jerome Powell said that the time for raising interest rates has not yet come, since the labor market has not fully recovered and, according to forecasts, this will happen by mid-2022. The Fed will be patient until then. At the same time, Powell noted that the pace of reduction of incentives can be adjusted at the beginning of next year both towards acceleration and towards deceleration, depending on economic conditions.

It can be understood from this statement of the head of the FRS that the regulator keeps a path to retreat, and one should not expect an early cut in the ultra-soft monetary policy at the moment. This interpretation pushed the stock indices up again, and Dow Jones, S&P500 and Nasdaq updated their historical highs once again.

(It is worth noting that for the first time, transactions with NASDAQ 100 (Ustec.c) helped one of the traders to become one of the most productive NordFX clients, earning a profit of $38.124 in October).

So, the US Central Bank is ready to make and adjust its decisions depending on the market situation. As for the European Central Bank, unlike the Fed, it believes the markets are wrong. ECB President Christine Lagarde said Oo Wednesday November 03 that the bank's Governing Council has clearly formulated three conditions for raising interest rates, and that these conditions will not yet be met in 2022.

Investors were not pleased with the macro statistics of the Eurozone either. Composite PMI (Purchasing Managers Index) declined for the third month in a row, and the volume of industrial orders in Germany in September rose by only 1.3%, despite the fact that in August it fell by 8.8%. The growth in the yield of government bonds of the Eurozone countries, caused by their active sale, which reminds the markets of the prospects of the debt crisis, looks alarming as well.

All these factors put significant pressure on the common European currency and led to its fall, as a result of which the EUR/USD pair renewed its October lows.

Focusing on the recovery of the labor market, the head of the FRS outlined the priorities for his organization. Against this background, the dynamics of NFP (Non-Farm Payroll) becomes even more important. This US non-farm employment report is traditionally released on the first Friday of the month, this time November 05. According to its data, the number of new jobs in October was 531K (with the forecast of 425K and the previous value of 312K). In addition, the unemployment rate fell to 4.6% from 4.8% in September. Stock indices soared even higher against this background. As for the EUR/USD pair, after a correction, it completed the weekly session at 1.1567.

Naturally, most indicators on D1 face south. These are 100% among the trend indicators. The same could be said about oscillators. However, 10% of them have taken a neutral position, 10% are in the oversold zone and another 10% turned to the north at the very end of the week.

As for the experts, 25% vote for the growth of the pair, the same number is for its fall, and 50% is for the sideways movement. Support levels are 1.1535, 1.1500, 1.1485, 1.1425 and 1.1250. Resistance levels are 1.1575, 1.1615, 1.1665, 1.1715, 1.1800, 1.1910.

As for the upcoming release of macroeconomic statistics, data on the state of the consumer markets in Germany and the United States will be released on Wednesday, November 10, and the preliminary consumer confidence index of the University of Michigan will be announced on Friday, November 12. This index is an indicator of the US consumers’ confidence in economic growth and assesses their willingness to spend money.

GBP/USD: Shock from the Bank of England

The threat of stagflation, combining weak GDP growth and high inflation, is very dangerous for the British economy, which is still under pressure from the Brexit effects. According to forecasts of experts from the Bank of England, the annual inflation rate will accelerate to about 5% by April 2022 and will decrease to the target level of 2% as late as by the end of 2022. These are very high rates, and a few days before the meeting of the Bank of England, its head Andrew Bailey said that with such indicators, it may be necessary to act and raise interest rates more quickly than originally planned. As a result, the markets believed that the regulator would raise the key rate in November and... were deceived in their expectations.

The Monetary Policy Committee (MPC) of the Bank of England voted at its meeting on Thursday November 04 by seven votes to two to keep the interest rate at the previous level of 0.1%, and by six votes to three to keep the volume of asset purchases at £ 895 billion. Disappointed investors responded to the regulator with the collapse of the pound. The GBP/USD pair reached a local low, falling 270 points to 1.3425. The last chord of the week sounded at 1.3490.

Andrew Bailey stated in response to criticism that he misled investors, that "we never promised a November rate hike" and that "it is not my job to manage the markets." Sylvana Tenreiro, an external member of the Bank of England's Monetary Policy Committee, who believes that the Central Bank should not react to short-term shock situations and the problem of supply of goods will become less acute next year, spoke soothingly. The opposite position was taken by Deputy Head of the Bank Dave Ramsden, who said that he voted for a rate increase, as the shortage of labor is becoming more and more noticeable.

As some analysts note, there are currently growing expectations that London will decide to apply Article 16 of the EU Leaving Agreement. It is possible within the framework of this article for one of the parties to suspend part of the Brexit transaction if its further execution creates serious economic or other difficulties. That said, the EU's response could be more radical than the UK government expects. And this situation has and will continue to exert additional pressure on the pound.

The preliminary data on the UK GDP for the Q3 will be released on Thursday, November 11. They may affect market sentiment along with macro statistics from the US. In the meantime, analysts' opinion is as follows: 55% of experts bet on bears to win, 35%, along with graphical analysis on D1, support bulls, and the remaining 10% have taken a neutral position.

Among the oscillators on D1, 75% is colored red, 25% indicates that the pair is oversold. Trend indicators are 100% red. Support levels are 1.3470, 1.3420, 1.3380, 1.3200, the target of the bears is 1.3135. The resistance levels and targets of the bulls are 1.3510, 1.3570, 1.3610, 1.3735, 1.3835.

USD/JPY: Sideways Trend Again

The charts of the last three weeks showed that the upward momentum of the USD/JPY pair has dried up, and it has moved to its favorite activity: the sideways trend, limited by the range of 113.40-114.40. The yen rose on the back of the 10-year Treasury yield decline to 1.53% and continued to strengthen at the end of the working week, finishing at the lower boundary of this channel.

The current situation is clearly confirmed by the spread of expert opinions and indicator readings. Among analysts, 50% expect the pair to return to the upper border of the 113.40-114.40 channel, 25% to move along the 113.00 Pivot Point, and 25% to fall to the 112.00 area. It should be noted that, when moving from weekly to monthly forecast, the number of supporters of the latter increases to 50%.

There is a complete discordance among the oscillators on D1: 35% look north, 40% south, 15% give oversold signals and the remaining 10% turn neutral grey. There is a neutrality among the trend indicators: 50% side with the green ones, the other 50% side with the red ones. The resistance levels are 113.70, 114.40, 114.70 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. The nearest support level is 113.25, further targets are 112.00 and 111.65.

