Daily Market Analysis and News From NordFX

[Stan NordFX]

USD/JPY: Bulls Wary as Bears Anticipate Currency Interventions

As for Japan, the question of "economy or inflation" is not up for debate; the answer is unequivocally the economy. On Wednesday, September 6, Kyodo News, citing anonymous sources, reported that the Japanese government apparently plans to roll out new economic stimulus measures in October. Reuters, quoting Japanese media outlets, identified the primary goals of the stimulus as "supporting wage increases within companies and mitigating electricity costs." "It is expected that Prime Minister Fumio Kishida will task [the responsible parties] with preparing a draft […] to allocate additional budget resources for these measures," the report stated. Reuters also presented an analysis indicating that the country's debt burden will increase due to the announced stimulus measures. According to estimates, Japan's debt, which is already twice its GDP, will hit a record level of 112 trillion yen (760 billion dollars) in the next fiscal year.

It becomes clear that under such circumstances, inflation will continue to rise. Meanwhile, USD/JPY continues its upward movement, reaching a level of 147.86 on September 7, marking a 10-month high. On Friday, September 8, Japan's Finance Minister Shunichi Suzuki reiterated once again that the country's authorities "are not ruling out any options to combat excessive currency fluctuations." However, no market participants believe in a rate hike anymore, given that it has been stuck at a negative level of -0.1% for many years. Concerns are growing among investors that the Ministry of Finance and the Bank of Japan (BoJ) may finally resort not to verbal, but to actual currency interventions, as was the case last fall. According to the same Reuters report, Japan's chief currency diplomat, Masato Kanda, stated that Japanese banking authorities are considering the possibility of intervention to put an end to "speculative" movements.

Against the backdrop of the DXY Dollar Index holding around 105.00, its highest level since March, only currency interventions by the Bank of Japan could help the yen strengthen its position somewhat. However, according to some analysts, the main reason for the yen's weakness lies in the disagreements among the country's politicians regarding its monetary policy.

The final point of the past trading week was marked at 147.79. Strategists at UOB Group anticipate that the continuation of the upward momentum could push USD/JPY towards an assault on the 149.00 level in the coming weeks. As for the consensus forecast, only 20% of analysts still believe in the dollar's potential and the pair's further growth. Bears have gained the favour of 80%. (It's worth noting that even a 100% consensus does not guarantee the accuracy of the forecast, especially when it comes to the Japanese yen.) As for the trend indicators and oscillators on the D1 chart, all 100% are coloured green, although 40% of these are signalling overbought conditions. The nearest support level lies in the 146.85-147.00 zone, followed by 146.10, 145.55-145.70, 145.30, 144.90, 144.50, 143.75-144.05, 142.90-143.05, 142.20, 141.40-141.75, 140.60-140.75, 139.85, 138.95-139.05, 138.05-138.30, and 137.25-137.50. The nearest resistance stands at 148.45, followed by 148.85-149.10, 150.00, and finally, the October 2022 peak at 151.90.

No significant economic data concerning the state of the Japanese economy is scheduled for release in the upcoming week.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Fear and Doubt in the Market

For the third week, the market has been in a state of apathy. According to observations by crypto-millionaire William Clemente, the total trading volume for digital assets has fallen to its lowest levels since 2020. The BTC/USD chart on the H1 and H4 timeframes mostly resembles an ant trail, where these insects move in a thin, unbroken line.

The situation was invigorated by a court decision in the Grayscale case. This world-leading investment firm in cryptocurrency asset management won an appeal against the U.S. Securities and Exchange Commission (SEC). As a result, on August 29, bitcoin surged from $26,060 to $28,122 within three hours, showing its best growth rate in the last 12 months. However, the excitement was short-lived, as the SEC struck back by deciding to postpone until October the consideration of applications for spot bitcoin ETF registrations. Consequently, the flagship cryptocurrency returned to the support zone of $25,500.

Turning to technical analysis, this support corresponds to the Fibonacci level of 0.382. A break below this level could potentially lead to a fall to $21,700: the Fibonacci level of 0.618. Experts from Fairlead Strategies note that at the end of August, the digital gold's monthly chart confirmed an exit from the overbought zone on the stochastic oscillator, which could signal disappointment for bitcoin bulls. Analysts believe that this formed signal often indicates the passing of a local peak, as seen at the end of 2017 and the beginning of 2021. "The decline [in the stochastic oscillator] suggests that the bottom formation process may be prolonged. This is especially true when considering the Ichimoku cloud overhead, which serves as resistance (~$31,900)," said the report from Fairlead Strategies.

According to an analyst going by the nickname Tolberti, the BTC chart is forming a "head and shoulders" pattern, which threatens further price declines. Another argument supporting the bearish trend is that bitcoin is trading below its 200-week moving average (MA). As a result, Tolberti speculates that the leading cryptocurrency could fall to $10,000, with a possible reversal occurring in March 2024.

Negative forecasts are also coming from analysts at Cointelegraph. The fact is that bitcoin derivatives have started to show bearish tendencies. The BTC price chart leaves no doubt that investor sentiment has not improved following Grayscale's victory. Therefore, experts anticipate that the leading cryptocurrency's quotes could decline to $22,000 in the coming weeks.

Cointelegraph believes that not only the postponement of the launch of spot bitcoin ETFs is pressuring the market, but also U.S. regulatory actions against exchanges like Binance and Coinbase. Multiple sources claim that the U.S. Department of Justice (DOJ) is likely to charge the world's largest trading platform and initiate a criminal investigation. The allegations involve money laundering assistance and violation of sanctions against Russian companies.

Currently, market participants are in a state of limbo and are uncertain about what to expect. Regulatory uncertainty is favouring the bears. The derivatives market is ridden with fear and doubt, which benefits those betting on a decline, according to Cointelegraph.

We have previously noted that powerful catalysts for market growth in the medium and long term could be the launch of spot bitcoin ETFs and the bitcoin halving event scheduled for April 2024.

Recall that this summer, eight major financial institutions submitted applications to the SEC to enter the cryptocurrency market through spot bitcoin ETFs. Among them, in addition to BlackRock, are global asset managers like Invesco and Fidelity. According to some estimates, in the first six months after the ETF launch, new demand for the cryptocurrency could amount to $5-10 billion, and the value of BTC could rise to $50,000-120,000 per coin.

Despite the SEC's decision to postpone the review of applications until mid-autumn, the chances of approval are quite high. After all, BlackRock is not some small fish but a global investment giant, and it is in good standing with U.S. authorities. It's worth mentioning that when the Federal Reserve decided in 2020 to buy securities through ETFs to support the American economy, half of the volume went to BlackRock funds.

Interestingly, the company itself highly estimates the chances of application approval. This is evident from its purchasing of both bitcoin and shares of mining companies. In mid-August, it became known that BlackRock acquired shares of four major mining companies, spending a total of over $400 million. Larry Fink, BlackRock's CEO, has referred to bitcoin as digital gold and an international asset that potentially offers inflation protection.

Alistair Milne, the Chief Investment Officer of the Altana Digital Currency Fund, believes that the price of bitcoin could reach $100,000 even without the approval of spot bitcoin exchange-traded funds (ETFs). In his view, the ETF topic merely distracts market participants. Milne is confident that issues within the U.S. banking sector, the stabilization of risky assets following the end of the Federal Reserve's interest rate hikes and increasing profitability in the crypto-mining sector will drive the coin's price upward.

