DIFX DIVE: This Week in Markets

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Markets have lifted the expected peak for Fed funds to 5.28% which has resulted in some gains in the dollar safe-haven. The Fed’s favored inflation indicator, the core PCE index, is expected to rise 0.4% in January, while the annual pace may have slowed just a fraction to 4.3%.

The US economy has recently shown signs of a tight labor market, stable consumer prices, strong retail sales, and higher producer prices. As a result, there are expectations that the Fed will implement tighter monetary policy to address inflation.

China’s benchmark lending rates have remained unchanged for the sixth consecutive month in February, as expected. This decision comes as the world’s second-largest economy continues to show promising signs of recovery from a slump induced by the covid-19 pandemic.

In today’s DIFX Analytics, we’re going to look into the following assets:

Bitcoin/US Dollar (BTC/USD)

Bitcoin is trending bullish with the EMA cross occurring over the weekend.

This cross signals further upward gains in the asset and we could see it reach new highs this week.

The next resistance after $25.2k is $27.8k.

As price action enters the next range. We can now expect liquidations and accelerated bullish movement toward $30k.

The Dollar Index (DXY)

The Dollar index made a gain last week and price action has begun to trade between the 50 and 200 daily EMAs.

As the market continues to price in a higher terminal rate from the Fed, we can expect bullish moves in the DXY with the Dollar gaining against major pairs.

The next resistance is $104.71 but we anticipate price action to reach $105.57 over the course of the week.

Euro/US Dollar (EUR/USD)

EUR/USD briefly dipped beneath the 50-day EMA but rebounded to hover just above this level.

RSI has dropped below the 50 level which signals bears in EUR/USD.

We may see price action make another move to the downside throughout the week.

The support at the 200-day EMA near $1.0528 could be tested this week.

Gold/US Dollar (XAU/USD)

Gold is rebounding slightly after a bearish run last week.

RSI is below 50 and reading at 40.25 at the time of writing.

We expect a slight retracement upward followed by continued bearish moves toward $1810.

We don’t expect a trend reversal until RSI is oversold at the 30 level on the daily chart.

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DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.

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