Forex and cryptocurrency forecast for February 15 – February 19, 2021
First review of last week’s events:
EUR/USD. It often happens that monthly forecasts meet faster than weekly. That was also the case this time. Recall that only 30% of experts expected the EUR/USD pair to grow over a weekly period. In the transition to the monthly forecast, these were already mostly, 60%. We started talking about the paradoxes of the relationship between stock indices and the dollar seven days ago. With the pandemic erupting at the end of February last year, there was clearly an inverse correlation between them: with fiscal stimulus (QE), lower interest rates and pumping the U.S. economy with cheap money, the S&P&P500, Dow Jones and Nasdaq stock indexes went up and the DXY dollar index went down. And it was logical. And here came 2021, and everything turned upside down. Against the backdrop of good economic data and expectations for a new $2 trillion “vaccine” financial injection, the rise in risk sentiment and stock market indices continued. But at the same time, the yield on long-term U.S. Treasury bonds and the dollar rose. But the surprises with tipping did not end there. Based on the same fiscal incentives and rapid vaccinations in the United States, Wall Street Journal experts are raising their 2021 U.S. GDP forecasts from 4.3% to 4.9%. In Europe, the opposite is true: there are many delays in vaccination, EU countries, one by one, are once again tightening anti-plant measures, there is no end in sight of blockades. As a result, the European Commission lowers its forecast for the euro area economy to 3.9%. But at the same time, the euro is rising and the U.S. currency is falling. According to many experts, this is a long-term policy of the US Fed, which does not intend to end the QE program until the end of 2021 and will not raise dollar interest rates earlier than 2023. This should lead to a recovery not only of the US but also of the global economy, including the EU, making the euro a rather attractive currency for some, mainly Chinese, investors. China’s interests in Europe are huge and appetites are constantly growing, supporting demand for a Pan-European currency. As a result, after starting at 1.2050, the EUR/USD pair rose by 100 pips and reached a weekly level of 1.2150 on Thursday, February 11. This was followed by a correction and a finish of 1.2120; GBP/USD. Published macro statistics look quite contradictory. Due to the corona pandemic, investment cuts and Brexit problems, UK GDP has shrunk by 9.9%, a record low for more than 300 years. At the same time, monthly and quarterly GDP was better than expected. GDP growth in Q4 2020 was +1%. Industrial production data was lower than expected, but the trade balance report pleased investors. The Bank of England’s robust monetary policy, positive interest rate and the world’s first and third (after Israel and the UAE) in terms of vaccination rates also played on the pound side. At the time of writing, 20.67% of the country’s population was already vaccinated (14.02% in the US). Recall that the majority of analysts (65%) also on the UK side of the currency. The main forecast was that the pair would succeed, after breaking resistance at 1.3750, to 1.3800 and possibly 25-50 points higher. And so it happened: the high week was set at 1.3865 and the last gbp/USD pair chord set at 1.3850. USD/JPY. The movement of this pair in most cases depends on what happens not in Japan, but in the United States, where stock indices move, as well as the yield on U.S. government bonds and the DXY dollar index. It also happened last week. DXY climbed $91.21, USD/JPY rose to 105.66 on February 8. On February 10, the dollar index fell to 90.26 and then the lower one at 104.40. On February 12, the dollar rose to 90.71 and the USD/JPY rose to 105.17, followed by a slight drop: in the index to 90.39, in tandem to 104.95. So, if anyone wants to try DXY as a leading indicator for this pair, they can try it; cryptocurrencies. By the end of 2020, Forbes had compiled a list of the richest representatives of the cryptocurrency industry with capital worth more than $1 billion. The top three included Coinbase CEO Brian Armstrong with $6.5 billion, FTX boss Sam Bankman-Fried with $4.5 billion and Ripple co-founder Chris Larsen with $2.9 billion. In total, Forbes had 11 billionaires, although given the increase in the price of digital assets in the January-February period, there may have already been more. Suffice it to say that the total capitalization of the cryptocurrency market increased by 87% in less than a month and a half in 2021, from $776 billion to $1.452 billion. Last week was one of the most successful this year. The rally began with the news that Tesla had bought $1.5 billion in bitcoins. At the same time, his boss, Elon Musk, said he plans to sell the brand’s cars for the cryptocurrency in the near future. Bitcoin went up in price by 23% on this news, on February 8. But it didn’t end there. Global payments giant MasterCard has announced that it plans to provide merchants with the ability to receive payments in crypts later this year. As a result, bitcoin once again renewed its record highs, reaching $48,930 in the afternoon of Friday, February 12. Btc’s capitalization has grown to $885 billion at the moment and exceeded the size of the money supply of such a large country as Russia, for the first time. Crypto Fear & Greed Index reached 92 (a week ago it was 81) and is in the overbought zone. At the same time, btc’s domination index has fallen from 70.36% to 61.06% since the beginning of the year. But, according to many experts, this does not mean a deterioration in investors’ attitudes towards bitcoin, but an improvement in their approach to altcoins. So, the Chicago Mercantile Exchange (CME) began trading in Ethereum futures on Monday, February 8. Turnover reached $30 million on the first day, and open interest – $ 20 million, which indicates stable investor interest in this token. ETH’s capitalization has increased by 32% since the beginning of the year and stands at more than $203 billion as of February 12. The next best coin we’ve already looked out for in a previous review is Litecoin. Over the past three months, total open ltc futures shares have increased 285% to $584 million. And although Litecoin’s share of the total capitalization of the cryptocurrency market is quite small (8th place with 0.85%), it currently occupies an honorable 3rd place among derivatives after bitcoin and Ethereum.