Arthur Hayes, the co-founder of the crypto exchange BitMEX, also thinks that due to issues in the banking sector, bitcoin is poised for substantial growth. According to him, the bull phase began after the Federal Reserve initiated a $25 billion program to stabilize the banking sector, notably including the "rescue" of Silicon Valley Bank. Hayes asserts that this situation has prompted traders to focus on assets with limited supply, such as bitcoin. While only a small fraction of market participants are currently taking this into account, he is convinced that their number will increase, and over the next 6-12 months, the leading cryptocurrency will experience a new surge.

As for the second driver, the halving, well-known blogger and analyst Lark Davis believes that this event could lead to a 500-600% increase in bitcoin's current price, potentially reaching around $150,000 to $180,000. However, with more than seven months to go before the halving, there are two upcoming events that could significantly influence investors' appetite for risky assets. These are the publication of U.S. inflation data on Wednesday, September 13, and the Federal Reserve meeting on September 20.

As of the time of writing this review, on the evening of Friday, September 8, BTC/USD is trading at around $25,890. The total market capitalization of the cryptocurrency market stands at $1.043 trillion, slightly down from $1.048 trillion a week ago. The Crypto Fear & Greed Index for bitcoin remains in the 'Fear' zone, registering at 46 points, up from 40 points a week earlier, though it is edging closer to the 'Neutral' zone.

In conclusion, another forecast comes from Artificial Intelligence. Utilizing several technical indicators, including Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), Bollinger Bands (BB), and others, the AI on the PricePredictions platform has calculated that the price of bitcoin should reach $26,228 by September 30. We don't have long to wait to see whether such intelligence can be trusted.


NordFX Analytical Group


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

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

CryptoNews of the Week

– Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, addressed the United States Senate, stating that the vast majority of cryptocurrencies fall under the jurisdiction of his agency. Consequently, all market participants, including exchanges, brokers, dealers, and clearing agencies, must mandatorily register with the SEC.
Gensler drew parallels between the current crypto industry and the tumultuous years at the beginning of the 20th century when securities market legislation was still in development. During that era, the agency implemented a series of stringent enforcement actions to regulate the industry, and many cases ended up in court. Similar measures are needed today. They are not only intended to deter entrepreneurs but also to safeguard investors, as perceived by the head of the SEC.

– Starting from November 1, 2023, Sarah Breeden will assume the position of Deputy Governor at the Bank of England. According to her current statements, cryptocurrencies do not currently pose a significant risk to the country's financial stability. However, they could become problematic if closely integrated into the financial world, such as in the case of using stablecoins for payments.
In her perspective, "cryptocurrencies are assets without intrinsic value. Their price can potentially drop to zero, so investors should be prepared for the possibility of losing all their money. Nevertheless, blockchain technology can be valuable for the financial system." The official has pointed out that recent events have underscored the risks within the cryptocurrency sector. Consequently, the cryptocurrency market's downturn has adversely affected two major American banks, Silvergate and Signature, and has also led to the collapse of the stablecoin UST, along with the bankruptcy of several crypto-lending institutions. Given the global nature of the cryptocurrency market, collaborative efforts among regulatory authorities are crucial for devising comprehensive oversight measures for crypto assets, as highlighted by Breeden.

– On Monday, September 11, the BTC price dropped below $25,000 despite the weakening dollar and rising stock indices. This drop occurred amidst rumours that the controversial exchange FTX plans to sell digital assets as part of a bankruptcy procedure. On Tuesday, investors started buying again at the lower price points, causing the coin's value to rise above $26,500.
According to several analysts, there is no fundamental justification for these fluctuations in the price of bitcoin. Essentially, due to low liquidity and a declining market capitalization, the asset is shifting between different groups of players. In reality, investors are looking ahead to September 20 when the next Federal Reserve (FRS) meeting is scheduled.

– We have previously reported on the case of James Howells, a programmer who accidentally discarded a hard drive containing cryptocurrency during an office cleanup in August 2013. Consequently, the hard drive, which held 7500 BTC, ended up in a landfill in Newport, United Kingdom.
Over the course of ten years, Howells has been petitioning local authorities for permission to search for his lost wealth. Recently, his legal representatives sent an open letter to the municipality, requesting access to the landfill site by September 18th. In the event of refusal, the unsuccessful crypto investor intends to initiate a legal lawsuit against the city council, seeking compensation for the value of the lost bitcoins, which currently stands at approximately $250 million. Howells also plans to challenge the authorities' decision to deny him access to the landfill.
Howells stated, "I've tried everything I could over the past decade, but they have been unwilling to cooperate, so I am left with no choice but to pursue legal action. They have even refused to engage in serious discussions about the matter. Regardless of the type of asset, whether it's bitcoin, gold, or diamonds, not addressing this issue is simply imprudent.".

– Analysts from the cryptocurrency platform Matrixport have issued a warning that if Ethereum (ETH) were to fall to $1,500, it could pave the way for a further drop to $1,000. This lower level is considered justified based on their revenue forecasts for the Ethereum blockchain ecosystem. Matrixport highlights that ETH is not a "super-hard currency" capable of resisting inflation, as last week, the number of newly issued coins exceeded the amount burned by 4,000, deviating from the deflationary model that the blockchain transitioned to when switching from Proof of Work (PoW) to Proof of Stake (PoS) consensus algorithm.

– Analyst Benjamin Cowen has set an even lower target. He stated that Ethereum is on the brink of "extreme swings," which could result in its price dropping to a range of $800 to $400 by the end of the year. This potential decline is linked to the possible reduction in the profitability of blockchain platforms built on Ethereum's smart contract technology.
According to Cowen, both the Ethereum bulls and bears "have suffered setbacks and failed to execute their strategies." This will likely lead to both sides realizing losses by the end of 2023.

– The Twitter account of Ethereum creator Vitalik Buterin was compromised as a result of a SIM card swap attack. Buterin had not enabled two-factor authentication, allowing the attacker to change the login password for his account by entering a code sent via SMS. Subsequently, the criminal posted a message on Buterin's behalf, falsely claiming a free NFT giveaway, and stole digital assets worth $691,000 from individuals who followed the provided link and linked their crypto wallets.

– David Marcus, co-founder of PayPal and CEO of Lightspark, a company specializing in integrating BTC payments using the Lightning Network, has made an unexpected statement. It turns out he himself doesn't believe that bitcoin will become a popular method of payment for purchases. Marcus explained that the currencies transmitted over the network will still remain fiat currencies that people are familiar with and use today. As for bitcoin, he likened it to a small data packet on the internet that is used to transfer values such as dollars, yen, or euros.

– Trader, analyst, and founder of the venture company Eight, Michael Van De Poppe, is predicting the last correction in the price of the leading cryptocurrency before an upcoming bull rally. In his view, if the bears manage to breach the exponential moving average line, which is positioned at $24,689, the worst-case scenario would see the coin drop to $23,000.
The specialist believes that this upcoming correction provides the final opportunity to buy bitcoins at a lower price. Institutional demand for digital assets is growing, so in the long term, the cryptocurrency's price will rise due to buying pressure.
However, it's worth noting that on August 17th, the BTC price broke below the ascending trendline that began in December 2022 and stayed below it. This suggests a high risk of a prolonged bearish trend.

– Dan Gambardello, the founder of Crypto Capital Venture, predicts that the next bull cycle could be the most impressive in the cryptocurrency market. The analyst has singled out ETH and XRP as cryptocurrencies to watch in the upcoming bull rally. His attention to these two altcoins is driven by Ripple's victory over the SEC in court and the approval of ETH ETF applications submitted by reputable fund managers.
At the same time, Gambardello has cautioned that the cryptocurrency market follows cycles, and it appears to be in an accumulation phase at the moment. Consequently, the analyst has warned that there is a possibility that the price of bitcoin could drop to $21,000 in the coming weeks. He attributes this potential drop to market manipulation by large players who may be suppressing prices and accumulating coins in anticipation of the next bull run.

