DIFX DIVE: This Week in Markets

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The Fed is expected to continue raising rates, but markets hope it will stick with the 25 BPS moves. The European Central Bank President Christine Lagarde said it was “very likely” they would raise interest rates by 50 basis points this month.

Bank of Japan Governor Haruhiko Kuroda’s final policy meeting is on Friday, and all eyes are on the fate of its yield curve control stance.

Bitcoin/US Dollar (BTC/USD)

Bitcoin is trading near support levels, just over $22,000.

There have been minimal directional movements over the weekend with purely consolidation trading occurring. 

The next support is at $21,500. If we see hawkish comments from Powell this week then we may see a slide in Bitcoin.

The Dollar Index (DXY)

The Dollar index is trading flat as the anticipation trade has begun. Markets are totally split based on how the next 2 weeks will go.

Jobs data this week will give a strong indication but there’s also CPI data next week which is even more of a signal as to how the Fed should navigate this fragile period of slowing down the rate hikes.

Expect a bullish dollar if we see nonfarm payrolls surprisingly higher this week.


ETH/USD is trading flat after a slight selloff on Friday. Ethereum has been quite steady since the crossover between the 50 and 200-day EMAs.

The sentiment on the Dollar has overshadowed the bulls in the crypto market as markets have been pricing in a more hawkish Fed.

A hawkish Fed should result in a bullish Dollar and a bearish crypto market.

Gold/US Dollar (XAU/USD)

Gold is bullish as it approaches the resistance at $1861.

As the markets begin to tussle between which direction the Fed will go in the coming weeks, it is clear that a more hawkish than expected approach is beginning to resonate.

If the negative correlation between the Dollar and Gold prevails then we could see a rejection at $1861 or when RSI hits 60 on the Daily chart, followed by more bears in the precious metal.

US Dollar/Japanese Yen (USD/JPY)

USD/JPY is awaiting the final policy meeting from Kuroda this Friday.

As his term comes to an end, we could see a pivot from the ultra-dovish monetary policy that has been the focal point of his time at the helm.

A more hawkish stance from the new governor will result in bullish moves in Yen and we should see a slide in USD/JPY.

Euro/US Dollar (EUR/USD)

EUR/USD is experiencing a reversal in trend. It has fallen beneath the 50-day EMA and is trading just above the 200-day EMA.

As the Dollar strength started to get a tighter grip on the markets, we could see the FX pair fall to $1.05 as the first support with the next target at $1.035.

RSI is trading below the 50 level as an additional indication of the bearish trend.

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