GBP/USD, JPY/USD, EUR/USD and Bitcoin Forecasts This Week April 26-30

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

pair EUR/USD

The US economy is showing impressive growth. On the other hand, Europe is broadly in lockdown and clearly experiencing a second recession. The proportion of those who have received at least one COVID-19 vaccine in the European Union is 25.1%, while in the United States double or more, 63.2%.

Can the euro grow in such a situation? Only 25% of experts answered this question positively last week, and they turned out to be right: the EUR/USD reached the level of 1.2080 on Tuesday, April 20.

The majority of analysts (50%) believe that the bulls and bears will engage in a “tug of war” across the 1.2000 line. It also turned out that they are not far from the truth: the pair fluctuated up/down in the range of 1.1995-1.2080 from Tuesday until the end of the week. Although of course victory remained with the bulls, as the last chord of the trading session appeared near the high of the past seven weeks at 1.2100.

There are two main reasons for these dynamics. The first is in America, the second is on the other side of the Atlantic, in Europe.
On the one hand, the yield on long-term US Treasuries continues to fall, and with it the US currency continues to weaken. The dollar index against a basket of six major currencies (DXY) fell to 91.0, down 230 points from this year's high of 93.3. This is fueling investors' risk sentiment and continues to push the major US stock indices higher.

This is happening even though US President Joe Biden has proposed doubling the capital gains tax (from 20% to 39.6%) for citizens with an income of $1 million or more.

On the other hand, the euro received support from positive expectations of the vaccination rate in Europe, especially the news that Pfizer will increase vaccine supplies to the European Union by 100 million doses. The yield on German bonds is increasing, which is beginning to catch up with its US competitors. Stronger than expected statistics on business activity in the Eurozone helped the EUR/USD bulls as well. Analysts polled by Reuters had expected the PMI to fall on average from 53.2 points to 52.8. However, it rose to 53.7 in April

pair GBP / USD

First, a few words about another pair, GBC / USD, which may appear in the near future. While in some countries regulators ban cryptocurrencies (for example, in Turkey), in others they try to put them at their service. Recently, BIS conducted a survey and it was found that out of 66 central banks, 52 are considering their own digital currency. One of these is the Bank of England, backed by Barclays Bank, one of the largest financial conglomerates in the country.

The digital pound has already received the fun name “Britcoin”, but until the GBC/USD pair appears in the list of trading instruments, let’s go back to its “big brother”, the GBP/USD pair. It rose at the beginning of the week, thanks to the weakness of the dollar, like the EUR/USD. The pair reached a high of 1.4010 on Tuesday after adding 170 pips.

However, he could not hold above the horizon of 1.4000: the pound lost all its advantages after two days, and the pair fell to the level of 1.3825. At the end of the trading week, the British pound received support from the strong statistics of business activity in the services sector: the Markit index rose from 56.3 to 60.1 (against expectations of 59.0) during the month, thanks to a slight growth in the pair. It completed the five-day period at 1.3885

pair USD / JPY

Recall that in the previous review we talked about the fact that one of the reasons for the decline in the US 10-year Treasury yield, and with it the strengthening of the yen against the dollar, may be the return of Japanese buyers to the market. They were actively getting rid of US bonds at the end of the fiscal year, but they are starting to replenish their investment portfolios with them now.

The majority of analysts (70%) voted seven days ago on the fact that the growth of the Japanese currency and the decline of the USD/JPY pair will continue, and these predictions turned out to be quite correct. The 107.50 level was indicated as support, which became the low of the local week. This was followed by a correction and ended at 107.85 .

Bitcoin

While the task of the bulls on Friday, April 16 was to prevent the BTC/USD pair from falling below $60,000, seven days later they are struggling to gain a foothold in the $50,000 region. After the massive growth to $64,800, which occurred on the eve of the Coinbase IPO in the US, we are now witnessing a similarly rapid crash. Bitcoin price dropped to the level of $47,545 on Friday, April 23, indicating a 26.6% drop.