CRYPTOCURRENCIES: Ethereum Renews Its High


It was 13 years ago, on October 31, 2008, that a person or a group of people known as Satoshi Nakamoto published the bitcoin white paper. The nine-page technical document 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 in April 2011, and the public was never able to find out who wrote these 9 pages, which marked the beginning of a multi-billion-dollar industry. More precisely, multi-trillion, since the total crypto market capitalization reached a new all-time high last week, exceeding $2.7 trillion.

But the share of bitcoin has decreased again: its dominance index fell over the week from 44.15% to 42.84%. The historical record of $ 66,925, set by bitcoin on October 20, has not yet been broken. The bulls did try to update this result on Tuesday November 02, but having reached the $64,260 high, the BTC/USD pair reversed and rolled back to $60,000. The Crypto Fear & Greed Index is still in the Greed zone at 73 points (70 weeks ago).

While the main cryptocurrency is marking time, the attention of many investors has turned to altcoins. Ripple rose in price (XRP/USD), and the ETH/USD pair updated its all-time high once again, reaching $4.657 on Wednesday November 03.

Among the top altcoins, Ethereum attracts with its long history and use in many projects. The main driver of its growth in recent months has been the burning of coins for transactions on the network and the fact that the rate of their burning outstrips the rate of their production. However, after the activation of the London hard fork and the latest Ethereum 2.0 Altair update, commissions on the network have almost doubled, but the developers promise to solve this problem.

The past week is the sixth in a row since the beginning of the rise in the rate of Ethereum, which has added 75% since September 21. This token appears now to be targeting the $5,000 level. And this is not a limit. So a reputable cryptanalyst known as CryptosRUs predicts that ETH will soon reach $10,000. Moreover, he is confident that it is almost the last opportunity now to purchase this altcoin at a price below this mark. The forecast of Goldman Sachs specialists, who do not exclude that the ETH/USD pair may rise to $8,000 by the end of the year, is somewhere in the middle.

Of course, it would be unfair to say that the market has completely forgotten about bitcoin. Many investors and experts still single out this cryptocurrency. Whales added 142,000 BTC to their wallets in the last week of October alone, according to Chainalysis.

“Bitcoin is mathematics, mathematical purity” that allows it to maintain a level of predictability. Therefore, it outperforms the US dollar. This was stated by Apple co-founder Steve Wozniak in a recent interview with Yahoo Finance. In his opinion, regulators can create new paper notes on their whim, and therefore it is difficult to predict inflation of fiat money.

The author of the book “Rich Dad Poor Dad”, writer and investor Robert Kiyosaki, like Steve Wozniak, has criticized the administration of President Joe Biden and has declared his distrust the US federal government. He believes that the authorities "rip off people", promote inflation and do not try to reduce it. Get ready for an economic collapse and a new depression. Be smart. Buy gold, silver and bitcoin,” Kiyosaki urged. “I love bitcoin because I don't trust the Fed, Treasury, and Wall Street.”

Chinese crypto analyst Willie Woo said in an interview with Bitcoin Fundamentals that the current “bullish” growth cycle for bitcoin is very different from previous similar periods. Woo noted that the latest wave of BTC accumulation began at the end of last year, when institutional investors began to enter the crypto market, aiming at the long-term accumulation of digital assets. This factor, in his opinion, indicates that the current growth cycle will be longer, will last another six months or a year, and the price of bitcoin during this period will exceed $100,000.

The forecast of analysts at JPMorgan Chase looks much more modest. Cryptocurrencies can continue to grow, but are unlikely to be stable, so they cannot be recommended as a key asset, JPMorgan says. As for bitcoin, its fair value is estimated by JPMorgan Chase analysts at $35,000. They came to such an assessment based on a comparison with gold, noting that the volatility of the cryptocurrency is about 4 times higher than that of the precious metal. However, if BTC's volatility is halved, the $73,000 target will "look reasonable."

PayPal co-founder Peter Thiel doubts as well that now is the right time to buy BTC. “You know, bitcoin is already worth $60,000 and I'm not sure it should be bought aggressively. But, of course, this tells us that we are in a crisis moment,” Bloomberg quoted him as saying. At the same time, Thiel expressed regret once again that he had not invested more money in the first cryptocurrency when its price was significantly lower.


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 Brokerage company has summed up the performance of its clients' trade transactions in October 2021. The services of social trading, PAMM and CopyTrading, as well as the profit received by the company's IB-partners have also been assessed.

October Results: Pound, Gold and Bitcoin Prioritized Again, NASDAQ 100 Is the Newcomer1 

The undisputed leader at the end of the month was a trader from India, account No. 1556XXX, whose profit amounted to 169,533 USD. This solid result was achieved in the British Pound (GBP/USD) trades.

The second step of the podium was taken by a representative of China, account No.1593XXX, with a result of 38,124 USD.Their profits were mainly derived from operations with gold(XAU/USD), bitcoin ( BTC/USD), as well as withNASDAQ 100 (USTEC.C). By the way, this is the first time since the beginning of the year when a person who makes trades in stock indices is included in the top three.

The third place is taken by a trader from Vietnam, account No.1416XXX, who earned 37,116 USD in October on transactions on the XAU/USD and EUR/AUD pairs.

The passive investment services:

- in CopyTrading, as before, one can mark the KennyFXPRO signal, The Compass. It has shown an increase of 108% since November 2020. At first glance, this is not such an impressive result (although it is ten times higher than the interest on bank deposits). But combined with a moderate maximum drawdown of 22%, this signal becomes quite attractive for subscribers who have invested over 75,000 USD in it.

TheSkyAngle signal can also be noted. It showed a profit of 76.64% in just the last two weeks of October with a maximum drawdown of 10.47%. This very good result was obtained mainly in transactions with the EUR/JPY and GBP/USD pairs. However, the signal has one serious drawback: it has a very short lifespan. Therefore, those wishing to subscribe to it should be extremely careful.

Of course, there are long-livers in the CopyTrading service. For example, the signal MF989923, which is based on one of the Academy's MasterforeX-V trading systems. It has a lifespan of almost 2,500 days and has generated 510% profit (an average gain of 0.2% per day). However, it must be borne in mind that it has had serious drawdowns reaching 66% on several occasions in almost 7 years of the signal's life.

- In the NordFX PAMM service, as well as in CopyTrading, you can mark the manager under the nickname KennyFXPRO. They have increased their capital by 53% on their account KennyFXPRO-The Multi 3000 EA since january 2021, with a drawdown of less than 16%.

