Forex and cryptocurrency forecast next week

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First, a review of the events of the past week:

EUR/USD

 Statistics in the United States (including the ISM and NFP) appear somewhat optimistic. US indices have updated their record levels for the past five days: the Dow is 29,393 and the S&P500 is 3,345. Production orders in Germany have fallen 0.5% for three months in a row, underscoring concerns about the state of Europe's economy, which is teetering on the edge stagnation. As a result, expectations are growing among investors regarding the expansion of the quantitative easing (QE) policy in the eurozone, and confidence is growing that the dollar price will at least remain unchanged. This was stated recently by Federal Reserve Vice Chairman Randall Quarles. Donald Trump is also radiating optimism ahead of the presidential election, persistently reminding voters that the US unemployment rate is at a record low of 3.5%.

Remember that the opinion of experts, as well as most indicators on D1, regarding the pair's prices in the past five days, was neutral gray: 50-50. , due to the unclear situation with the Corona virus. But at the same time, in both frames, H4 and D1, about 15% of oscillators gave signals that the pair is overbought and that a trend reversal is coming. Chart analysis on H4 agrees with this development, which indicates a return to very strong support at 1.0990-1.1000.

This is exactly what happened: the pair turned around and reached the specified support level on Wednesday, February 5th. This was followed by a 20-hour battle between the bulls and the bears, which ultimately ended in the victory of the latter. The dollar continued to rise, while the euro continued to decline. The decline in coronavirus infection rates and market support from the Chinese central bank played in the US currency's favour. As a result, the pair found a local bottom at 1.0940 and ended the trading session at 1.0945; On Friday, February 07, after updating the lowest price for several months.

GBP / USD

After the euro, the pound lost its position against the dollar. Additional pressure has been put on him due to concerns that the UK will not yet be able to agree a trade deal with the EU during the post-Brexit transition period.

As for the EUR/USD, about 15% of oscillators last week gave clear signals about the pair's rise, and technical analysis predicted a decline in the British currency first to the level of 1.2970, and then to the level of 1.2800. In fact, on Friday, February 7, the pair's fall stopped almost in the middle of the specified range – in the 1.2880 area;

USD / JPY

 The low rate of coronavirus infection and hopes for an early victory over this infection are reducing markets' interest in safe haven currencies such as the Japanese Yen. As a result, the pair was able to break the key level at 110.00 in the second half of the week and reach the level of 110.016. Then there was a rebound, and a chord appeared in the area of ​​a strong medium-term support / resistance zone - at the level of 109.75.

Cryptocurrency

Bitcoin has had the best January in the past seven years. The value of the main currency increased by about 30 percent. The capitalization size of the asset added about $39 billion. According to experts, the reason for this rise was the geopolitical situation. The halving is approaching the value of Bitcoin. The last time Bitcoin showed strong growth dynamics was in January 2013. Then the value of the coin rose by about 54 percent. It should be noted that at that time the original was preparing for halving.

Another reason to push the BTC/USD pair higher is the coronavirus. “Asian investors are increasingly buying cryptocurrency due to the coronavirus situation. “Dollar payments may be blocked, so Bitcoin and other currencies will be the only way out,” Vijay Ayar, a senior manager at Luno crypto exchange, told CNBC. He also sees that the price of Bitcoin is affected by the “black” market. Many Chinese companies have shut down the export of goods, which is why the volume of smuggling paid using cryptocurrency has increased significantly.

Whatever it was, the halving, along with the virus and smugglers, pushed “Bitcoin” almost to the ten thousand dollars: on Thursday, February 6, fully justifying the expectations of most experts, the cost of one coin reached the mark of 9,860 $.

Of course, the growth of the leading cryptocurrency has given another boost to the altcoins. Ethereum (ETH/USD) reached $223.9, Litecoin (LTC/USD) - $75.30 and Ripple (XRP/USD) - $0.2800.

As for the forecast for next week, we can say the following:

EUR/USD

During the past week, all the most popular currency pairs reached historical levels: EUR/USD (1.1000), GBP/USD (1.3000) and USD/JPY (110), which makes the task of predicting further moves more difficult, because these levels can be They act as a very strong support and resistance.

At the time of writing this forecast, the situation in the EUR/USD pair indices mirrors what we observed a week ago. 100% of trend indicators and 85% of oscillators on H4 and D1 are now red. The remaining 15% of the oscillators are now indicating that this pair is oversold and a rebound is expected.

