Daily Market Analysis By FXOpen

Rising Yields Spark Dollar’s Rally



Financial market participants were taken by surprise last week. The US dollar, on a steady decline since April of last year, has pared losses and started to rally.

It gained across the board, trading higher against the euro, the pound, or the Australian dollar. The move higher in the dollar comes against all forecasts at the end of last year. Investment banks across the world forecasted a lower dollar to be the theme for the entire 2021, but that trend lasted only for the first two months of the year.

The move higher in the dollar was sparked by a dramatic increase in the US 10y yields. The Treasury yield is already at the end-2021 forecast, with only two months ended in the trading year.



Higher Yields, Higher Dollar

The rising yields pose a threat to the reflation theme and the risk-on environment. Whenever yields are rising, the rise brings an unwanted tightening in financial conditions.

At this point, investors are speculating that the tightening of financial conditions during a pandemic will trigger more action from some central banks. However, the Fed looks trapped due to higher inflation and the Treasury issuance plan. Therefore, the chances are that other central banks, in particular the ECB and the RBA, will likely ease, further fueling the move higher in the dollar.

The EURUSD and the AUDUSD pairs lows over two big figures last week, and the trend lower continues. At the time of writing this article, the EURUSD traded close to 1.20, after only last Thursday it was as high as 1.2240. The move lower is almost vertical, and the same is seen on the AUDUSD pair.

In other words, this is a higher dollar move triggered by financial tightening and the risk-on environment changed. Should we see, yields continuing to rise, the dollar’s strength will continue as well.

This is the NFP week, and trading is tricky until the jobs data is released next Friday. However, this time the release may not be so relevant for markets unless the yields give away some of the recent games.

Also, investors will focus on what the RBA will do tomorrow, as well as the signals from the ECB. Any signs of further easing should trigger a new leg lower in the EURUSD and AUDUSD pairs.

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BTC and XRP – Breakout seen but first resistance encountered



BTC/USD

From Sunday’s low at around $43,070, the price of Bitcoin came up $49,579 at its highest point today which was a recovery of 15%. Since today’s high, we have seen a minor pullback but the price is still in an upward trajectory overall.



This recovery of 15% was a breakout from the descending triangle that formed from the 25th of February and was the 3rd sub-wave from the correctional move that started on the 21st. The price found support on the 0.5 Fib level on Sunday which led to the price increase and ultimately to a breakout but now new resistance has been encountered above the prior local high at the significant horizontal level.

We could have seen the completion of the 4th corrective wave from the higher degree count with the wave structure implying that the descending triangle from which it broke was the C wave from the lower degree count. If this is true, then the current rise is the next starting impulse that is going to push the price of Bitcoin above its prior all-time high onto the next one. But first, there must be a validation which would come in a form of a breakout from the currently interacted horizontal resistance level. This is why now the pullback might continue to the 0.382 Fib level where if the price finds support, further uptrend continuation would be expected.

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EUR/USD Facing Hurdles, USD/JPY Gains Bullish Momentum



EUR/USD declined towards 1.2000 before recovering higher. USD/JPY is following a strong uptrend and it even broke the 106.50 resistance zone.

Important Takeaways for EUR/USD and USD/JPY

• The Euro tested the 1.2000 support zone and it is now recovering higher.
• There was a break above a steep bearish trend line with resistance near 1.2020 on the hourly chart of EUR/USD.
• USD/JPY climbed above the 106.00 and 106.50 resistance levels.
• There is a major bullish trend line forming with support at 106.70 on the hourly chart.

EUR/USD Technical Analysis

This past week, the Euro topped near the 1.2245 before starting a fresh decline against the US Dollar. The EUR/USD pair broke the 1.2150 and 1.2120 support levels to move into a bearish zone.

The pair even broke the 1.2080 support level and the 50 hourly simple moving average. Finally, there was a spike below the 1.2000 support and the pair traded as low as 1.1991 on FXOpen.