As for the forecast for the coming week, summarizing the reviews many experts, as well as forecasts made on the basis of various methods of technical and graphic analysis, we can say the following:
EUR/ USD. In the coming week, China is celebrating the New Year, which will cause a significant part of the trade volumes to leave the world markets. However, this does not promise calm or a decrease in volatility at all. Although at the moment investors are at a crossroads. U.S. stock indexes, after a strong jump up in January, have gradually pushed up to consolidate and look overbought. No surprises are expected from the Fed any time soon, and the report from the Open Market Committee meeting on Thursday, February 18, is likely to be boring enough. On the same day, a report on the ECB’s monetary policy meeting will be published, but it is likely to be filled mainly with overall streamlined returns. That’s why the main drivers for the EUR/USD pair will once again be the news of successes in the fight against the Covid-19 pandemic on both sides of the Atlantic Ocean. As for the experts, 60% of them, along with a graphical analysis for the H4 and D1, expect the pair to fall to at least 1.2050 support. In the event of an outbreak, the next target for bears will be february 5 low at 1.1950. The closest support is in the 1.2100 zone. 40% of analysts follow the opposite scenario. However, when it goes from weekly to monthly forecast, the number of bull supporters increases to 60%. 85% of trend indicators on H4 and D1 are also painted green. But the readings of oscillators in both time intervals can not be analyzed: there is a complete chaos of red, green and neutral gray colors. The closest resistance level is 1.2150. Bull targets include first returning steam to the 1.2200-1.2300 zone, followed by January’s level of 1.2350. As regards the economic calendar of the week, in addition to the aforementioned Fed and ECB meetings, we look forward to: on Tuesday, February 16 – euro area GDP data, on Wednesday, February 17 – retail sales data in the United States (a noticeable increase from -0.7% to + 0.7% is expected), and at the end of the working week, on Friday, February 19, statistics on Markit’s economic activity in Germany and the EU will be published (here, although not so noticeable, but still expected to increase);
GBP/USD. Quarterly GDP growth of 1% means that the country has every chance of getting out of recession. High vaccination rates will also contribute to this (although there are concerns about new strains of coronavirus). Prime Minister Boris Johnson plans to present a plan to leave quarantine at the end of the month, or rather 22 February, which should explain the prospects for a recovery in the UK economy. Meanwhile, analysts’ voices have been split as follows: the pound has reached 34-month highs, and 45% of experts believe it’s time to stay and play a little down. 20% vote for a further increase in steam, while the remaining 35% take a neutral position. 100% of trend indicators and 75% of oscillators on H4 and D1, along with graphical analysis of H4, north point, targets are 1.3900 and 1.3950. The remaining 25% of oscillators give signals that the pair is taken out. As for the graphical analysis on the D1, it shows a reflection from resistance of 1.3865 and a drop first to support in zone 1.3700, then 1.3630 and 1.3575. As regards economic statistics, attention should be paid to data on the UK consumer market, which will be published on Wednesday 17 February, and economic activity in the services sector on Friday 19 February; USD/JPY. Graphical analysis d1 predicts the movement of steam in the channel along the pivot point 104.85 during the month. Moreover, it will first rise to the upper limit of the channel at 105.75 and then go down to the lower limit at 104.40. In H4, the oscillation amplitude is naturally lower, from 104.85 to 105.30. In addition to the green color of 75% of trend indicators on D1, the readings of other indicators and oscillators look quite confusing. It is also difficult to draw any conclusions from the opinions of experts who are divided almost equally: 40% for the growth of the couple, 30% for its demise and the same amount for sideways movement. The GDP figures for Q4 2020, which the Japanese Cabinet of Ministers will publish on Monday 15februss, may somehow influence the short-term trend of the USD/JPY pair, especially if this indicator differs significantly from the forecast of +2.3%; kryptocurrencies. We wrote about bitcoin’s willingness to storm a $50,000 high two weeks ago. And its increase to $48,930 on February 12 is a clear confirmation of the correctness of this forecast, which 80% of experts on a monthly basis. The growth of bitcoin and other top coins is dragging up the entire crypto market. Its members are eagerly awaiting, for example, Tesla and MasterCard and other P500 companies listed on the NYSE to announce their readiness to work with digital assets. As for example, there’s Bank of New York Mellon, which said it would allow digital currencies to pass through the same financial network that it uses for traditional financial assets. The fact that every company in America will soon follow tesla’s example, mentioned Galaxy Digital cryptobank founder Mike Novogratz in an interview with Bloomberg. According to the billionaire, this will help bitcoin rise to $100,000 by the end of this year. In the long run, the BTC/USD pair could rise to as much as $600,000. At least that is the opinion of the specialists of the financial and investment firm Guggenheim Partners. According to the company’s chief investment officer, Scott Minerd, everything will depend on the number of coins in the public domain. “Cryptocurrency can increase to very high values. It’s possible that we’re talking about $400 or even $600,000 per coin… Bitcoin was once unreasonable for institutional investors, but now everything has changed,” Minerd said. According to the specialist, the concerns are due to the rapid growth of assets over the past few weeks. It is possible that we are talking about speculations in which institutional investors are involved, capable of managing the value of the coin with large investments. So far, bitcoin is in a difficult situation, because the departure of large depositors will lead to the return of a negative trend. This development is unlikely, says the director of Guggenheim Partners, but it is definitely important to consider.
NordFX Analytical Group
Note: These materials are not investment recommendations or guidelines for working in the financial markets and are for informational purposes only. Trading on the financial markets is risky and can result in a complete loss of deposited funds.