It is difficult to pinpoint a single reason for what happened. Leading analyst Willy Wu said the decline was caused by massive power outages in Xinjiang, one of the largest regions in China where bitcoin mining is concentrated. According to the BTC Cambridge Energy Efficiency Index, the Xinjiang region accounts for about 25% of the total coin hash rate. Due to the fact that most miners were temporarily out of service, the hash rate of the asset began to decline, and the average transaction fee on the Bitcoin network exceeded $50, which has not been the case since 2017.
According to Woo, bitcoin should return to growth after the electricity supply situation stabilizes. Electricity returned to Xinjiang, but bitcoin continued its decline.

We have written time and time again that the cryptocurrency market is heavily influenced by regulatory risks. In this case, the panic was likely fueled by rumors that an investigation might be launched in the United States into a number of financial institutions on suspicion of money laundering using cryptocurrencies. Additional pressure on the market was put on by two news stories. The first is the news that the US Congress has approved the creation of the SEC and CFTC working group to advance crypto regulation. The second is US President Joe Biden's plans to raise taxes on capital gains, which could limit investment in digital assets.

The total cryptocurrency market cap fell by 17% during the week, from $2.2 trillion to $1.825 trillion. Meanwhile, Bitcoin continues to decline. If its share in the total capitalization on January 2 was 72.65%, it would be only 50.70% on April 23. This indicates that investors are looking for more profitable assets for their investments among digital currencies, of which there are currently more than 8000.

Just look at Ethereum. Despite the April 18 crash, this leading digital currency managed to renew its all-time high last week, hitting $2,635. Of course, the wave of sales did not pass by, but the drop in the price of ETH during the week was only about 11%. As for Ethereum's share in the total crypto market capitalization, its share has grown from 10.79% to 14.49% since the beginning of the year.

Summing up the last week, we note that the bitcoin price fell below the 50-day average, which is a worrying factor that could lead to more sales. The BTC dominance indicator, as mentioned earlier, is also declining. However, it is still far from the lows of early 2018, when it fell to 32%. Another indicator, Crypto Fear & Greed Index, fell from 78 to 55 points during the week and approached neutral territory.

Next week's forecast:

pair EUR/USD

As expected, the European Central Bank maintained ultra-soft policy and did not make any adjustments at its April 22nd meeting. Bank President Christine Lagarde has made every effort to limit further euro growth. Investors should have concluded from her speech that the European Central Bank will start to roll back fiscal stimulus (QE) later than the US Federal Reserve, given that the EU economy lags behind the US economy. (According to JPMorgan's forecast, Eurozone GDP, after a 1% decline in the first quarter of 2021, is expected to grow by 6% in the second quarter. In the US, the same numbers are +5% and +10%) .

The European Central Bank is not interested in a strong euro, because it interferes with European exports, and considers the current prices of the euro / US dollar to be too high. However, Ms. Lagarde was not able to reverse the pair's downtrend. Moreover, it is very likely that US Federal Reserve Chairman Jerome Powell will say the same thing at his next meeting on Wednesday, April 28 as I did: Although the pace of the US economic recovery is impressive, this is not at all enough to start a discussion of downsizing financial stimulus programmes.
The next meeting of the European Central Bank will take place on June 10, and a lot can happen during this time. The Euro will rise due to the increase in the vaccination rate and the economic recovery in the European Union. The bears are unlikely to be able to turn the pair south until the US Treasury yield starts rising again.

Goldman Sachs analysts believe that the four largest eurozone countries will vaccinate 37% of their population by the end of May, and that number will already reach 54% by the end of June. As a result, the bank raised its forecast for the EUR/USD from $1.2100 by the end of the year to $1.2500.

Conversely, the latest Bloomberg consensus estimate has fallen. If the number recalled in January was 1.2500, now it is 1.2200. Although this value indicates further strengthening of the euro.

The main event for the coming week will be the meeting of the US Federal Reserve System's Open Market Committee and its management's suspension on future monetary policy. Jerome Powell, as mentioned earlier, is likely to stick with a similar speech to Christine Lagarde, which could put further pressure on US bond yields and the US dollar price.