– Prominent analyst known as CrypNuevo has analysed the current dynamics of bitcoin. According to this specialist, in the near future, the flagship cryptocurrency could reach the $27,000 mark. However, as the analyst emphasized, this is likely to be a false move. Furthermore, a subsequent drop is expected, potentially down to the $24,000 level.

– Mike McGlone, Senior Macroeconomic Strategist at Bloomberg Intelligence, has cautioned investors that the near future could be challenging for the crypto sphere. In his view, digital assets gained popularity during an era of zero interest rates. However, monetary policy is currently undergoing changes, which could pose problems for the industry. This is evident in the decline in Bitcoin's price, despite positive news about the impending approval of spot ETFs in the United States.
"Cryptocurrencies flourished during an unprecedented period of zero interest rates, but this policy is rapidly changing, with consequences for prices. In Q3, bitcoin dropped by 15%, despite the potential approval of spot ETFs. Cryptocurrency, traded around the clock and without weekends, could become one of the most accurate indicators of an impending reset in the global economy. It has been overly inflated with liquidity, and now we're witnessing a liquidity unwind," believes the analyst.
McGlone pointed out that by November, according to futures, the yield on US government bonds is expected to reach 5.45%. This is significant, especially when considering that from 2011 to 2021, this figure was only 0.6% annually, precisely when bitcoin and other digital assets experienced substantial growth. Therefore, the liquidity outflow from cryptocurrencies is not surprising.
(Recall that back in June, Mike McGlone had already warned about the potential decline in bitcoin's price and turned out to be correct).

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for September 18 - 22, 2023​

EUR/USD: ECB Triggers Euro Collapse

The past week was marked by two significant events. The first was the release of Consumer Price Index (CPI) data in the United States on September 13. The second was the meeting of the European Central Bank's (ECB) Governing Council on September 14.

Regarding the first event, the annual CPI in the United States rose from 3.2% in July to 3.7% in August, surpassing market forecasts of 3.6%. On a monthly basis, the CPI increased from 0.2% to 0.6%, precisely in line with market expectations. Financial markets reacted relatively tepidly to this data. According to CME Group, there is a 78.5% likelihood that the Federal Open Market Committee (FOMC) will maintain the key interest rate at its current level of 5.50% per annum during its meeting on September 20. However, the CPI statistics provide the regulator some room for manoeuvre in terms of tightening monetary policy in the future. If inflation in the United States continues to rise, there is a high probability that the Federal Reserve will increase the refinancing rate by another 25 basis points (bps). This is especially likely given that the U.S. economy is demonstrating stable growth and the national labor market remains robust. The published number of initial unemployment claims was 220K, which was lower than the forecasted 225K.

The second event triggered a considerably more volatile response. On Thursday, September 14, the ECB raised its key interest rate for the euro by 25 basis points (bps) for the tenth consecutive time, moving it from 4.25% to 4.50%. This is the highest it has reached since 2001. Experts had varying opinions on the move, labelling it as either hawkish or dovish. However, in theory, an interest rate increase should have supported the common European currency. Contrarily, EUR/USD fell below the 1.0700 mark, recording a local low at 1.0631. The last time it reached such depths was in the spring of 2023.

The decline in the euro was attributed to dovish comments made by the ECB's leadership. One could deduce from these that the central bank had already brought rates to levels that, if sustained over an extended period, should bring inflation within the Eurozone down to the target 2.0%. ECB President Christine Lagarde's statement, "I'm not saying we are at the peak of rates," failed to impress investors. They concluded that the current hike to 4.50% is likely the last step in this tightening cycle of monetary policy. As a result, with the backdrop that the Federal Reserve may still raise its rate to 5.75%, bears in EUR/USD have gained a noticeable advantage.

Bearish momentum increased even further following Thursday's release of data indicating that U.S. retail sales for August increased by 0.6% month-over-month (MoM), significantly exceeding the 0.2% forecast. At the same time, the Producer Price Index (PPI) for August rose by 0.7%, also surpassing expectations and the previous reading of 0.4%.

"We anticipate that the relative strength of the U.S. economy will continue to put pressure on EUR/USD in the coming months, as the growth differential will play a leading role. We maintain our forecast for the cross to be at the 1.0600-1.0300 range over the next 6-12 months," comment strategists at Danske Bank, one of Northern Europe's leading banks. They continue: "Given that it's hard to envision a sharp shift in the current U.S. dollar dynamics, and with commodity prices currently rising, we may reach our 6-month forecast for the cross earlier than expected."

HSBC strategists predict an even faster decline for the pair, anticipating that it will reach the 1.0200 level by the end of this year. According to specialists at ING, the pair could drop to the 1.0600-1.0650 area around the time of the Federal Reserve meeting in the upcoming week. "We believe that, at this stage, the EUR/USD rate will be increasingly influenced by the dollar," they write. "Markets have recognized that the ECB has most likely reached its peak interest rate, which means that Eurozone data should become less relevant. We might see EUR/USD rise again today [September 15], but a return to the 1.0600/1.0650 area around the date of the Federal Reserve meeting seems highly likely.".

As of the time of writing this review, on the evening of Friday, September 15, the pair indeed rose and ended the five-day trading period at the 1.0660 mark. 55% of experts are in favour of a continued upward correction, while 45% agree with ING economists' opinion and voted for a decline in the pair. As for technical analysis, almost nothing has changed over the past week. Among the trend indicators and oscillators on the D1 timeframe, 100% are still favouring the U.S. currency and are coloured in red. However, 25% of the latest indicators signal that the pair is oversold. Immediate support for the pair is located in the 1.0620-1.0630 area, followed by 1.0515-1.0525, 1.0480, 1.0370, and 1.0255. Bulls will encounter resistance in the 1.0680-1.0700 zone, then at 1.0745-1.0770, 1.0800, 1.0865, 1.0895-1.0925, 1.0985, and 1.1045.

The upcoming week will be quite eventful. On Tuesday, September 19, consumer inflation data (CPI) for the Eurozone will be released. Undoubtedly, the most significant day of the week, and perhaps even the upcoming months, will be Wednesday, September 20, when the FOMC meeting of the Federal Reserve will take place. In addition to the interest rate decision, investors expect to glean valuable information from the FOMC's long-term forecasts as well as during the press conference led by the Federal Reserve's management. On Thursday, September 21, the traditional initial jobless claims data will be published in the United States, along with the Federal Reserve Bank of Philadelphia's Manufacturing Activity Index. Friday promises a deluge of business activity statistics, with the release of PMI data for Germany, the Eurozone, and the United States.

continued below...

 

[Stan NordFX]

GBP/USD: Awaiting the Bank of England Meeting

According to recent statistics, the UK economy is going through a challenging period. Some of the more emotional analysts even describe its condition as dire. GBP/USD continued to decline against the backdrop of disappointing GDP data for the country. According to the latest figures released by the Office for National Statistics (ONS) on Wednesday, September 13, the British economy contracted by -0.5% on a monthly basis, compared to an expected decline of -0.2%.

The day before, on Tuesday, the ONS published equally disheartening data concerning the labor market. The unemployment rate for the three months through July rose to 4.3%, compared to the previous figure of 4.2%. Employment decreased by 207,000 jobs, while the economy lost 66,000 jobs a month earlier. The market consensus forecast had been for a reduction of 185,000 jobs.