Recently, the pair started an upside correction above 1.2020. There was a break above a steep bearish trend line with resistance near 1.2020 on the hourly chart of EUR/USD. The pair climbed above the 23.6% Fib retracement level of the downward move from the 1.2245 swing high to 1.1991 low.

It is now trading above the 1.2060 level and the 50 hourly simple moving average. An immediate resistance is near the 1.2100 level.

The first key resistance is near the 1.2120 level. It is close to the 50% Fib retracement level of the downward move from the 1.2245 swing high to 1.1991 low. A clear break above the 1.2100 and 1.2120 levels could open the doors for a move towards the 1.2200 level.

Conversely, the pair could start a fresh decline below the 1.2060 support. The first major support is near the 1.2050 level and the 50 hourly simple moving average.

If there is a downside break below the 50 hourly simple moving average, the pair could dive towards the 1.2000 support in the near term. Any more losses might call for a retest of the 1.1965 support level.

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LTC and EOS – Looking for support



LTC/USD

The price of Litecoin has been on the rise since the start of the month and came up from $154 to $197.24 at its highest point so far which was an increase of 28%. Since yesterday’s high we have seen a pullback to the $182 level above which it is currently being traded.



On the hourly chart, you can see that the price of Litecoin is making an interaction with the 0.5 Fib level measured from the 27th of January until the 20th of February which was the five-wave impulse to the upside that developed after a prolonged correction in January. The price made another minor breakout from the start of March from the descending trendline and is now inside another ascending channel.

If the previous upside impulse was the next five-wave impulse to the upside, the price has made a corrective decrease afterward. This would bring the current rise as the next sub-wave of the upward impusle that is set to exceed February’s high of $246. But another possibility could be that the higher degree impulse ended in February with the seen five-wave move in which case the currently seen rise is the 2nd sub-wave of the higher degree correction. This is why now depending on the wave structure behind the move we are going to see which scenario is in play.

If the price makes another three-wave move it would mean that the rise since the start of the month is corrective, but if it continues moving to the upside in a five-wave manner that would be an early indication that we are going to see a further uptrend continuation and new yearly highs for the price of Litecoin above the February’s one.

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Gold Price Slides Below $1,700, Oil Price Approaches $65



Gold price started a fresh decline below the $1,750 and $1,720 support levels. Crude oil price is still in a positive zone and it is approaching the $65.00 resistance.

Important Takeaways for Gold and Oil

• Gold price started a steady decline and it even broke the $1,700 support against the US Dollar.
• There is a major declining channel forming with resistance near $1,715 on the hourly chart of gold.
• Crude oil price traded to a new multi-month high near $64.96.
• There was a break above a key bearish trend line with resistance near $61.50 on the hourly chart of XTI/USD.

Gold Price Technical Analysis

Gold price struggled to stay above the $1,750 support and started a strong decline against the US Dollar. As a result, there was a break below the $1,720 and $1,715 support levels.

The price even declined below the $1,700 support and settled below the 50 hourly simple moving average. It traded as low as $1,687 on FXOpen and it is currently consolidating losses.



An initial resistance on the upside is near the $1,700 level. It is close to the 38.2% Fib retracement level of the recent decline from the $1,722 swing high to $1,687 low. The first major resistance is near the $1,710 level.

An intermediate resistance is near $1,705. It is close to the 50% Fib retracement level of the recent decline from the $1,722 swing high to $1,687 low. There is also a major declining channel forming with resistance near $1,715 on the hourly chart of gold.

The trend line is close to the 50 hourly simple moving average at $1,716. A close above the trend line resistance and a follow up move above $1,720 is needed for a fresh surge.

On the downside, the first major support is near the $1,688 level. The next major support is near the $1,675 level. Any more losses might call for a move towards the $1,650 support level.