60% of experts expect EUR growth in the coming week backed by charting analysis, 100% of trend indicators and 85% of oscillators on H4 and D1. The remaining 15% of oscillators indicate that this pair is overbought. The resistance levels are 1.2125, 1.2185, and the target is the February 25th high at 1.2245.

It is worth noting that when switching to the forecast for May, the picture changes sharply, and here there are already 70% of experts, supported by graphical analysis on D1, who expect the EUR / USD pair to fall below the 1.2000 horizon. Supports are at 1.1940, 1.1865 and 1.1800. Bears target is the end of March low around 1.1700.

Regarding next week's events, apart from the Federal Reserve meeting, you should pay attention to the statistics of consumer markets: the United States - Monday, April 26, Germany - Thursday, April 29, and the eurozone - Friday, April 30. In addition, indicators of GDP for the first quarter will become known: the USA - April 29, as well as Germany and the eurozone - April 30

pair GBP / USD

A number of experts believe that successful vaccination of the population will help warm the UK economy. Quarantine restrictions have been loosened severely in recent weeks, and bars and restaurants have opened. The macroeconomic statistics are encouraging. However, concerns about Brexit, the massive trade and British budget deficits, still weighed on the British pound. But the dollar is also under pressure. Perhaps that is why forecasts for the GBP/USD pair seem somewhat contradictory: 45% of experts vote for its movement to the north, 35% to the south and the remaining 20% to the east. Technical analysis readings on H4 are also mixed.

On D1, thanks to the uptrend that started 13 months ago, most oscillators (65%) and trend indicators (85%) are looking forward. Graphical analyzes also indicate that the pair will once again try to break into the high level of 1.40000, but then drop to the support level in the 1.3670-1.3700 area. The nearest resistance level is 1.3920, the nearest support is 1.3800

pair USD / JPY

The main indicator for this pair was and still is the yield on US government bonds. If it continues to decline next week, the USD/JPY pair will fall further. The closest support is in the 106.80-107.10 region, and the next level is near the 200-day moving average at 105.80.

The opinion of the experts fully agrees with what was expressed a week ago. 70% of them believe that the pair will continue to decline. The remaining 30% expect the pair to bounce higher (resistance levels 108.35 and 109.00). There is complete disagreement among the oscillators on H4, at D1 - 75% are colored red, and 25% give signals that the pair is oversold. The graphic analysis on both time frames shows that at first the pair can rise to the resistance level 108.35, and only then, having rebounded from this level, will drop sharply

GBP/USD, JPY/USD, EUR/USD and Bitcoin forecast this week April 26-30Bitcoin

According to a number of experts, the declining share of Bitcoin in the total capitalization of the cryptocurrency market is a very annoying factor for investors. Remember that the leading cryptocurrency dominance index was 85% at the beginning of 2017, and dropped to 45% before the crash. Now that number is just over 50%. Pessimists argue that the rally in BTC/USD prices before Coinbase was listed on Nasdaq was the final stage of the bull run, and we need to prepare for a new “crypto winter” now, which could extend for several years. This is confirmed by the massive liquidation of Bitcoin futures contracts.

However, as is usually the case, in addition to pessimists, there are also optimists. For example, analysts at Santiment believe that Bitcoin's trend is still bullish. They came to this conclusion after analyzing the frequency of tweets for buy bottoms phrases. With the price of Bitcoin dropping below $51,000, the number of buy-to-be posts reached a weekly record of 2,108 tweets. This allowed Santiment analysts to conclude that this correction is nothing more than a "bump in the road".

However, it is unlikely that the two thousand Twitter users will seriously affect the market. More important is the mood of institutional investors who are not enthusiastic about cryptocurrency at all. There is a high probability that they will not be active until the position of the leading regulators on the sector becomes clear. Those “whales” who bought cryptocurrency in the fall of 2020 may begin to set profits at the current level: $45,000-50,000 is more than acceptable for them. But the new big purchases look risky.

 


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