The Bank of England's (BoE) efforts to combat inflation appear to be rather modest. Although the annual rate of price growth in the UK has decreased from 7.9% to 6.8% (the lowest since February 2022), inflation remains the highest among the G7 countries. Moreover, the core Consumer Price Index (CPI) remained unchanged from the previous month at 6.9% year-on-year, only 0.2% below the peak set two months earlier.

Sarah Briden, the Deputy Governor of the BoE, believes that the "risks to inflation [...] are currently to the upside," and that it will only reach the target level of 2% two years from now. Meanwhile, according to quarterly survey data, only 21% of the country's population is satisfied with what the Bank of England is doing to control price growth. This marks a new record low.

Analysts at Canada's Scotiabank believe that the decline of GBP/USD could continue to 1.2100 in the coming weeks, and further to 1.2000. Economists at the French bank Societe Generale hold a similar view. According to them, while a fall to 1.1500 seems unlikely, the pair could very well reach 1.2000.

GBP/USD concluded the past week at a mark of 1.2382. The median forecast suggests that 50% of analysts expect the pair to correct upwards, 35% anticipate further movement downwards, and the remaining 15% point eastward. On the D1 chart, 100% of trend indicators and oscillators are coloured red, with 15% indicating that the pair is in oversold territory. If the pair continues to move south, it will encounter support levels and zones at 1.2300-1.2330, 1.2270, 1.2190-1.2210, 1.2085, 1.1960, and 1.1800. In the event of an upward correction, the pair will face resistance at 1.2440-1.2450, 1.2510, 1.2550-1.2575, 1.2600-1.2615, 1.2690-1.2710, 1.2760, and 1.2800-1.2815.

Among the key events related to the UK economy, the publication of the Consumer Price Index (CPI) on Wednesday, September 20, stands out. This inflation indicator will undoubtedly impact the Bank of England's decision on interest rates (forecasted to rise by 25 bps, from 5.25% to 5.50%). The BoE meeting will take place on Thursday, September 21. Additionally, toward the end of the workweek, data on retail sales and the UK's Purchasing Managers' Index (PMI) will be released.

USD/JPY: No Surprises Expected from the Bank of Japan Yet

Since the beginning of this year, the yen has been gradually losing ground to the U.S. dollar, with USD/JPY returning to November 2022 levels. It's worth noting that it was a year ago at these heights that the Bank of Japan (BoJ) initiated active currency interventions. This year, however, the BoJ has so far engaged only in verbal interventions, although quite actively: high-ranking Japanese officials are frequently making public comments.

In a recent interview with Yomiuri newspaper, BoJ Governor Kazuo Ueda stated that the central bank might abandon its negative interest rate policy if it concludes that sustainable inflation targets of 2% have been achieved. According to Ueda, by year-end, the regulator will have sufficient data to assess whether conditions are ripe for a policy shift.

This verbal intervention had an impact: markets responded with a strengthening of the yen. However, the "magic" was short-lived, and USD/JPY soon resumed its upward trajectory, closing the five-day trading period at 147.84.

Economists at Danske Bank believe that the global environment favours the Japanese yen and forecast a decline in USD/JPY to 130.00 over a 6-12 month horizon. "We believe that yields in the U.S. are peaking or close to it, which is the primary argument for our bearish stance on USD/JPY," they state. "Additionally, under current global economic conditions, where growth and inflation rates are declining, history suggests that these are favourable conditions for the Japanese yen." Danske Bank also anticipates that a recession could begin in the United States within the next two quarters, prompting the Federal Reserve to cut dollar interest rates. Until the Federal Reserve concludes its easing cycle, the Bank of Japan is expected to maintain its monetary policy unchanged. Therefore, any action from the BoJ before the second half of 2024 is unlikely.

As for short-term forecasts, Societe Generale does not rule out the possibility that following the FOMC decision by the Federal Reserve on September 20, USD/JPY could move closer to the 150.00 mark. As for the Bank of Japan's meeting on Friday, September 22, no surprises are expected, and it will likely involve another round of verbal intervention. Meanwhile, the vast majority of surveyed experts (80%) believe that if the Federal Reserve rate remains unchanged, USD/JPY has a high likelihood of correcting downward. Only 10% expect the pair to continue its upward trajectory, while another 10% take a neutral stance. All trend indicators and oscillators on the D1 time frame are coloured green, although 10% of these are signalling overbought conditions.

The nearest support levels are located in the 146.85-147.00 zone, followed by 145.90-146.10, 145.30, 144.50, 143.75-144.05, 142.90-143.05, 142.20, 141.40-141.75, 140.60-140.75, 138.95-139.05, and 137.25-137.50. The nearest resistance is at 147.95-148.00, followed by 148.45, 148.85-149.10, 150.00, and finally, the October 2022 high of 151.90.

We have already mentioned the Bank of Japan's meeting on September 22. No significant economic data concerning the state of the Japanese economy is scheduled for release in the coming week. Traders should be aware, however, that Monday, September 18, is a public holiday in Japan as the country observes Respect for the Aged Day.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Death Cross and Bitcoin Paradoxes

A "Death Cross," indicated by the intersection of the 50-day and 200-day moving averages, has appeared on bitcoin's daily chart. This pattern last emerged in mid-January 2022, and was followed by a nearly threefold decrease in bitcoin's price by November, which is cause for concern. Interestingly, a similar Death Cross was observed in July 2021, but did not result in a price decline, offering some reassurance.

The current week in the cryptocurrency market has been marked by high volatility, with trading volumes for the leading cryptocurrency reaching $15 billion. Such levels of activity are typically only seen around major macroeconomic events. In this case, they include the release of U.S. inflation data on Wednesday, September 13, and the upcoming Federal Reserve meeting on September 20.

The BTC/USD weekly chart showed the following trends. On Monday, September 11, the price of bitcoin fell below $25,000, despite a weakening dollar and rising stock indices. This decline was fueled by rumors that the controversial FTX exchange was planning to sell digital assets as part of a bankruptcy proceeding. On Tuesday, investors resumed buying at lower levels, pushing the coin's price above $26,500. On Thursday, following the ECB's decision on interest rates, bitcoin continued to strengthen its position, reaching a high of $26,838. This occurred even as the dollar was strengthening.

In fact, the recent price dynamics are quite paradoxical. Imagine BTC/USD as a set of scales. When one side becomes heavier, it goes down while the other goes up. Yet, we witnessed both sides simultaneously descending and ascending. According to some analysts, there was no fundamental rationale behind these bitcoin movements. With low liquidity and falling market capitalization, the asset was merely being "shifted" from one group of speculators to another.

Even the testimony of Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), before the U.S. Senate did not spook market participants. He stated that the overwhelming majority of cryptocurrencies fall under the jurisdiction of his agency. Consequently, all intermediaries in the market, exchanges, brokers, dealers, and clearing agencies, are required to register with the SEC.

Gensler compared the current state of the crypto industry to the "wild west" years of the early 20th century, when securities market legislation was still being developed. During those years, the agency took a series of strict enforcement actions to rein in the industry, and many cases ended up in court. Similar measures are needed today, not only to serve as a deterrent to businesses but also to protect investors, the SEC Chairman stated. (It's worth noting that, according to Ripple CEO Brad Garlinghouse, the SEC is to blame for the U.S. becoming one of the "worst places" to launch cryptocurrency projects.)

But aside from the SEC, there are other regulators, such as the Federal Reserve. It's clear that the Fed's decisions and forecasts, which will be announced on September 20, will impact the dynamics of risky assets, including cryptocurrencies. Mike McGlone, Senior Macro Strategist at Bloomberg Intelligence, has already warned investors that the near future for the crypto sector looks challenging. According to him, digital assets gained popularity during a period of near-zero interest rates. However, as monetary policy shifts, challenges could arise for the industry. McGlone pointed out that the yield on U.S. Treasury bonds is expected to reach 5.45% by November, based on futures contracts. In contrast, from 2011 to 2021, this yield was only about 0.6% annually, a period during which bitcoin and other digital assets saw significant growth. Therefore, a liquidity outflow from cryptocurrencies would not be surprising.

