Currencies Brace for FOMC, Bitcoin Buoyant Above $50K - TraderFactor (2024)

The foreign exchange market sees a flurry of activity as traders and analysts closely monitor the leading currencies ahead of critical economic events, notably the release of the FOMC minutes. Amid the general market anticipation, Bitcoin shows signs of bullish behavior, managing to stir interest in the cryptocurrency sphere.

EUR/USD Responds to Market Sentiment Ahead of Fed Minutes

Descending below the 1.0800 mark, the EUR/USD pair has erased the gains it accumulated in the early European trading hours on Wednesday. A fresh bid for the safe-haven US Dollar places pressure on the pair, causing investors to adopt a careful stance before the Federal Reserve releases the minutes of its January policy meeting.

Although reaching a peak since early February at 1.0840 on Tuesday, EUR/USD saw a dip but maintained footing above 1.0800. With a technical outlook hinting at a bullish skew, efforts turned towards sustaining the momentum.

Following the Memorial Day weekend in America, the US Dollar faced downward forces as Treasury yield retreats colored Tuesday’s trade session. However, this morning’s wary forecast for global markets, as reflected by the decline in US index futures, has steadied the US Dollar, curtailing EUR/USD’s prospects.

Attention now revolves around the Fed, with investors poised to garner hints from the minutes, although the market currently prices in a near 70% probability of unchanged rates in the forthcoming dual policy meetings, according to the CME FedWatch Tool.

In opposition, should Federal Reserve officials downplay the latest uptick in inflation and hint at potential rate cuts in May, we could witness a significant selling momentum against the USD. Conversely, any indication or sentiment triggering safe-haven shifts could stymie EUR/USD advances.

EURUSD Daily Chart

The EUR/USD currency pair is currently experiencing an upward trend, maintaining gains above 1.0800 as of early Wednesday, after hitting two-week highs on Tuesday. Despite a mixed market mood, the US Dollar remains broadly weak, which has allowed the Euro to extend its recovery from the 2024 low of 1.0690 Technical analysis suggests that the EUR/USD is expected to stay slightly bid in a 1.0780-1.0840 range. The recommended entry point for buying is at 1.0795, with the first target price (TP1) set at 1.0825 and the second target price (TP2) at 1.0840.

The risk associated with this position is estimated at 2%. This recommendation is valid for the intraday trading period. The Relative Strength Index (RSI) supports this ascending sentiment, indicating a potential increase in buying pressure.

GBP/USD Holds Ground as Markets Await Central Bank Insights

Struggling to break the 1.2600 barrier, GBP/USD resides in negative territory within the European session Wednesday. A renewed drive for the US Dollar ensues as markets digest a worsening risk appetite, with the Federation of Open Market Committee (FOMC) minutes and commentary from Bank of England (BoE) and Federal Reserve speakers on the near horizon.

After a progressive surge above the 1.2650 threshold just a day prior – a level unseen in a week’s span – the GBP/USD coupling encountered resistance, stabilizing above the 1.2600 mark. The near-term analysis does not suggest an immediate bullish surge; buyers await a decisive break past 1.2650-1.2660 resistance.

Compelling remarks before the UK Treasury Select Committee by BoE’s Governor Andrew Bailey mentioned focused inflation reduction, counterbalancing market forecasts leaning towards rate slashes within the year.

With a landmark jobs report and inflation data post-January policy assembly already factoring into market dynamics, minor revelations are expected from the upcoming Fed minutes release.

AUD Experiences Uptrend Amid Anticipation for RBA and FOMC

On the flip side, AUD carries on with its sixth successive streak of gains this Wednesday. Spurred by the Reserve Bank of Australia’s (RBA) meeting summaries and a retreating US Dollar ahead of the anticipated FOMC minutes, traders weigh the potential of no cuts in the immediate rate future.

Australia’s domestic currency faces challenges on various fronts, from a downward trend in domestic equities to losses on Wall Street. These factors collectively undermine the mining sector and metals prices. Mixed statistics from the Australian Wage Price Index for the last quarter seem to have made an imperceptible impact on the AUD’s movement.

AUDUSD Daily Chart

The AUD/USD currency pair is set to continue its upward trajectory, following a positive trading session on Tuesday. The pair is currently hovering around the major level of 0.6550. An optimistic outlook over China and signals from the Reserve Bank of Australia (RBA) have boosted the Australian dollar, which has now gained positive traction for six straight days and is moving closer to a multi-week top.

For intraday trading, the recommended buy entry point stands at 0.6545, with a first target price (TP1) at 0.6580 and a second target price (TP2) at 0.6600. The associated risk for this position is estimated at 2%. The Relative Strength Index (RSI) further solidifies these upward dynamics, indicating a potential increase in buying pressure.

Bitcoin Bulls Defiant Amidst Volatility

Bitcoin, unfazed by traditional currencies’ suspense, reached a high for the year on February 20, climbing to $53,019 before sliding back toward $50,000 across several exchanges. Attracting attention, spot BTC ETF inflows align with the halving event anticipation, seeing BTC valuations perched above $52,100 at the time of writing.

Futures open interest (OI) for Bitcoin scaled new yearly heights too, stirring trading enterprise around the premier cryptocurrency. Coinglass reported that BTC’s total OI in futures touched $22.69 billion as of February 20 – a point not witnessed since November of 2021.

A wellspring of enthusiasm is noted amongst investors eyeing Bitcoin due to parallel momentum in both spot BTC ETFs and physical gold ETF outflows. The initial high after January 10th’s ETF endorsem*nt by US regulators is potentially being revisited, with traders committed to maintaining a benchmark above the $52,000 echelon.

BTCUSD Daily Chart

The BTC/USD pair is currently experiencing some selling pressure below the 52620 mark, following a recent spike to $53K. Despite this surge, resistance seems to be catching up with Bitcoin bulls. The cryptocurrency market has been on a rollercoaster ride, with Bitcoin’s price consolidating below key resistance levels. For intraday trading, the recommended sell entry point stands at 52430, with a target price (TP1) set at 50150. The risk associated with this position is estimated at 1%.

The Relative Strength Index (RSI) trails beneath neutral, indicating a potential increase in selling pressure, while the Moving Average Convergence Divergence (MACD) leans towards the negative, suggesting a possible bearish market sentiment.

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