Forex Forecast and Cryptocurrencies Forecast for March 09 - 13, 2020
First, a review of last week’s events:
- EUR/USD. It seems that now one can ignore the macroeconomic indicators, which previously not only had an impact on the quotes, but also could reverse trends by 180 degrees. The situation in the financial markets has been completely dominated by the coronavirus for many weeks on the run, which now affects not only the health of people, but also the actions of governments and Central banks.
Global regulators are massively lowering interest rates. The effect of a bombshell was produced by the decision of the US Federal reserve, taken at an emergency meeting convened for the first time since the 2008 crisis, to lower the key interest rate from 1.75% up to 1.25%. This decision was the outcome of a teleconference with the participation of Finance Ministers and Central bankers of the G7 States on monetary policy in the face of the coronavirus Covid-19.
Come from war, you belong to war, and a lull on the fronts of the fight against this infection is not yet expected. The amplitude of fluctuations of the basic currency pairs breaks all the trading strategies created in a quiet and calm 2019. The DXY dollar index lost 1.7% over the past week, while it had been not far from 3-year highs just two weeks before.
Starting from January 01 to February 20, 2020, the dollar rose against the euro by 460 points, which is an impressive figure in itself. But onwards and upwards: having made a U-turn, the EUR/USD pair has soared by more than 640 points in just the last two weeks! And all these jumps, both up and down, took place without any serious corrections, knocking out first the bulls, and now the bears. The height of only one daily "candle" on Friday, March 06, was more than 140 points.
It should be noted that in general, the forecast given last week by the majority of our experts (60%) and supported by 70% of the indicators was correct. The new year's high at 1.1240 was named as the goal the pair was supposed to reach. However, on the last day of the trading session, against the background of an 18% collapse in the yield of 10-year us bonds, the pair did overcome this resistance, reaching a peak of 1.1355, and it ended the five-day period at 1.1300;
- GBP/USD. Surprisingly, the fact is: no matter what happens in the world in general, and in the UK in particular, the GBP/USD pair repeatedly returns to the iconic support/resistance zone of 1.3000 for the fifth month in a row. This was also the case last week: after finding the local bottom at 1.2735, the pair flew up almost 300 points and finished at 1.3030. This fully confirmed the forecast given by the majority (65%) of experts who predicted the pair's return to the 1.3000-1.3070 zone;
- USD/JPY. The flight from the dollar and the growing demand for hedging currencies allowed the yen to demonstrate a phenomenal two-week growth of 720 points, i.e. by 6.4%. However, analysts' forecasts were even bolder. They expected that, supported by the coronavirus, the pair will break through the support of 107.50, 106.65, 105.65 one after another and approach the August 2019 low in the area of 104.45. The supports were broken indeed, however, the pair failed to achieve its goal: the local low was recorded on Friday, March 06 at 104.98, and the final chord sounded at 105.35;
– cryptocurrencies. We doubted in the last review that Bitcoin has actually become the same hedge asset as the euro or, even more so, the yen, as many crypto gurus have tried to prove to everyone. As it turns out, we are not alone in our doubts. Billionaire, former Wall Street banker and Bitcoin enthusiast Michael Novogratz was surprised to find that Bitcoin quotes were rolling down at the same time as the dollar and stock indices in the last decade of February. "How did BTC stop being an asset for hedging risks and start trading as high-risk securities? Novogratz exclaimed on Twitter. "It hurts!"". In his opinion, those traders who lost on the stock market started shorting Bitcoin in an attempt to catch up, and eventually drove the quotes down.
In fairness, it should be noted that the reference cryptocurrency has tried to restore its reputation last week. However, it failed: having lost more than $2,000 in price over the previous two weeks, it only won $730 back. This success against the background of the explosive growth of the euro and the yen looks quite modest. So it's probably too early to talk about Bitcoin as a truly protective asset.
As for such top altcoins as Ethereum (ETH/USD), Litecoin (LTC/USD) and Ripple (XRP/USD), they have traditionally followed in the wake of the BTC/USD pair. The capitalization of the crypto market in the past week has remained almost unchanged: at the level of $256 billion, the Bitcoin Crypto Fear & Greed Index has also almost frozen in place: the drop from 40 to 39 points is simply not worth taking into account.
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