Once again, many analysts are offering positive medium- and long-term forecasts but negative short-term outlooks. Michael Van De Poppe, founder of venture firm Eight, predicts a final price correction for the leading cryptocurrency before an impending bull rally. According to him, if bears manage to breach the exponential moving average line, currently at $24,689, the coin could drop to as low as $23,000 in a worst-case scenario. Van De Poppe believes this upcoming correction represents the last chance to buy bitcoin at a low price.

Dan Gambardello, founder of Crypto Capital Venture, predicts that the next bull cycle could be the most impressive in the cryptocurrency market. However, he also reminds investors that the crypto market follows cycles and appears to be in an accumulation phase. Given this, Gambardello warns that there's a possibility that bitcoin's price could drop to $21,000 in the coming weeks. He attributes this potential decline to market manipulation by major players who may be driving down prices to accumulate coins in anticipation of the next bull run.

According to a popular expert known as CrypNuevo, the flagship cryptocurrency could soon reach a $27,000 mark. However, the analyst emphasized that this is likely to be a false move, and a dip down to around $24,000 should be expected thereafter. (It's worth noting that on August 17, the BTC price broke through the ascending trend line that started in December 2022 and settled below it, indicating a high risk of a prolonged bearish trend.)

As for the short-term prospects of the leading altcoin, they also appear to be less than optimistic. Analysts at Matrixport have warned that if ETH drops to $1,500, the path to $1,000 would be open: a level the experts consider justifiable based on their revenue projections for the Ethereum blockchain ecosystem. Matrixport notes that ETH is not a "super sound money" capable of resisting inflation, as the number of coins minted last week exceeded the amount burned by 4,000. This represents a deviation from the deflationary model that the blockchain adopted with the consensus algorithm transition from Proof of Work (PoW) to Proof of Stake (PoS).

Analyst Benjamin Cowen sets an even lower target. He claims that Ethereum is on the brink of "extreme volatility," potentially plummeting to a range between $800 and $400 by the end of the year. The reason remains the same: a possible decline in the profitability of blockchain platforms built on ETH smart contract technologies. According to Cowen, both ETH bulls and bears "have crashed and failed to execute their strategies," which will result in both parties locking in their losses by the end of 2023.

With three and a half months remaining until the end of the year, the current state of the market at the time of writing this review, Friday evening, September 15, shows ETH/USD trading around $1,620 and BTC/USD at $26,415. The total market capitalization of the crypto market stands at $1.052 trillion, up from $1.043 trillion a week ago. The leading cryptocurrency accounts for 48.34% of the market, while the primary altcoin makes up 18.84%. The Crypto Fear & Greed Index for bitcoin remains in the 'Fear' zone at 45 points, albeit inching closer to the 'Neutral' zone (it was 46 points a week ago).


NordFX Analytical Group


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

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

CryptoNews of the Week

– Bitcoin is grappling with the $27,000 level ahead of the Federal Reserve's interest rate decision, set to be announced on September 20. John Bollinger, the creator of the Bollinger Bands volatility indicator, believes that the leading crypto asset is poised for a breakout. The indicator employs standard deviation from a simple moving average to identify asset volatility and potential price ranges. Currently, the BTC/USD pair is forming daily candles that touch the upper band, which may suggest a reversal back to the central band or, conversely, an increase in volatility and an upward movement. The narrow Bollinger Bands on the charts indicate that the latter scenario is more likely. However, Bollinger himself is cautious in his commentary, stating that it's too early to draw any definitive conclusions.

– Many participants in the crypto community are confident that bitcoin will continue to grow. For instance, an analyst going by the pseudonym Yoddha believes that bitcoin has a chance to reach a new local high and target $50,000 by the end of the year. Following that, a correction to $30,000 could occur in early 2024, ahead of the halving event.
Crypto blogger Crypto Rover argues that troubles in the U.S. economy will serve as a catalyst for bitcoin's growth. Should a confident breakout occur around the $27,000 resistance level, a price movement to $32,000 could be anticipated.
Analyst DonAlt, who accurately predicted the cryptocurrency rally earlier this year, posits that bitcoin has a chance for another significant rally and could set a new high for 2023. "If we rise and overcome the resistance we're currently battling," he writes, "the target could be around $36,000. [...] I don’t rule out missing a good entry at $30,000 because if the price takes off, it may rise too quickly. [However] there are substantial reasons for a downward move as well. In the worst case, I'll take a minor hit if it dips into the $19,000 to $20,000 range."

– Prominent analyst known by the pseudonym PlanB has reaffirmed his forecast made earlier this year. He noted that the November 2022 low was the bottom for bitcoin, and its ascent will commence closer to the halving event. PlanB believes that the 2024 halving will propel the leading cryptocurrency to $66,000, and the subsequent bull market in 2025 could elevate its price beyond the $100,000 mark.

– According to CoinShares, investments in crypto funds decreased by $54 million last week, with bitcoin accounting for $45 million of the outflows and Ethereum making up $5 million. Investments in funds allowing for short positions on bitcoin decreased by $4 million. This marks the fifth consecutive week of capital outflows, which have occurred in 8 out of the last 9 weeks. The total outflows over the past two months amount to $455 million. Meanwhile, weekly trading volumes have increased to $1 billion, representing a 42% surge compared to the previous week.

– Chainalysis has compiled a ranking of 154 countries based on the proportion of citizens investing a significant share of their savings in crypto assets. India topped the list, followed by Nigeria and Vietnam. The top 20, in descending order, included the United States, Ukraine, the Philippines, Indonesia, Pakistan, Brazil, Thailand, China, Turkey, Russia, the United Kingdom, Argentina, Mexico, Bangladesh, Japan, Canada, and Morocco.
Analysts noted that the global cryptocurrency adoption index is far from the historical highs seen in 2021 and is showing a declining trend. Most countries occupying leading positions in the ranking are categorized by the World Bank as nations with below-average income per capita.

– A new wave of cryptocurrency scams impersonating Elon Musk has emerged on the social media platform TikTok, as reported by Bleeping Computer. According to the publication, videos are being uploaded hourly, featuring Musk purportedly giving interviews to major outlets and directing viewers to a website where a giveaway is taking place. Fraudsters have created hundreds of such websites, some of which pose as cryptocurrency exchanges.
Journalists from the publication tested one of the giveaways: they created an account on the platform and entered the promo code provided in the TikTok video. They were then promised a bitcoin deposit into their account. A balance of 0.34 BTC (~$9,000) allegedly appeared in their wallet. However, upon attempting to withdraw the funds, they were asked to activate their account by depositing 0.005 BTC (around $132).

– U.S. Senate Banking Committee Chairman Sherrod Brown has called for stricter disclosure requirements for companies in the digital assets industry. Brown sent letters to the U.S. Treasury Secretary, the Chairman of the Securities and Exchange Commission (SEC), and the head of the Commodity Futures Trading Commission (CFTC), emphasizing the significant financial losses suffered by cryptocurrency investors. According to his data, investors lost approximately $10 billion in 2022 due to fraud and hacking attacks.
Additionally, nine American lawmakers have endorsed a bill aimed at combating money laundering through cryptocurrencies, which has been reintroduced for consideration in the U.S. Congress.