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GBP/USD Turns Red While GBP/JPY Could Rise Further



GBP/USD surged above 1.4150 before starting a fresh decline below 1.4000. GBP/JPY is rising and it remains supported for more gains above 150.50

Important Takeaways for GBP/USD and GBP/JPY

• The British Pound started a fresh decline below the 1.4000 support zone against the US Dollar.
• There was a break below a rising channel with support near 1.3925 on the hourly chart of GBP/USD.
• GBP/JPY climbed higher steadily above the 149.00 and 150.00 resistance levels.
• There is a major bullish trend line forming with support near 149.70 on the hourly chart.

GBP/USD Technical Analysis

This past week, the British Pound topped near the 1.4200 level against the US Dollar. The GBP/USD pair started a fresh decline and traded below many key supports near the 1.4100 level.

The pair even broke the 1.4000 support level and settled below the 50 hourly simple moving average. Recently, there was a break below a rising channel with support near 1.3925 on the hourly chart of GBP/USD.



The pair even spiked below the 1.3800 level. A low is formed near 1.3778 on FXOpen and the pair is currently consolidating losses. An initial resistance is near the 1.3885 level.

The 23.6% Fib retracement level of the recent decline from the 1.4016 high to 1.3778 low is also near the 1.3885 level. The next major resistance is near the 1.3890 level and the 50 hourly simple moving average.

The 50% Fib retracement level of the recent decline from the 1.4016 high to 1.3778 low is the next barrier near 1.3900. A close above the 1.3900 level may possibly lift the pair higher towards the 1.4000 resistance zone.

If not, there is a risk of more downsides below the 1.3800 support zone. The next major support is near the 1.3740 level, below which the pair could decline towards the 1.3680 level.

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Decisive Week Ahead for the ECB and the Euro



The first week of the month ended up with the Non-Farm Payrolls (NFP) in the United States showing a strong rebound of the US labor market. The NFP report revealed that the job market added double the number of jobs that the economists forecasted. As such, the perspective of a faster than expected recovery is not an illusion anymore but a fact.

On top of that, the White House announced that the US will have a vaccine available for every adult by the end of April this year. This puts the US economy in front when it comes to the economic recovery after the pandemic, as the vaccines appear to be effective and the rest of the world lags in its vaccination efforts.

Unsurprisingly, the US dollar gained across the board. The USDJPY closed the week above 108, the EURUSD pair fell to 1.19, and even the AUDUSD dropped three big figures from its 0.80 highs.

While the previous week was exciting, as all NFP weeks are, the week ahead is even more interesting. The name of the game this week is what the European Central Bank (ECB) will do at its Thursday meeting.


ECB in Focus This Week

The euro area economies did not perform so well as the United States economy did. Just the opposite. In Europe, the COVID-19 pandemic hit the economies multiple times, with two or three pandemic waves resulting in more deaths than expected. As a consequence, most of the economies were closed for most of last year and in 2021 as well.

So, when the US is thinking of the economic growth ahead, Europe barely deals with the pandemic. The European Commission failed to secure vaccines for its population, and the speed of administering the existing ones is much slower than anything we have seen in other countries (e.g., United States, United Kingdom, Israel). Like it or not, the difference will be seen in the economic performances in the period ahead, and Europe is poised to lag its rivals.

More problematic for the ECB is the tightening of long-term yields in the United States. The move higher in the US yields, which are the benchmark for risk-free rates in the world, triggered a similar move in other jurisdictions – e.g., the Bund yields in Germany are on the rise too.



Higher yields signal economic recovery. While in the US, higher yields are a logical market reaction to the improved economic picture and the fast vaccination rate, in Europe, higher yields bring a challenge. When yields are rising, financial conditions tighten. This is a problem for the ECB, as it does not want tightening conditions while the economy continues to underperform.

Hence, Thursday’s ECB meeting is crucial for the ECB and the euro. On the one hand, the ECB must act to wind down the unwanted tightening. On the other hand, the EURUSD exchange rate keeps trading in a tight correlation with the equity markets in the United States. Should the ECB expand the asset-buying program (i.e., PEPP), the EURUSD may fall much lower than the current levels.