Investors who prefer moderate returns with moderate risk may also pay attention to TranquilityFX-The Genesis v3 account, which has gained 34.5% since April 03 with a drawdown of 16.7%.

Among the IB partners, NordFX TOP-3 is as follows:
- the largest commission, 8,841 USD, was credited in October to a partner from Vietnam, account No.1258ХXХ;
- the next is a partner from India, account No.1504XXX, who earned 4,132 USD in a month;
- and, finally, a partner from China, account No.1336ХХХ, who received 4,087 USD as a reward, closes the top three.

***

And summing up the results of the month, it should be reminded that traders have received another great opportunity to earn money. NordFX has a Super Lottery for NordFX clients this year, where many cash prizes ranging from $500 to $20,000 will soon be drawn.

It is very easy to take part in the lottery and get a chance to win one or even several of these prizes. All the details are available on the NordFX website.

EUR/USD: After ECB Meeting, Ahead of Fed Meeting

Last time the EUR/USD review was titled “In a state of uncertainty”, as confirmed by the previous week. Starting at 1.1643, the pair dipped to 1.1581, then rose to 1.1691, and ended the session with a new drop, this time to the 1.1560 level.

The main event last week was the European Central Bank meeting. As expected, the interest rate remained unchanged at 0%. Therefore, the commentary of the ECB management on monetary policy was of much greater interest. After the US Federal Reserve and the Bank of England outlined the timing of the start of curtailing their monetary stimulus (QE) programs, investors wanted to hear similar statements from the ECB. But… they didn’t hear them: the regulator’s press release practically repeated the previous one of September.

According to Bloomberg insider information, there is currently a split among ECB Governing Council members. First and foremost, this concerns estimating the extent of the upcoming inflation. ECB President Christine Lagarde's assurances that the recent rise in inflation to 3.4% is temporary does not suit all. Even more so, they look doubtful against Germany's 28-year inflation peak (4.6%) and Spain's 37-year peak (5.5%). The statement of the bank's management that the analysis does not confirm the need to raise the interest rate in 2022 also looks dubious.

All of the above has led investors to feel that the withdrawal of monetary stimulus in the Eurozone will not begin until late 2022 and early 2023. Against this backdrop, the European currency should have to weaken sharply. But if we look at the chart, we will see a sharp increase of the EUR/USD pair: the EUR/USD pair rose 110 points on October 28. Surprising but true!

The main reason lies in the macro statistics from the US, which came out at the same time as the ECB chief's press conference began. According to preliminary estimates, US GDP in Q3 will be 2.0%, well below not only the previous 6.7% but also the 2.7% forecast. The growth rate of the US economy fell from 12.2% to 4.9%. The figures tempered investor optimism and caused the dollar to weaken, with the USD index (DXY) falling from 93.86 to 93.33, and the Dow Jones and S&P500 stock indices almost returning to their historic highs. Falling gas and coal prices also played against the dollar, reducing the likelihood of an energy collapse in Europe.

At the end of the week, on Friday October 29, the dollar was able not only to win back losses, but also pushed the EUR/USD pair down to three-week lows. Investor positioning was key to this after the release of the US Fed's report on economic conditions, known as the Beige Book, ahead of the regulator's meeting next week. “With the Fed set to move to reduce asset purchases and flexibility, which is likely to be a key feature of future policy, the risk/return ratio becomes more positive for the dollar,” TD Securities analysts explained.

The dollar was also supported by a monthly gain on risk assets, a rise in bond yields to 1.672% (the highest since May) and good macro statistics from the US: the rise in the underlying PCE (Personal Consumption Expenditure) remained at 3.6% in September, in line with August. However, the European statistics caused another anxiety attack at investors, showing an acceleration in inflation and a sharp slowdown in GDP growth.

Despite the fluctuations of EUR/USD over the past few weeks, 100% of the trend indicators on D1 are looking south. But among oscillators, these fluctuations caused a certain amount of confusion: only 40% of them point south, 30% look north and 30% east. There is no unity among experts either. 30% vote for the growth of the pair, 55% for its fall, and 15% for lateral movement. Support levels are 1.1520, 1.1485, 1.1425 and 1.1250. Resistance levels are 1.1580, 1.1625, 1.1670, 1.1715, 1.1800, 1.1910.

As for important events and the release of macroeconomic statistics, there will be a lot of both in the coming week. German retail sales volumes and the ISM business activity index in the US manufacturing sector will be released on Monday November 01. The value of ISM in the service sector, as well as the ADP report on the level of employment in the US, will become public on Wednesday November 03. We will have such a key event as the Fed meeting on the same day, including the interest rate decision, as well as comments from its management on the US Central bank monetary policy. Christine Lagarde, head of the European Central Bank, is scheduled to speak on Wednesday and Thursday.

As usual, the first Friday of the month, November 05, will see data from the US labour market, including such an important indicator as the NFP, the number of jobs created outside the US agriculture sector. Eurozone retail sales statistics will be released the same day.

GBP/USD: Ahead of Fed and Bank of England Meetings

The Consumer Price Index (CPI), which reflects the retail price performance of goods and services that make up the consumer basket of United Kingdom residents, and is a key inflation indicator, was +0.3% in September (vs. +0.4% and +0.7% in August). On a year-on-year basis, the UK CPI grew by +3.1% (vs. +3.2% forecast and +3.2% in August). Although indicators showed inflation slowing in September, analysts expect it to accelerate sharply in October due to high energy prices, utility tariffs and a partial increase in VAT.

The coming week is not only the week of the Fed meeting, but also of the Bank of England, which will take place on Thursday November 04. According to a number of experts, the slowdown in inflation in September is unlikely to force the UK regulator to stop raising its key interest rate in the coming months (now at 0.1%).

The threat of stagflation, combining weak GDP growth and high inflation, is highly dangerous for the British economy, which is still being pressured by the effects of Brexit. According to the Bank of England experts, the annual inflation rate will accelerate to around 5% by April 2022 and fall to the 2% target as late as by the end of 2022. This is a very fast pace, and the head of the central bank, Andrew Bailey, has recently said that at such rates, it may be necessary to act and raise interest rates faster than originally planned.

Many investors now believe that the interest rate on the pound could reach 0.45% by the end of 2021 and 0.95% by June 2022, which is supposed to lead to a stronger pound. However, in the current substandard situation, things are not so simple, and the curtailment of monetary stimulus could lead to a deterioration in the British economy, deepening crisis and a drop in living standards of the UK residents. Retail sales volumes (excluding fuel), as determined by the Office for National Statistics, have shown a year-on-year decline of -0.9% to -2.5% for three consecutive months, suggesting that people have started saving.