– Analysts at Matrixport, a provider of cryptographic services, believe that the surge in applications for launching spot bitcoin ETFs is revitalizing the digital asset market and could act as a catalyst for the price growth of the flagship cryptocurrency. The company notes a substantial "potential buying pressure for bitcoin," particularly from investors interested in the offering of a spot exchange-traded fund. Against this backdrop, bitcoin's dominance level has risen to 50.2%, marking the highest level in a month and nearing the 26-month peak of 52%, reached at the end of June.

– According to data from Chainalysis, cybercriminals from North Korea stole $340 million in 2023, with a third of that amount coming from just two attacks. This figure is significantly less than the previous year's record of $1.65 billion stolen in 2022. However, the attack dynamics are causing concern among experts. In the last 10 days alone, the Lazarus Group has hacked the Stake platform for $40 million and the CoinEx exchange for $55 million.

– Investor and bestselling author of "Rich Dad Poor Dad," Robert Kiyosaki, believes that traditional fiat currency has no future, and the future of money lies in cryptocurrencies. According to the expert, the U.S. economy is on the brink of a serious crisis, and cryptocurrencies, especially bitcoin, offer investors a safe haven during these turbulent times. Kiyosaki forecasts that the price of bitcoin could soar to $120,000 next year, with the 2024 halving serving as a key catalyst for the rally.
The specialist also revealed that he personally owns 60 BTC, which he acquired at $6,000 per coin. As a result, his current profit from this transaction exceeds $1.25 million.

– Analyst Jason Pizzino believes that bitcoin's bullish market cycle began to form around January and this process is not yet complete, despite the recent price consolidation. According to the trader, bitcoin will confirm its bullish sentiment if it crosses a key level at $28,500.
"In this market, we've rarely seen levels below $25,000. I'm not saying it can't go down, but for the last six months, the weekly closes have been above these levels. So far, so good, but the bulls aren't here yet. They need to at least occasionally see closes above $26,550," states Pizzino. "The bulls still have a lot to accomplish. I'll start talking about them once we cross the white line again at the $28,500 level. That's one of the key levels for the beginning of bitcoin's upward movement, to then attempt to break through $32,000.".

– According to popular analyst and host of the DataDash channel Nicholas Merten, the crypto market may be in for another downturn, signalled by decreasing stablecoin liquidity. "It's a good indicator for identifying trends in the crypto market. For example, from April 2019 to July 2019, bitcoin rose from $3,500 to $12,000. During that same period, stablecoin liquidity increased by 119%. Then we see a period of consolidation where liquidity also remained stable. When bitcoin rose from $3,900 to $65,000 in 2021, stablecoin liquidity soared by 2,183%," shares the expert.
"Liquidity and price growth are linked. If liquidity is decreasing or consolidating, then the market is likely not going to grow. This holds true for both cryptocurrencies and financial markets. Market capitalization needs liquidity to grow, but we're seeing it constantly decrease, making a decline in cryptocurrency prices more likely," states Nicholas Merten.


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.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for September 25 - 29, 2023​

EUR/USD: Verbal Interventions by the Federal Reserve Support the Dollar

In previous reviews, we extensively discussed the verbal interventions made by Japanese officials who aim to bolster the yen through their public statements. This time, similar actions have been taken by FOMC (Federal Open Market Committee) officials, led by the Chairman of the Federal Reserve, Jerome Powell. At their meeting on September 20th, the FOMC decided to maintain the interest rate at 5.50%. This was largely expected, as futures markets had indicated a 99% probability of such an outcome. However, in the subsequent press conference, Mr. Powell indicated that the battle against inflation is far from over, and that the 2.0% target may not be achieved until 2026. Therefore, another rate hike of 25 basis points is very much in the cards. According to the Fed Chairman, there is no recession on the horizon, and the U.S. economy is sufficiently robust to sustain such high borrowing costs for an extended period. Furthermore, it was revealed that 12 out of 19 FOMC members anticipate a rate hike to 5.75% within this year. According to the Committee's economic forecast, this rate level is expected to persist for quite some time. Specifically, the updated forecast suggests that the rate could only be lowered to 5.1% a year from now (as opposed to the previously stated 4.6%), and a decrease to 3.9% is expected in a two-year outlook (revised from 3.4%).

Market participants have mixed beliefs about these prospects, but the fact remains that the hawkish assertions from officials have bolstered the dollar, despite the absence of tangible actions. It's possible that the Federal Reserve has learned from the mistakes of their European Central Bank (ECB) counterparts, who have led market players to believe that the monetary tightening cycle in the Eurozone has concluded. As a reminder, ECB President Christine Lagarde made it clear that she considers the current interest rate level to be acceptable, while the Governor of the Bank of Greece, Yannis Stournaras, stated that, in his opinion, interest rates have peaked, and the next move will likely be a reduction. A similar sentiment: that the September act of monetary tightening was the last, was also expressed by Stournaras's colleague, Boris Vujčić, the Governor of the National Bank of Croatia.

As a result of the Federal Reserve's verbal intervention, the Dollar Index (DXY) soared from 104.35 to 105.37 within just a few hours, while EUR/USD declined to a level of 1.0616. Economists at Oversea-Chinese Banking Corporation (OCBC) believe that, given the Fed's decision to retain flexibility concerning another rate hike, it is not advisable to anticipate a dovish turn in the foreseeable future.

Danske Bank strategists opine that "the Fed was as hawkish as it could be without actually raising rates." However, they contend that "despite the ongoing strengthening of the dollar, there may be some upside potential for EUR/USD in the near term." Danske Bank further states, "We believe that peak rates, improvements in the manufacturing sector compared to the service sector, and/or a reduction in pessimism towards China could support EUR/USD over the next month. However, in the longer term, we maintain our strategic position favouring a decline in EUR/USD, expecting a breakthrough below 1.0300 within the next 12 months."

Data on U.S. business activity released on Friday, September 22, presented a mixed picture. The Manufacturing PMI index rose to 48.9, while the Services PMI declined to 50.2. Consequently, the Composite PMI remained above the 50.0 threshold but showed a slight dip, moving from 50.2 to 50.1.

Following the PMI release, EUR/USD concluded the week at 1.0645. Seventy percent of experts favoured further strengthening of the dollar, while 30% voted for an uptrend in the currency pair. In terms of technical analysis, not much has changed over the nearly completed week. All trend indicators and oscillators on the D1 timeframe are still unanimously supporting the American currency and are coloured red. However, 15% of them are signalling the pair's oversold condition. The nearest support levels for the pair lie in the 1.0620-1.0630 range, followed by 1.0490-1.0525, 1.0370, and 1.0255. Resistance levels will be encountered in the 1.0670-1.0700 zone, then at 1.0745-1.0770, 1.0800, 1.0865, 1.0895-1.0925, 1.0985, and 1.1045.

As for the upcoming week's events, Tuesday, September 26 will see the release of U.S. real estate market data, followed by durable goods orders in the U.S. on Wednesday. Thursday, September 28 promises to be a busy day. Preliminary inflation (CPI) data from Germany as well as U.S. GDP figures for Q2 will be disclosed. Additionally, the customary U.S. labour market statistics will be released, and the day will conclude with remarks from Federal Reserve Chairman Jerome Powell. On Friday, we can also expect a slew of significant macroeconomic data, including the Eurozone's preliminary Consumer Price Index (CPI) and information regarding personal consumption in the United States.