60% of experts, supported by technical analysis on H4, believe that the pair will continue to decline, aiming to test the November-October 2019 lows in the 1.0880 area. And if it succeeds, it will open the way to the 1.0500-1.0800 area, which it already visited in 2015-2017.

However, technical analysis also draws a rebound for the pair from the support level of 1.0880 up: first to the resistance level of 1.1000, and then to another 100 points. The majority of analysts (60%) agree that the pair will reach 1.1100 and 1.1200 again in the medium term.

As for the macroeconomic analysis, next week, it will include a whole wave of important events. Among them are Federal Reserve Jerome Powell's speech to the US Congress, the publication of statistics on consumer markets in Germany and the United States on February 13-14, and the release of GDP data for Germany and the eurozone at the end of the week, on Friday, February 14;

GBP / USD

 On Tuesday, February 11th, UK GDP data for the fourth quarter of 2019 will also be available. The increase is expected to be zero, which could put additional pressure on the pound. It should be noted that the situation with Brexit and the monetary policy of the Bank of England makes the prospects for the British currency very murky. At least, expert opinions are now divided into three roughly equal parts: 30% for the upside, 30% for the downside and 40% for the lateral movement of the pair. In the medium term, the majority of analysts (65%) still hope for a successful promotion of the UK-EU trade negotiations.

As for technical analysis, the pair repeats the situation with the EUR / USD: indicators are in red, and only 15% of oscillators are in the oversold territory.

The pair ended the week at the level of 1.2880 in the area of the Pivot Point, around which it revolved from the end of October to the beginning of December 2019. Therefore, the closest limits of its volatility are the limits of the same corridor last year -1.2800 and 1.3000. However, the pound's fall over the past five days by 320 pips indicates that it may not stay in the defined channel. The next target for the bears is the 1.2400-1.2580 area. If the trend reverses, we will see the pair in the 1.2975-1.3200 area with a pivot point at 1.3100. Due to the increased volatility of the pair, no more accurate parameters can be given (remember that in December 2019, it “goed strong” more than 600 points in just 10 days!);

USD / JPY

 Japan is the most energy dependent country due to the lack of its own energy resources, especially now, when, after increasing the number of nuclear power plants, it was necessary to significantly increase purchases of petroleum products. Therefore, a sharp increase in the price of this energy company always leads to a weakening of the Japanese currency.

During the past week, the oil market witnessed increased volatility in anticipation of the decision of the OPEC + committee to reduce oil production. As a result, it was decided to reduce its production by 600,000 barrels per day, which should stop the decline in the price of “black gold”. Easing China's trade policy should support the oil market, in particular, Beijing's decision to lower tariffs on $75 billion worth of American goods. Most likely, all this affected the growth of the USD/JPY pair and the Japanese currency's drop to 110 yen per dollar last week. 60% of experts expect the pair to continue to grow further, which will be facilitated not only by the oil factor, but also by the improvement of the situation with the coronavirus.

However, we must not forget that since January 06, Brent oil futures have fallen almost 21% - from $68.91 to $54.45, giving reason for the remaining 40% of analysts along with the Japanese currency.

Technical analysis on H4 indicates a decline in the pair to the 109.10-109.30 area, the next supports are 108.30 and 107.65. On D1, the picture is reversed: first, the growth to the level of 110.80-111.30, then to 111.70.

Cryptocurrency

Bitcoin price updated 3-month high. “Beware of a trend reversal!” 20% of experts warn. Against the background of the coronavirus epidemic, relations between the United States and China may stabilize, which will lead to an increase in investor interest in fiat currencies. In this case, Bitcoin can sink a lot. Even without the coronavirus, these two industrial giants are moving step by step toward the end of the trade war. But how much will this affect Bitcoin?

80% of analysts believe that a particularly strong decline (below $9,100) should not be expected, and the pair will soon reach the $10,450 level. And there's $12,300 around the corner. Thomas Lee, co-founder of Fundstrat Global Advisors, expects further growth. In his opinion, the average return on Bitcoin in the next six months will reach 200%.
But, as it often happens, when everyone goes up, the price goes down. Therefore, we strongly advise you not to forget about the 20% of specialists who advocate extreme caution.

Forex and cryptocurrency forecast next week

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