The last week and a half shows that the bullish momentum on the GBP/USD pair that started on September 30 has dried up and, thanks to the same factors listed for EUR/USD, the pound ended the trading session at 1.3685 a month later.

Intrigue as to how the market will react to plans by the US Fed and Bank of England to wind down QE remains for now. But it's safe to say that coming Wednesday and Thursday, when these regulators meet, promise to be very interesting, high volatility is guaranteed. At the same time, 40% of experts are betting on the bears winning, 30% along with the graphical analysis on D1 support the bulls, and the remaining 30% have taken a neutral position.

As many as 50% of the oscillators are neutral grey. The readings of the rest oscillators are divided equally: 25% for the red and 25% for the green. As for trend indicators on D1, reds win with a clear advantage, they are 80%. Support levels are 1.3765, 1.3675, 1.3600, 1.3575, 1.3525 and 1.3400. The resistance levels and targets of the bulls are 1.3725, 3770, 1.3810, 1.3835, 1.3900 and 1.4000.

USD/JPY: The Yen Has Its Own Path


Charts from the past two and a half weeks show that the upward momentum has dried up for USD/JPY as well. Only if, in the case of GBP/USD, the dollar has been weakening against the pound since the end of September, on the contrary, it has been strengthening against the yen.

The Japanese currency is a safe haven currency for investors. And its recent weakening fits logically into a stable inverse relationship between the yen rate and the growing risk appetite of the market. It should also be added that another trigger for the yen's weakening was the shift in Japan's trade balance towards imports, due to a spike in energy and metal prices. And, of course, one cannot ignore such an important factor influencing the USD/JPY quotes as the yield of US Treasury bonds. However, it is also directly related to the market's risk-aversion.

USD/JPY upgraded its four-year high on October 20 to reach 114.70 high, the very point where it was in November 2017. After that, the enthusiasm of the bulls subsided, and the pair went down, ending last week at 113.95.

At this stage, 70% of analysts expect the pair to first return to the 113.00 horizon, and then drop to the 111.00-112.00 zone by the end of November. The remaining 30% of experts adhere to the opposite point of view, expecting the next update of multi-year highs and the rise of the pair to the range 115.00-116.00.

The resistance levels are 114.35, 114.70 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. The nearest support levels are 113.85, 113.40 and 113.25, then 112.00 and 111.65.

As for the events of the coming week, the release of the report of the Bank of Japan's Monetary Policy Committee meeting on Tuesday November 02 could be noted. However, it is likely the market will react to it fairly calmly. Especially since this event will take place just one day before the US Fed meeting, which will be the focus of all investors and speculators.

CRYPTOCURRENCIES: Ethereum Renews Its High

The historical record of $66,925 set by bitcoin on October 20 has not yet been broken. The imminent correction that followed taking that height brought forward a fierce bull and bear fight. The forces proved to be about equal. As a result, after swaying in the $57,590—63,645 range, the pair returned on Friday October 29 to roughly where it had been seven days earlier, to the $62,000 zone. The total crypto market capitalization is also unchanged at $2.6 trillion, but bitcoin's share has decreased somewhat: its dominance index has dropped from 45.94% to 44.15%. This was due to capital flows into altcoins, primarily ethereum, which rose from 18.72% to 19.61% over the week. The Crypto Fear & Greed Index is still in the Greed zone at 70 points (75 weeks ago).

Most analysts believe that the upward trend of the BTC/USD pair will continue. This is supported by statistics. Coin outflows from the exchanges have resumed, according to Glassnode. Bitcoin network hash rate has almost recovered after China's mining ban, which caused it to drop by 50%. At the same time, bitcoin supply is quite low: miners and investors are holding their reserves in the expectation of further price growth.

The macroeconomic background is also favourable. The New York Stock Exchange continues to list bitcoin-related ETFs. True, there is information that the Securities and Exchange Commission (SEC) is likely to reject Valkyrie's application to launch a leveraged ETF. Other of the 40 filings currently under consideration by the SEC, apart from applications to launch ETFs on bitcoin futures, will not receive the green light either. But those that will be approved are quite enough to ensure a solid inflow of funds into this sector from investors saving their capital from inflation.

The good news for BTC is that payments giant Mastercard will soon announce cryptocurrency support on its network. This includes bitcoin wallets, credit and debit cards, and loyalty programs where points can be converted into digital assets.

The American company Walmart Inc., which operates the world's largest wholesale and retail chain, has also turned to the main cryptocurrency and launched a pilot program to sell bitcoins in its stores.

Crypto trader and analyst known as Altcoin Sherpa is confident that bitcoin will not fall below the $54,000 zone where the strong support is located and, pushed back from it, will update its historic high in November, exceeding $80,000.

Another prominent analyst, PlanB, also expects a parabolic increase in the price of bitcoin. As a reminder, PlanB is the creator of the Stock-to-Flow (S2F) model, which predicts the price of the flagship cryptocurrency, and which allowed it to accurately predict BTC prices in August and September. And if bitcoin continues to follow this model, it will reach $98,000 in November and $135,000 in December. “So, it's going to be a really good Christmas this year,” declared PlanB.  At the same time, the expert believes that the flagship cryptocurrency is unlikely to be able to avoid another major correction that historically follows each major bull cycle.

Another popular cryptanalyst and trader Lark Davis expects that “the next six months are likely to be mega-crazy for bitcoin and cryptocurrencies! Many of you will get the chance to completely change your financial destiny,” he tweeted.

Davis does not advise investors to get carried away with speculative altcoins and NFTs in the current situation, but to bet on time-tested coins. “Let the winners win, double and even triple your positions and cut the losers. Do it mercilessly, there is no point in keeping dubious assets,” writes Lark Davis.

In his view, BTC could increase investor savings by 20 times over the next 10 years, but individual altcoins could generate comparable returns much sooner. “Altcoins are for making money, BTC is for storage,” the expert explains.

The leading altcoin seemed to have heard Lark Davis's words. While bitcoin was hovering around $60,000-61,000, ethereum renewed its all-time high, peaking at $4,447 on October 29. The previous record of $4,360 was set back in May.

The ETH/USD pair is bursting up for the fifth week in a row, having added more than 65% since September 21. The reason for this growth is the coin-burning process that takes ETH tokens out of circulation. Another factor that pushed this altcoin up was the news of the successful start of the Ethereum 2.0 Altair update for the Beacon Chain, which brought the moment of the full launch of ETH 2.0 even closer.