GBP/USD: BoE Withdraws Support for the Pound

The financial world doesn't revolve around the Federal Reserve's decisions alone. Last week, the Bank of England (BoE) also made its voice heard. On Thursday, September 21, the BoE's Monetary Policy Committee left the interest rate for the pound unchanged at 5.25%. While a similar decision by the Federal Reserve was expected, the BoE's move came as a surprise to market participants. They had anticipated a 25 basis point increase, which did not materialize. As a result, the strengthening dollar and weakening pound drove GBP/USD down to 1.2230.

The BoE's decision was likely influenced by encouraging inflation data for the United Kingdom published the day before. The annual Consumer Price Index (CPI) actually declined to 6.7%, compared to the previous 6.8% and a forecast of 7.1%. The core CPI also fell from 6.9% to 6.2%, against a forecast of 6.8%. Given such data, the decision to pause and not burden an already struggling economy appears reasonable. This rationale is further supported by the United Kingdom's preliminary Services Purchasing Managers' Index (PMI) for September, which hit a 32-month low at 47.2, compared to 49.5 in August and a forecast of 49.2. The Manufacturing PMI was also reported at 44.2, significantly below the critical level of 50.0.

According to economists at S&P Global Market Intelligence, these "disheartening PMI results suggest that a recession in the United Kingdom is becoming increasingly likely. [...] The sharp decline in production volumes indicated by the PMI data corresponds to a GDP contraction of more than 0.4% on a quarterly basis, and the broad-based downturn is gaining momentum with no immediate prospects for improvement.".

Analysts at one of the largest banks in the United States, Wells Fargo, believe that the BoE's decision signals a loss of rate-based support for the British pound. According to their forecast, the current rate of 5.25% will mark the peak of the cycle, followed by a gradual decline to 3.25% by the end of 2024. Consequently, they argue that "in this context, a movement of the pound to 1.2000 or lower is not out of the question."

Their counterparts at Scotiabank share a similar sentiment. New lows and strong bearish signals on the oscillator for short-term, medium-term, and long-term trends indicate an elevated risk of the pound dropping to 1.2100-1.2200.

Economists at Germany's Commerzbank do not rule out the possibility of a slight recovery for the pound if inflation outlooks significantly improve. They believe that the Bank of England has left the door open for another rate hike. The vote for maintaining the current rate was surprisingly close at 5:4, meaning four members of the Monetary Policy Committee voted in favour of a 25 basis point increase. This underscores the high level of uncertainty. Nevertheless, due to the weakness in the UK economy, the outlook for the pound remains bearish.

GBP/USD closed the past week at 1.2237. Analyst opinions on the pair's immediate future are evenly split: 50% expect further downward movement, while the other 50% anticipate a correction to the upside. All trend indicators and oscillators on the D1 chart are coloured in red; moreover, 40% of these oscillators are in the oversold zone, which is a strong signal for a potential trend reversal.

If the pair continues its downward trajectory, it will encounter support levels and zones at 1.2190-1.2210, 1.2085, 1.1960, and 1.1800. On the other hand, if the pair rises, it will face resistance at 1.2325, 1.2440-1.2450, 1.2510, 1.2550-1.2575, 1.2600-1.2615, 1.2690-1.2710, 1.2760, and 1.2800-1.2815.

In terms of economic events impacting the United Kingdom for the upcoming week, the highlight will be the release of the country's GDP data for Q2, scheduled for Friday, September 29.

continued below...

 

[Stan NordFX]

USD/JPY: Lacklustre Meeting at the Bank of Japan

Following their counterparts at the Federal Reserve and the Bank of England, the Bank of Japan (BoJ) held its meeting on Friday, September 22. "It was a lacklustre meeting," commented economists at TD Securities. "All members unanimously voted to keep policy unchanged. The statement was largely similar to the one issued in July, and no changes were made to the forward guidance." The key interest rate remained at the negative level of -0.1%.

The subsequent press conference led by BoJ Governor Kazuo Ueda also disappointed yen bulls. Ueda did not speak against the weakening of the national currency; instead, he reiterated that the exchange rate should reflect fundamental indicators and remain stable. The central bank's head also noted that the regulator "could consider the possibility of ending yield curve control and altering the negative interest rate policy when we are confident that achieving the 2% inflation target is near."

Japan's Finance Minister Shunichi Suzuki's speech was also a typical form of verbal intervention for him. "We are closely monitoring currency exchange rates with a high sense of urgency and immediacy," the minister declared, "and we do not rule out any options for responding to excessive volatility." He added that last year's currency intervention had its intended effect but did not indicate whether similar steps could be expected in the near future.

Ten-year U.S. Treasury bonds and the USD/JPY currency pair are traditionally directly correlated. When the yield on the bonds rises, so does the dollar against the yen. This week, following hawkish statements from the Federal Reserve, rates on 10-year Treasuries soared to their highest peak since 2007. This propelled USD/JPY to a new high of 148.45. According to economists at TD Securities, considering the rise in U.S. yields, the pair could break above 150.00. Meanwhile, at the French bank Societe Generale, target levels of 149.20 and 150.30 are being cited.

The last note of the five-day trading session sounded at the 148.36 mark. A majority of surveyed experts (70%) agreed with the views of their colleagues at TD Securities and Societe Generale regarding the further rise of USD/JPY. A correction to the downside, and possibly a sharp drop due to currency interventions, is expected by 20% of analysts. The remaining 10% took a neutral stance. All 100% of trend indicators and oscillators on the D1 timeframe are coloured green, although 10% of the latter are signalling overbought conditions. The nearest support level is in the 146.85-147.00 zone, followed by 145.90-146.10, 145.30, 144.50, 143.75-144.05, 142.20, 140.60-140.75, 138.95-139.05, and 137.25-137.50. The nearest resistance is at 148.45, followed by 148.45, 148.85-149.20, 150.00, and finally, the October 2022 high of 151.90.

No significant economic data related to the state of the Japanese economy is scheduled for release in the upcoming week. However, traders may want to mark Friday, September 29 on their calendars, as consumer inflation data for the Tokyo region will be published on that day.

CRYPTOCURRENCIES: Battle for $27,000

On Monday, September 18, the price of the leading cryptocurrency began to soar, pulling the entire digital asset market upward. Interestingly, the reason behind this surge was not directly related to bitcoin, but rather to the U.S. dollar. Specifically, it was tied to the Federal Reserve's decisions regarding interest rates. High dollar rates limit the flow of investments into riskier assets, including cryptocurrencies, as large investors prefer stable returns. In this case, ahead of the upcoming Federal Reserve meeting, market participants were confident that the regulator would not only refrain from raising rates but would also keep them unchanged until year-end. Riding on these expectations, BTC/USD surged, reaching a peak of $27,467 on August 19, adding more than 10% since September 11.

However, although the rate did indeed remain unchanged, it became clear following the meeting that the fight against inflation would continue. Therefore, any hopes of a shift away from the Fed's hawkish stance should be set aside for now. As a result, the price of bitcoin reversed course. After breaking through the support zone at $27,000, it returned to its starting positions.

Despite the recent pullback, many in the crypto community remain confident that the digital gold will continue to rise. For instance, an analyst going by the alias Yoddha believes that bitcoin has a chance to refresh its local high in the short term and reach $50,000 by year-end. After which, he suggests, a correction to $30,000 may occur in early 2024, ahead of the halving event. Blogger Crypto Rover also anticipates that troubles in the U.S. economy will fuel BTC's growth. If the pair manages to firmly establish itself above $27,000, he expects the price to move towards $32,000.

Analyst DonAlt is of the opinion that bitcoin stands a chance to stage a new impressive rally and update its 2023 high. "If we rise and overcome the resistance we are currently battling," he writes, "the target, I believe, could be $36,000. [...] I won't rule out missing a good entry at $30,000 because if the price takes off, it may rise too quickly. [But] we have enough compelling reasons to also move downward. In the worst case, I'll take a minor hit if it plunges into the $19,000 to $20,000 range.".

