Cryptos
Winter is here, but the biggest fear among crypto traders is whether the crypto winter is here? No one wants to see another crypto winter as it is difficult to forget the dire consequences of the previous one. Moreover, what traders have been hoping for is a strong rally especially given the fact that during this time of the year, we usually see a strong rally for cryptos–of course, with the exception of the crypto winter.
Looking at the Bitcoin price, it seems like the bitcoin bulls are losing power, and they are likely to struggle soon as well, especially if the price breaks below the 50-day SMA on the daily time frame. Having said that, Bitcoin was well due for a correction according to the RSI indicator, and that correction is finally here.
Speaking from a technical price perspective, if the price continues to stay above the 50-day SMA, we could see another substantial rally for Bitcoin.
Forex
Euro’s weakness is the most prominent in the currency market, and traders have been looking at its fragile price action over the last number of days. If one is wondering why there is so much weakness creeping into the Euro for the past number of days, the European Central Bank is one of the most dovish Central Banks of all. The bank has made it clear a few times that it is no rush to increase its interest rate; it has a number of other quantitative easing programmes that need to wind down before starting to think of interest rates.
According to ECB President Lagarde, any tightening measures taken now would do more damage than good. Since the summer, the EUR/USD has been on a persistent downward trend. Despite the fact that the ECB lowered the scale of their Pandemic Emergency Purchase Program, it has become evident that they are well behind the Federal Reserve, the Bank of England, the Bank of Canada, and the Reserve Bank of New Zealand in terms of raising interest rates.
Covid Cases
Covid cases have started to spike in Europe and new cases are at an all-time high, and health ministries are pressing for limits to be reinstated. Over the weekend, Amsterdam announced a new lockdown to reduce infection rates, and many investors are asking if Austria and Germany will follow suit. Regardless, heightened COVID-19 worries in Europe may inhibit social activities such as dining out and visiting concerts and sporting events.
US And China Meeting
President Joe Biden and President Xi Jinping concluded their meeting on a much more positive note than expected. It seems like that there is a willingness on both sides to mend the relationship as they understand that working together on shared goals is the only way forward. For the last number of years, they have seen the results of having unnecessary friction, which created nothing but chaos for market players and business entrepreneurs.
Overall, it is certainly safe to say traders are feeling more comfortable about the US and China relationship now than before the meeting. Cooperation amid tensions is the only way forward and the US seems to have understood that it can’t pressure China as it controls the supply chain around the globe.
Gold
The precious metal prices seem to be stabilising once again and there is a possibility that the brief sell off may be over. The gold price has been under pressure for the past number of days purely due to the strength in the dollar index, but today traders have decided to fight that as they know that the soaring inflation situation is a more damaging one.
In addition to that, we also have US retail sales numbers which are coming out in the afternoon. A strong reading could bring strength for the dollar index and vice versa.
In terms of the Fed officials, their messages are mixed as always. For instance, Richmond’s Fed Reserve President said yesterday that the Fed would be quick on its feet if inflation continues to stretch beyond its limit and threatens the economic recovery. However, this is certainly a view of one person, and we have a number of them speaking next week as well, and if the message isn’t consistent—a highly likely scenario – we could see sharp moves in the dollar index again.