REGULATORY NEWS SENDS CRYPTOCURRENCY PRICES LOWER
Cryptocurrencies moved towards the lowest levels of the year this week after news regarding tightening digital currency regulations from the United States weakened market sentiment. The SEC charged two companies over misleading investors, while US lawmakers called for tighter regulation on cryptocurrencies and ICO’s. Ethereum was one of the worst performing cryptocurrencies, as it sunk towards the $150.00 level causing the ETHUSD pair to lose nearly forty-five percent of its market value at one point. Ethereum later recovered above the $200.00 level, marking a stunning late week recovery for the second largest cryptocurrency.
The ETHUSD pair is bearish while trading below the $200.00 level, further losses towards the $135.00 and $125.00 levels seem possible.
If the ETHUSD pair trades above the $200.00 level, further gains towards the $228.00 and $240.00 resistance levels remains possible.
The British pound suffered another volatile week on the foreign exchange market, as Brexit continued to drive market sentiment. The British pound hit a five-week trading high in early week trading against the greenback, as EU chief Brexit negotiator Michel Barnier said that a deal could be reached ‘within six to eight weeks’. The British pound also received a boost from better than expected monthly UK GDP data, as summer spending from the World Cup and better weather conditions boosted the UK economy. The Bank of England meeting proved a non-event for investors, with sterling rising towards the 1.3100 as the Bank of England noted that future rate hikes would be ‘slow and gradual’.
The GBPUSD pair is bullish while trading above the 1.2900 level, further upside towards the 1.3155 and 1.3210 levels seem possible.
If the GBPUSD pair moves below the 1.2900 level, further downside towards the 1.2802 and 1.2775 levels would then seem likely.
ECB KEEP RATES ON HOLD
The European Central Bank kept interest on hold this week as widely expected, noting that eurozone interest rates are likely to stay unchanged until the summer of next year. The Governing Council also said that they expected to end asset purchases around December this year. The EURUSD pair looked past the lack of near-term movement on the eurozone interest rate and climbed towards the 1.1700 level, after hawkish comments on growing eurozone inflation pressures from ECB President Mario Draghi.
The EURUSD pair is only bearish while trading below the 1.1600 level, key support is found at the 1.1528 and 1.1450 levels.
If the EURUSD pair trades above the 1.1700 level, further upside towards the 1.1789 and 1.1850 levels remains possible.
TRADE AND THE ECONOMY
Riskier asset classes received a boost this week, as US Treasury Secretary Steve Mnuchin reportedly proposed fresh trade talks between the United States and China. Financial markets took the news as a positive step towards the repairing of Sino-US relations after recent trade tensions between the two nations. US President Donald Trump later said that the United States was in no hurry to make a deal with China, playing down trade talk reports. The US economy also posted weaker than expected inflation data this week, with both US PPI and CPI inflation figures coming in worse than analyst had predicted.
The USDJPY is only bullish while trading above the 111.75 level, key resistance is located at the 112.25 and 112.78 levels.
If the USDJPY pair trades below the 111.90 level, further weakness towards 110.38 and 109.68 levels appears possible.