And another piece of news that will be of interest for those who think not only about their future, but also the future of their children and loved ones. Russian insurance company Renaissance Life and InDeFi SmartBank have started jointly developing smart contracts to help inherit digital assets. With the growth of the cryptocurrency market, the problem of inheriting such property has become quite acute. Since cryptocurrencies are decentralized, in the event of the death of the owner, the heirs simply cannot dispose of the property of the deceased without access to the cryptocurrency wallet. Smart contracts under development should solve this problem by enabling the client to transfer the disposal of digital assets to their designated heir in the event of their death.


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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EUR/USD: In a State of Uncertainty

When giving their forecast a week ago, 20% of analysts were in favour of a decline in EUR/USD, 50% voted for it to rise, and 30% were neutral. As a result, 80% of those who pointed north and east were right. After starting at 1.1600, the pair first rose to 1.1668, then fell to 1.1616, and then moved sideways in this channel. After Friday's speech by the Fed Governor, the pair dropped to the bottom of this trading range but finished almost in its middle at 1.1643.

According to Reuters, Jerome Powell said it was time to start reducing asset purchases but added that it was not yet time to raise rates. In his view, high inflation is likely to continue into next year, but the central bank expects it to return to the 2% target.

The figures coming in the week from the US labour market could be considered positive. This was due to a larger revision of the previous data on repeated claims for unemployment benefits, from 2.593K to 2.603K. Thus, the current number of 2.481K showed a decrease of 122K instead of the forecast 118K.

Such "tricky" mathematics improved data on primary benefit claims as well. As a result of revising previous results, they decreased by 6K instead of increasing by 2K.

However, all this positive has not helped the dollar much, as US Treasury yields remain around 2.15%, while the probability of its growth towards 3.0% remains.

Weaker Markit PMI in German and Eurozone manufacturing sectors could push the EUR/USD pair down on Friday 22 October. But they turned out to be multi-colored. The European index turned into the red, dropping from 56.2 to 54.3 against a forecast of 55.2. But the index of the main locomotive of the European housekeeper, Germany, on the contrary, is green at 58.2 against the forecast 56.5.

The fact that the US labour market continues to improve should, in the end, provide more support to the dollar. Fed Governor Jerome Powell has repeatedly stressed that the monetary stimulus (QE) program is aimed at stabilizing the labor market, among other things. This task, although not fully accomplished, is very close to the goal. Consequently, there is nothing preventing the Fed from starting to reduce monetary stimulus in the near future.

So, what to expect from EUR/USD in the near future? Whereas 55% of the oscillators on D1 were painted red, 15% green and 30% neutral grey a week ago, the picture has changed now. 50% of the indicators are pointing up, 20% have taken a neutral position, 15% are looking down, and the remaining 15% are signaling that the pair is overbought. As for trend indicators, their readings have also been affected by the sideways movement of recent days, resulting in a draw of 50% by 50%.

The overwhelming majority of analysts expect the dollar to strengthen by the end of the year. But their opinions are almost equally divided about the forecast for the coming week. 45% of experts vote for the bullish scenario, as much as bearish, and 10% have taken a neutral stance.

Support levels are 1.1615, 1.1585, 1.1560, 1.1520, 1.1485 and 1.1450. Resistance levels are 1.1670 1.1715, 1.1800, 1.1910.

As for next week's events, the Eurozone Bank Lending Report which will be published on Tuesday 26 October should be noted. Capital and durable goods orders are due from the US on Wednesday October 27. We are expecting quite a lot of macro statistics on Thursday and Friday, including consumer markets and GDP data from the Eurozone, Germany and the United States. In addition, the European Central Bank will meet on October 28. The interest rate is likely to remain unchanged at 0%. Therefore, the subsequent press conference and commentary by the ECB management on monetary policy is of much greater interest.

GBP/USD: Wherever the Euro Goes, the Pound Goes

Last week's GBP/USD chart is very similar to the EUR/USD chart: sideways movement with some advantage to bulls and finish just above the start level, at 1.3758. This stems from the absence of many serious drivers from the other side of the Atlantic, as well as from the statistics from the UK itself.

UK consumer price growth slowed from 3.2 per cent to 3.1 per cent, which is a good signal for investors fearing global inflation. However, the market has hardly reacted to these figures, keeping a close eye on gas prices, as the energy crisis is now a major threat not only for the United Europe but also for the UK that separated from it. Inflation is certainly very important, but the country is repeating the path already taken by the Eurozone and the United States, where it was followed by strong growth following a slight decline.

The Markit Business Activity Index (PMI) in the British services sector published on Friday, October 22, rose from 55.4 to 58.0 instead of the expected decline. This didn't help the pound. The dollar, with the help of Jerome Powell, who made a speech shortly before the markets closed, strengthened not only against the euro, but also against the British currency.

Unlike its European counterpart, the pound had been growing since September 29. And this could not but affect the readings of the indicators on D1, among which the advantage is still on the side of the green. Among the oscillators, these are 55%, 25% are grey and 20% signal that the pair is overbought. Among the trend indicators, 60% are looking north, 40% have already turned south.

As far as experts are concerned, there is no discernible advantage: 35% vote for the pair's growth, 25% for its decline, and 40% for movement in the side channel.

The supports are located at levels 1.3740, 1.3675, 1.3600, 1.3575, 1.3525 and 1.3400. The resistance levels and bull targets are 1.3770, 1.3810, 1.3835, 1.3900 and 1.4000

USD/JPY: Return to 2017

USD/JPY upgraded its four-year high on October 20 to reach 114.70 high, the very point where it was in November 2017. After that, the enthusiasm of the bulls subsided, and the pair returned to the values of a week ago.

While the dollar has strengthened against the euro and the British pound since Fed Governor Jerome Powell's speech on October 22, it has weakened a bit against the yen as a safe haven currency. As a result, the final chord sounded at around 113.42.

As we know, the pair's performance is strongly influenced by the yield of US government bonds, which hovers around 2.15% so far. However, if it rises, USD/JPY will see a new rise in volatility.

At this stage, 65% of analysts expect the pair to first return to the 113.00 horizon, and then drop to the 111.00-112.00 zone by the end of November. The remaining 35% of experts adhere to the opposite point of view, expecting the next update of multi-year highs and the rise of the pair to the range 115.00-116.00.

The resistance levels are 114.45, 114.70 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. Support levels are 113.25, 112.00 and 111.65.