Trader and analyst Jason Pizzino believes that bitcoin's bullish market cycle began forming around January, and this process is still not complete despite the recent price consolidation. According to the expert, bitcoin will confirm its bullish sentiment if it crosses a key level at $28,500. "This market has seldom seen sub-$25,000 levels. I'm not saying it can't go down, but for six months now, the weekly closings have been above these levels. So far, so good, but we're not in bull territory yet. Bulls need to see closings above $26,550 at least occasionally," states Pizzino. "Bulls still have much to do. I'll start talking about them once we cross the white line at the $28,500 level again. This is one of the key levels for bitcoin to start moving upwards and then try to break $32,000.".

John Bollinger, the creator of the Bollinger Bands volatility indicator, does not rule out the possibility that the leading crypto asset is preparing for a breakout. The indicator uses the standard deviation from the simple moving average to determine volatility and potential price ranges for an asset. Currently, BTC/USD is forming daily candles that touch the upper band. This could indicate a reversal back to the central band or, conversely, an increase in volatility and upward movement. Narrow Bollinger Bands on the charts suggest that the latter scenario is more likely. However, Bollinger himself comments cautiously, believing that it is still too early to draw definitive conclusions.

PlanB, the well-known creator of the S2FX model, has reaffirmed his forecast made earlier this year. He noted that the November 2022 low was the bottom for bitcoin, and its ascent will begin closer to the halving event. PlanB believes that the 2024 halving will drive the leading cryptocurrency up to $66,000, and the subsequent bull market in 2025 could push its price above the $100,000 mark.

Investor and best-selling author of "Rich Dad Poor Dad," Robert Kiyosaki, has high hopes for the halving event as well. According to the expert, the U.S. economy is on the verge of a serious crisis, and cryptocurrencies, particularly bitcoin, offer investors a safe haven during these turbulent times. Kiyosaki predicts that the price of bitcoin could soar to $120,000 next year, and the 2024 halving will serve as a key catalyst for the rally.

In conclusion, to balance out the optimistic forecasts mentioned earlier, let's introduce some pessimism. According to popular analyst and host of the DataDash channel, Nicholas Merten, the crypto market could experience another downturn. He cites the declining liquidity of stablecoins as an indicator. "It's a good metric for identifying trends in the cryptocurrency market. For instance, from April 2019 to July 2019, bitcoin rose from $3,500 to $12,000. During the same period, the liquidity of stablecoins increased by 119%. Then we see a period of consolidation where liquidity also remained at a constant level. When bitcoin rose from $3,900 to $65,000 in 2021, the liquidity of stablecoins surged by 2,183%," the expert shares his observations.

"Liquidity and price growth are interconnected. If liquidity is declining or consolidating, the market is likely not going to grow. This is true for both cryptocurrencies and financial markets. For market capitalization to grow, you need liquidity, but what we are seeing is a constant decline in liquidity, which makes a price drop for cryptocurrencies more probable," Nicholas Merten states.

As of the time of writing this review, Friday evening, September 22, BTC/USD is trading around $26,525. The overall market capitalization of the crypto market has remained virtually unchanged, standing at $1.053 trillion (compared to $1.052 trillion a week ago). The Bitcoin Crypto Fear & Greed Index has dropped by 2 points, moving from 45 to 43, and remains in the 'Fear' zone.


NordFX Analytical Group


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

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

CryptoNews of the Week

– Anthony Scaramucci, the founder of SkyBridge Capital, stated at the Messari Mainnet conference in New York that the worst is over in the current bear market for digital assets. "If you own bitcoin, I wouldn't sell it. You've weathered the storm. [...] The next 10-20 years will be extraordinarily bullish," he said.
The investor acknowledged that there are "headwinds" for bitcoin in the current macroeconomic environment, such as high interest rates, scepticism from SEC Chairman Gary Gensler, and negativity surrounding the acceptance of digital assets. However, he is confident that bitcoin offers more potential than gold. In his view, the proliferation of bitcoin ETFs will lead to the widespread adoption of digital assets.

– Mark Yusko, the CEO of consulting firm Morgan Creek Capital, believes that a positive decision on bitcoin ETF applications will trigger an inflow of $300 billion in investments. In such a scenario, the coin's market capitalization and value would see significant growth.

– Several other experts have predicted a decline in bitcoin's value leading up to the April 2024 halving. An analyst going by the pseudonym Rekt Capital compared the current market conditions to the BTC price dynamics in 2020 and speculated that the coin's price would decline within a descending triangle. However, in his opinion, the drop will be significantly less severe, as the coin will depreciate by 27% to $19,082.
Renowned trader Bluntz, who had previously predicted how far bitcoin's value would plunge during the 2018 bear trend, also foresees a continuation of the downward trajectory in the cryptocurrency market. He doubts that the asset's value has reached its bottom, as the descending triangle forming on the chart appears incomplete. For this reason, Bluntz anticipates that bitcoin will decrease in value to around $23,800, thereby completing the third corrective wave.

– Noted analyst Benjamin Cowen also believes that after several weeks of trading within a narrow range, the BTC price could fall to the $23,000 mark. Cowen bases his forecast on historical patterns, which indicate that the flagship cryptocurrency's price usually experiences a significant dip before a halving event. According to Cowen, data from past cycles suggest that BTC and other cryptocurrencies do not perform exceptionally well in the period leading up to such a pivotal event.

– Research firm Fundstrat speculates that, contrary to a bearish outlook, the price of BTC could actually surge more than 500% from its current value due to the halving, potentially reaching a level of $180,000. Meanwhile, financial corporation Standard Chartered estimates that the price of the oldest cryptocurrency could rise to $50,000 this year and to $120,000 by the end of 2024.
Current network activity suggests that investors are likely anticipating a new price surge, as bitcoin reserves on exchanges are approaching a six-year low.

– Over the years, the crypto community has been rife with bold speculations and conspiracy theories about who created bitcoin, how it was created, and why. One theory posits that it was conceived by the Communist Party of China, ostensibly for global domination. Others contend that it was the work of "good Samaritans" who aimed to aid societal progress. Some even believe the trail leads back to the CIA.
Within the bitcoin ecosystem, there is another persistent group that claims Satoshi Nakamoto was an employee of the National Security Agency (NSA). One of the most secretive U.S. intelligence agencies, according to this view, had an active role in creating the first cryptocurrency. Nic Carter, co-founder of research firm Coin Metrics, lends credence to this theory by pointing out that the Secure Hash Algorithm 256 (SHA-256) was created by mathematician Glenn M. Lilly. Lilly developed it under the supervision of the NSA and published the algorithm in 2001. He later served as the head of the NSA's mathematical research department.
Carter refers to his new theory as the "bitcoin lab leak hypothesis." He suggests that the bitcoin blockchain was initially an internal research project by the NSA aimed at collecting adversary information—a new "monetary weapon" for undermining third-country economies.
Matthew Pines, Director of Intelligence at Krebs Stamos, concurs with Carter's opinion. The cryptography analyst believes the creation of the BTC blockchain could be the result of collaboration between NSA cryptography experts and crypto enthusiasts. During the process, a communication breakdown occurred, and the anonymous developer inadvertently leaked proprietary information, thus making the project public property.
It is worth noting that the NSA was one of the first organizations to describe a system similar to bitcoin in a 1996 paper titled "How to Make a Mint: The Cryptography of Anonymous Electronic Cash." The paper proposed a system using open-source cryptography to allow users to make anonymous payments without revealing their identity.

continued below...