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BTC and XRP – Bullish sentiment continues



BTC/USD

From last Friday when the price of Bitcoin has been traded at $46,371, we have seen an increase of 17.6% measured to its highest point today at the $54,530 level. After a minor pullback, the price back close to the levels of today’s high and is still on an upward trajectory.



This upside movement is counted as the starting impulse to the upside after a correction ended on the 28th of February. The first two waves should have ended which is why now we are seeing the development of the next 3rd one.

If this is the five-wave impulse the price increase should continue after the completion of this rise which is set to exceed the high on the 3rd. But there is still a possibility that it would end on the 3rd wave in which case that would mean that we have seen the 2nd sub-wave of the higher degree correctional count.

In the first case, a new all-time high would be expected, while in the second the price would go above its low of February 28th which would be the first sub-wave of the higher degree descending move. The pivot point would be the pullback that is expected after the current rise ends, as it manages to stay above the $52,600 area it would validate the 4th wave. But if it continues moving down and even falls below the $50,000 area that would be a clear sign that the price of Bitcoin is headed for a lower low as the 4th wave count would be invalidated.

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EUR/USD Remains at Risk, USD/CHF Correcting Gains



EUR/USD started a fresh decline below the 1.2000 and 1.1920 support levels. USD/CHF traded towards the 0.9375 level before correcting gains.

Important Takeaways for EUR/USD and USD/CHF

• The Euro started a fresh drop below the 1.2000 and 1.1920 support levels against the US Dollar.
• There is a key bearish trend line forming with resistance near 1.1890 on the hourly chart of EUR/USD.
• USD/CHF followed a bullish path and it broke the 0.9300 resistance zone before correcting lower.
• There was a break below a connecting bullish trend line with support near 0.9295 on the hourly chart.

EUR/USD Technical Analysis

The Euro failed to extend gains above 1.2120 and started a fresh decline against the US Dollar. The EUR/USD pair broke the key 1.2000 pivot zone to move into a bearish zone.

The pair even broke the 1.1920 support level and settled below the 50 hourly simple moving average. The bears were able to push the pair below 1.1880 and a low is formed near 1.1836 on FXOpen.



It is currently correcting higher and trading above 1.1850. It even tested the 23.6% Fib retracement level of the recent decline from the 1.2112 high to 1.1836 low. There is also a key bearish trend line forming with resistance near 1.1890 on the hourly chart of EUR/USD.

If there is a break above the trend line resistance, the pair could correct higher towards the 1.1940 level. The next major resistance is near the 1.1975 level. It is close to the 50% Fib retracement level of the recent decline from the 1.2112 high to 1.1836 low.

If there is no upside break, the pair might continue to move down below 1.1850. The next key support is near the 1.1835 level, below which EUR/USD could decline towards the 1.1800 support. Any more losses could open the doors for a move towards the 1.1750 level.

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LTC and EOS – Did we see an upward correction ending?



LTC/USD

The price of Litecoin has been on a decline from its yesterday’s high made at $208 and has decreased by 7.64% today, coming down to $192. Since the price is in a downward trajectory and has made an entry below its prior higher high, further downside could be expected in the upcoming period.



On the hourly chart, we can see that the price of Litecoin has been on the rise since the start of March after a period of continuous decline. As on the 20th of February, we have seen the completion of the impulsive five-wave move to the upside. This is why a steep descending move was made as a corrective wave. This is why now we could have seen the continuation of the higher degree corrective move as the ABC to the upside from the start of the month.

The first indication that this was an upward ABC instead of the next five-wave impulse is the fact that the price failed to stay above the 0.382 Fib level which was the ending point of the 1st wave to the upside. If this is true then the price of Litecoin is now headed further to the downside below its low made on the 28th of February at $154.


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