As for the events of the coming week, one could note the meeting of the Bank of Japan, which will be held on the same day as the meeting of the ECB, on Thursday October 28. However, it is highly likely to bring no surprises, and the interest rate will remain negative at minus 0.1% as before.

CRYPTOCURRENCIES: $66,925: Bitcoin's New High


Bitcoin hit $64,850 on April 14, followed by a 55% pullback to $29,230. And now what crypto investors have been waiting for has finally happened. After months of anxiety and anticipation, the BTC/USD pair not only regained what it had lost, but also upgraded its historic high, peaking at $66,925 on October 20. Ethereum also reached its all-time high: the ETH/USD pair was noted at a height of $4,363.

Analysts say the reasons for the current rise are two. The first is the launch of Bitcoin ETFs (exchange-traded investment funds). First, the US Securities and Exchange Commission (SEC) approved a Bitcoin futures ETF from ProShares, followed by approval of VanEck's application to launch a similar ETF.

The second and main reason for the bullish trend was investors' concerns about inflation. Experts at JPMorgan Chase, the largest banking conglomerate, pointed out that real gold, unlike digital gold, has hardly responded to inflationary concerns. This suggests bitcoin's renewed role as the best capital protection tool for investors and supports the bullish outlook for BTC until the end of the year.

Many other analysts agree with JPMorgan Chase, who are optimistic about the performance of the main cryptocurrency until the end of December. But at the same time, they urge investors to be extremely cautious in early 2020 as the big four-year BTC cycle is about to end. So Scion Capital hedge fund founder Michael Burry, who predicted the 2007 mortgage crisis, has already thought about opening a short bitcoin position.

Finder conducted a survey of 50 fintech industry experts with representatives from Cypherpunk Holdings, Bitcoin Reserve, Kraken, Arcane and CryptoQuant, as well as 7 professors, representing universities in Asia, Europe and Australia. In their opinion, the BTC rate will peak at a level slightly above $80,000 within the next two months, and the flagship cryptocurrency will end the year around $71,400.

The levels indicated by these experts turned out to be significantly lower than the forecasts of analysts of Standard Chartered and Bloomberg, who believe bitcoin could exceed $100,000 this year.

Popular crypto analyst Willy Woo believes that the next phase of the bitcoin market will be more volatile than previous bullish periods, implying a longer time frame for the current cycle. recall that this analyst wrote in a series of Twitter posts a year ago that, according to his model, $200,000 per bitcoin by the end of 2021 is a conservative forecast. However, he did not exclude the likelihood that BTC will soar up to $300,000.

Morgan Creek Capital Management CEO Mark Jusko calls the numbers similar to Willie Woo's predictions. He suggests that the price of the oldest cryptocurrency could soar to the level of $250,000, only to happen not in 2021, but in the next 5 years. In doing so, he acknowledged that the path to such a peak may not be easy.

In the meantime, there is a rollback in the crypto market. The most cautious investors close long positions. Bitcoins are also sold by those who bought them at the spring highs. They have earned a little and do not want to risk again.  A glitch in the algorithm on the Binance.US exchange added fears as well, when the price immediately collapsed by 87%. However, the performance of other exchanges and brokers was not affected by this, and the BTC/USD pair was trading at $61,000 at the time of writing. The total crypto market capitalization is $2.6 trillion, and the Bitcoin Dominance Index is 45.94%. The Crypto Fear & Greed Index is in the Greed zone at 75 points. However, this does not mean that the market is strongly overbought, and, in the opinion of the index developers, it can still be dangerous to open short positions in this situation.


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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EUR/USD: Correction or Trend Change?

Having reached a local low of 1.1523 on Tuesday October 12, EUR/USD ended a five-week downward marathon, turned, and moved up. Since autumn started, the dollar has won back 385 points from the euro. And is the pan-European currency going to regain losses now?

The situation is actually ambiguous. Some experts expected a much more powerful correction further north. But it didn't happen: the pair managed to rise only to 1.1624 and ended the five-day run at 1.1600.

The week's data show that the US economy continues to recover fairly quickly, increasing to almost 100% the chance that the Fed will start tapering monetary stimulus (QE) program next month.

Initial claims for unemployment benefits in the US fell to 293,000 for the first time since the start of the COVID-19 pandemic (down 36K against 14,000 forecast). And the number of those already receiving benefits, with the forecast of 78 thousand, decreased by 134 thousand: from 2.72 to 2.59 million. Producer prices also showed an increase, from 8.3% to 8.6% (with a forecast of 8.5%). Year-on-year, therefore, inflation of these prices showed the most powerful uptick in history.

It should be noted that the Producer Price Index serves as a leading indicator for consumer prices. And consequently, inflation can be expected to continue rising, bringing the beginning of the end of QE closer. Especially as retail sales released on Friday 15th October were also in the green zone: ­plus 0.7% versus the forecast minus 0.2%.

 And here the question arises: if everything is so good in the US economy, why hasn't the pair continued its precipitous decline? Grasping at straws, euro-bulls are likely still hoping that the winding down of the fiscal stimulus program will be delayed at least until December. This is supported by the jump in stock indices: the S&P500 rose 3 per cent in the second half of the week (its highest gain in seven months) and the Dow Jones rose 3.4 per cent. This index has not seen such a big break in almost three months.

So what to expect from EUR/USD in the near future? Continuation of the downtrend after the correction? A stronger euro and an upward trend reversal? Or respite in the side channel?

The readings of the indicators on D1 look quite chaotic. Among oscillators, 55% are red, 15% green, and the remaining 30% are neutral grey. There is a lack of unity among trend indicators as well: 65% of them point south and 35% are looking north. The graphical analysis draws the pair's rise to 1.1725, then a fall back and move in the range of 1.1585-1.1725.

As for analysts, 20% favour further decline of the pair, 50% are for its growth, and 30% have taken a neutral stance. Support levels are 1.1585, 1.1560, 1.1520, 1.1485 and 1.1450. Resistance levels are 1.1625, 1.1685 1.1715, 1.1800, 1.1910.

For next week's events, the European Council meeting on Thursday October 21 and the Markit Manufacturing PMI in Germany and in the Eurozone as a whole on October 22 can be noted. The decision of the People's Bank of China on the interest rate, which will be made public on Wednesday, October 20, may also rock the pair.

GBP/USD: The Victory Is with the Pound So Far

Unlike its European neighbour, the British pound continues to strengthen actively against the dollar: the GBP/USD pair showed a 360-point gain (from 1.3412 to 1.3772) since September 29 and finished at 1.3744. The reason for this dynamic is understandable and lies in the Bank of England's intention to start tightening monetary policy and raising interest rates considerably in the foreseeable future.

As we have already written, according to Citibank experts, the pound is currently supported by the following factors. First is the UK's success in the fight against COVID-19. Secondly, the reduction of political risks associated with the negotiations between the EU and the UK on the Northern Ireland Protocol and the rejection of the referendum on the independence of Scotland. And of course, this is the decision of the Bank of England on a possible increase in the key interest rate to 0.25% in May 2022 and to 0.50% in December. Such prospects for UK monetary policy, according to Citibank analysts, are “well placed to confront Fed policy”, which is what we have seen during October.

However, once the Fed moves to wind down its QE programme, things could change dramatically in favour of the dollar. 60% of experts predict at the moment that the pair will head south again to test the supports at 1.3675, 1.3600, 1.3575, 1.3525 and 1.3400. 20% of analysts vote for the continuation of the upward trend (resistance levels and targets of bulls 1.3770, 1.3810, 1.3900 and 1.4000). And 20% of experts, supported by graphical analysis on D1, predict a sideways trend.

Among the indicators, a significant advantage is still on the side of the green. 60% of oscillators and 100% of trend indicators indicate the continuation of the uptrend on the daily timeframe. 25% of oscillators signal that the pair is overbought, and 15% are in a neutral position.

As for the economic calendar for the coming week, attention should be paid to such an important measure of inflation as the UK CPI (due on Wednesday October 20), as well as Markit's UK services PMI to be released on Friday October 22.

USD/JPY: Per Aspera Ad Astra


There is such an expression in Latin, Per aspera ad astra, the authorship is attributed to the ancient Roman philosopher Lucius Anna Seneca. It literally translates as "Through hardships to the stars” and means "Through difficulties to victory." This is exactly what the USD/JPY bulls won.

Most experts expected that they would not calm down until they took the 112.00 height by storm. And now, finally, their months-long efforts have succeeded. And in a great way. After jumping 222 points over the week, the pair reached a height of 114.45 on Friday October 15, and the last chord was slightly lower at 114.21, near the upper limit of the trade range since the beginning of 2017.

Such a fiasco of the Japanese currency is fully consistent with its role as a haven currency and reflects a stable inverse relationship between its rate and the demand for risks. The growing interest of investors in the American and Japanese stock markets (the Japanese stock index Nikkei 225 grew in parallel with the S&P 500) dealt a strong blow to the yen. A pullback in energy prices, which the country mostly imports, supported the market's appetite for Japanese stocks as well.

According to Japanese Finance Minister Shunichi Suzuki, the weak yen supports exporters, but inflates import costs for a number of companies and consumers. At the same time, he said that the stability in the Forex market is important for the government, and it closely monitors the impact of exchange rates on the Japanese economy. But the minister refused to comment directly on the current situation.

However, the yen's fall in two weeks of October looks too fast against the background of the dynamics of the last five months. And this could be the reason for a strong correction of the USD/JPY pair to the south. So 70% of analysts believe that the pair will return to the 111.00-112.00 zone within the next three to five weeks. However, the bulls will have the advantage in the short term. According to 55% of experts, the continued interest of investors in the stock market could lead to further weakening of the Japanese currency.

At the time of writing this review, 75% of oscillators and 100% of trend indicators on D1 indicate further growth in the pair. 25% of oscillators signal that it is overbought and a possible correction. The resistance levels are 114.55 and 115.50, the long-term target of the bulls is the December 2016 high of 118.65. Support levels are 113.80, 113.25, 112.00 and 111.65.

CRYPTOCURRENCIES: BTC's New Target Is $68,000

China-related news almost reversed the bitcoin trend south again on Wednesday, October 13. Binance, the largest cryptocurrency exchange, has announced, following other exchanges, that it will stop serving Chinese clients and remove the yuan from the list of supported currencies as of December 31.

Prior to Beijing's repressions, residents of this country formed one of the major parts of the crypto community, with the country leading bitcoin mining. Back in 2020, its share was 50-60% of the global hash rate. The situation has changed dramatically since then and, according to Cambridge University, the top three in crypto mining are now the United States (35.4%), Kazakhstan (18.1%) and Russia (11.2%).

If you look at the map, you can see that the last two of these countries have a land border with China, which made it possible to move numerous mining equipment there. As a result, illegal miners in some Russian border regions have increased annual electricity consumption by 160%.

Time will tell whether China will win or lose from the imposed bans. This applies to other countries as well, some of which seek to tighten legislation in this area as much as possible, while others are very loyal to digital assets. For example, Director of US National Intelligence John Ratcliffe sent a letter to the SEC chairman last year asking him not to restrict the activities of US miners. There is no need to talk about El Salvador, which recognized bitcoin as the official currency.

Interestingly, this decision was heavily criticized by ethereum creator Vitalik Buterin. “Shame on everyone (okay, I'll name the main culprits: shame on bitcoin maximalists) who praise him [El Salvador President Nayib Bukele] without any criticism,” Buterin wrote on Reddit. And he stressed that the process of forcibly integrating digital assets into the financial system “runs counter to the ideals of freedom that should be appreciated by members of the cryptocurrency community. In addition, the tactic of simultaneously distributing BTC to millions of El Salvadorians with little or no prior training is reckless and fraught with the risk of large numbers of innocent people being hacked or tricked."

The Capgemini Research Institute is also concerned with the question of how widely cryptocurrencies have entered the life of ordinary people. In addition to surveys conducted in many countries, it examined statistics from the Bank for International Settlements, the European Central Bank, the International Monetary Fund, the World Bank and other central banks.

Capgemini noted that less than 10% of consumers currently use cryptocurrency for payments. However, the institute predicts that nearly 45% of customers will use this new payment method in one to two years. This trend will be supported by the growing demand for international payments and the reluctance to pay high transaction fees.

If the world's leading powers don't start chasing bitcoin after China, the flagship cryptocurrency has a lot of chances to to bypass leading corporations and even entire sectors of the world economy in terms of capitalization.

According to Coinmarketcap, the largest capitalization currently belongs to Apple ($ 2.34 trillion), followed by Microsoft, Google, Amazon, and BTC is in fifth place. If you look at the statistics, the total capitalization of the stock market is currently about $100 trillion, the capitalization of the gold market is around $12 trillion, the total capitalization of the cryptocurrency market at the time of writing the review is $2.42 trillion, and the capitalization of BTChas already reached $1.12 trillion (dominance index 46.24%).

Bitcoin continued to delight investors over the past week. Over the seven days, the BTC/USD pair rose 16% to reach a local high of $62,880. Projections supported by many experts suggest that it will soon test the historic high of $64,810 on April 14. If successful, taking into account the statistical volatility, the pair will reach the $68,000, followed by a serious correction associated with massive profit taking.

However, despite a possible pullback, the mid-term outlook for this pair remains positive. The next major resistance level is located in the $80,000-81,000 area. American Crypto Exchange Kraken experts believe that the price of the flagship asset could reach $100,000 by the end of 2021. Based on the analysis of the dynamics of previous years, a calculation was made, according to which, the price of bitcoin tends to grow during the fourth quarter of any year. During this period, "the average and median returns reached +119% and +58%, respectively." If the average return of the previous 2020 year recurs, BTC could end the year close to $100,000. More precisely, around $96,000. However, if we see not the average, but the median profitability, Kraken experts write, then the price of bitcoin will rise to about $70,000.

The Crypto Fear & Greed Index climbed from the Fear Zone to the Greed Zone in the two weeks of October to reach 71 points. However, this does not mean that the market is strongly overbought, and, in the opinion of the index developers, it can still be dangerous to open short positions in this situation.


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.

[You must be registered and logged in to see this link.]

EUR/USD: First Down, Then Up


The global economy is recovering from the effects of the COVID-19 pandemic, and this process will continue in 2022. At least. The forecast for global GDP growth of 6% is maintained this year. Growth will continue (unless there are new “surprises”) to roughly 5% next year, according to preliminary forecasts. However, this is an average indicator, and it is the difference in the rates of recovery of the economies of different countries that will affect the rates of their national currencies.

You can see quite different vector behavior of the EUR/USD pair since the beginning of the pandemic. Having started at 1.0635 in March 2020, the pair was already at 1.2350 in early January 2021. The weakening of the dollar has been affected by the intense pumping of the US economy with a huge dollar mass as part of the monetary stimulus (QE) policy implemented by the US Federal Reserve.

With the start of a new 2021 and the arrival of the administration of a new President Joe Biden in the White House, the market has a feeling of greater stability and the imminent winding down of QE. All the more so because macroeconomic indicators, particularly inflation and the labor market recovery, were encouraging. The dollar gained muscle and the EUR/USD pair dropped to 1.1700 by the end of March.

But dovish sentiment prevailed among the Fed's leadership, the pumping of the economy with money continued, the beginning of the curtailment of the quantitative easing program was postponed indefinitely, and one could not even think about raising the base interest rate. And the pair rose above the important psychological level 1.2000 again, reaching the height of 1.2265.

The competition between the central banks of Europe and the United States certainly did not end there. But while the ECB's rhetoric continued to be dovish, the statements of some Fed leaders already sounded a harsh hawkish note. Investors started to expect that the Fed would begin to roll back QE at the end of this year and will complete it in 2022, in order to start raising the discount rate in early 2023. And the dollar gained ground again, dropping the pair back into the 1.1700 zone.  

At its September meeting, the American regulator did not announce any specific plans regarding the curtailment of the monetary stimulus program. But, if decision-making dynamics remain the same, the Fed will be ahead of the ECB by about six months.

On this basis, many experts predict the dollar will continue to strengthen in late 2021 and in the first half of 2022. In this case, the pair will continue to move south, first to support 1.1500 and then to 1.1200. Some particularly zeal bears predict the pair will even drop to the lows of March 2020.

As for the second half of 2022, according to a number of forecasts, the US economic situation will stabilize, while the “slow” Eurozone, on the contrary, will begin to gain momentum. A reduction in the European QE program and a rise in the euro interest rate could reverse the trend and return the pair to the 1.1700-1.2000 zone.   

It is clear that the dynamics of the pair depends on many factors on both sides of the Atlantic Ocean: political, economic, and in recent years, epidemiological. One other major player is China, which also has a strong influence on the economies of both the Old World and the New World. Therefore, it should be understood that everything said is based on a vision of the situation at the moment, and can be (and should be) subject to adjustment many times over the coming months.
 

Cryptocurrencies: Virtual and Real Gold

While there is a rough understanding and political and economic justification of forecasts with the major currency pair EUR/USD, things look much more complicated as far as cryptocurrency is concerned. Despite the assurances of influencers, this market looks more like the epicenter of mass speculation over the past 1-1.5 years, rather than a reliable investment platform. The year is not over yet, but bitcoin has already managed to soar from $28,550 in January to $64,800 in April, then collapsed to $29,300 in July, and then repeat this rally, only on a slightly smaller scale.

The rate of the BTC/USD pair can be influenced not only by the decisions of US regulators and the Chinese government, but even the mood Elon Musk has woken up in. One of his tweets can make you a millionaire or rip you to the bone. That's why NordFX brokerage gives its clients the opportunity to make money not only on the growth, but also on the fall of cryptocurrency rates, even without having a single token in stock. Why take the risk and buy bitcoin and then sell it? After all, you can just open a sell trade right away.

Nobody knows exactly how much the reference cryptocurrency will cost. Expert opinions vary widely. Some, like Standart Chartered, see $100,000 by the end of this year, and some predict a rise to the same $100,000, but only by the end of 2022. And some, like the Nobel laureate Robert Schiller, are sure that this bubble will burst soon, burying the two trillion USD plus that the investors have invested in this market.

Much will depend on the recovery of the US economy, the pace of the winding down the monetary stimulus (QE) programme, the prospects for the Fed raising interest rates and the dynamics of treasury yields. These are factors that can severely reduce the risk appetite of institutional investors and return them to more familiar financial instruments.

For ethereum, the forecast of Standard Chartered experts is as favorable as for bitcoin and looks very optimistic. A range of $26,000-35,000 per coin was announced in an interview for Reuters. But that's not the limit either, especially if the bitcoin rate approaches $175,000 by the end of 2022.

According to a report by the major investment bank Goldman Sachs published in Forbes, the base cryptocurrency has the chance to lose its leading position, giving way to ethereum. Goldman Sachs believes that the main reason for the popularity of the main altcoin is the ability to create new applications. And also the fact that many financial instruments can be replaced on the basis of its platform. This includes, among other things, loans and other banking operations.

As for real, not digital, gold, a number of experts believe that this precious metal has yet to run out of growth potential in 2022. They do not rule out that the XAU/USD pair could break the August 2020 record and rise to $2,200-2,300 per ounce. However, the price performance of this reserve asset will also depend on investors' willingness or reluctance to take risks, as mentioned above.


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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