Home Forex Foreign exchange and Cryptocurrencies Forecast for July 24 – 28, 2023 – Analytics & Forecasts – 22 July 2023

Foreign exchange and Cryptocurrencies Forecast for July 24 – 28, 2023 – Analytics & Forecasts – 22 July 2023

Foreign exchange and Cryptocurrencies Forecast for July 24 – 28, 2023 – Analytics & Forecasts – 22 July 2023


EUR/USD: Awaiting the Federal Reserve and ECB Conferences

● When the DXY Greenback Index dropped to April 2022 ranges (99.65) on July 14, many market contributors concluded that one of the best days for the American foreign money had been over. Inflation is nearing goal ranges, and so as to not suffocate the economic system, the Federal Reserve will quickly provoke a marketing campaign to ease its financial coverage. Nonetheless, issues aren’t that simple. After reaching a peak of 1.1275 on Tuesday, July 18, the EUR/USD pair reversed and began to say no.

● On the whole, towards the backdrop of weak macroeconomic experiences coming from america, the greenback may have given up just a few dozen and even a few hundred factors to the euro. Industrial manufacturing within the nation is falling for the second month in a row, with a 0.5% lower in June. Retail gross sales, anticipated to develop by 0.5%, solely elevated by 0.2% (a 0.5% enhance in Might). The Philadelphia Federal Reserve’s Manufacturing Exercise Index continues to be within the destructive territory (-13.5). The actual property market information additionally turned out worse than predicted. As an illustration, the variety of new constructions within the U.S. fell by 8.0% in June, following a 15.7% enhance within the earlier month. The variety of issued building permits additionally dropped by 3.7% after a 5.6% rise in Might. Gross sales within the secondary housing market had been under the earlier values (4.16M in June, 4.30M in Might, forecast 4.20M). Nonetheless, the labour market information turned out barely higher than anticipated – the variety of preliminary jobless claims was 228K (earlier worth 237K, forecast 242K). But, this can be a extremely unstable indicator, and it might not replicate the precise scenario, however the market was happy with this little bit of positivity.

Total, the revealed macro-statistics vividly illustrate the cooling of the American economic system. The worsening scenario in the actual property market clearly indicators the strain that high-interest charges exert on this essential sector. It is sufficient to recall the International Monetary Disaster of 2007-2008, which started with a mortgage disaster within the U.S.

In such a scenario, the hawkish course of the Federal Reserve is probably going nearing its finish. Virtually all Bloomberg specialists anticipate that on July 26, the Federal Open Market Committee (FOMC) will increase the rate of interest by 25 foundation factors to five.5%. There is a chance that the hike may very well be even much less: not 25, however simply 10 foundation factors. Afterwards, the regulator is anticipated to take a wait-and-see strategy, which may final till the top of the 12 months. The futures market estimates the likelihood of a charge enhance to five.75% in 2023 at 28%.

● Nonetheless, there’s not simply the American foreign money on the EUR/USD scale but additionally the pan-European one. Revised statistics present that in Q1, the Eurozone’s GDP was virtually at zero, the economic system is stagnating, and its development prospects seem moderately weak. It’s clear that the hike within the euro’s key rate of interest, which has grown from 0% to 4.00% on this tightening cycle, has had and continues to have a destructive influence. The lagging impact of financial tightening is changing into increasingly more palpable.

However, regardless of a 400 foundation level enhance in charges, inflation (CPI) within the Eurozone is declining fairly slowly – in June, it was 5.5% year-on-year in comparison with 6.1% a month earlier. It’s nonetheless very removed from its goal stage of two.0%.

Due to this fact, on one hand, we see vital value strain, on the opposite – the difficulties the EU economic system is experiencing. In such an ambiguous scenario, the additional steps of the European Central Financial institution officers additionally appear unsure. Extra readability concerning future financial coverage is anticipated to emerge on the upcoming European Central Financial institution Financial Coverage Committee assembly on Thursday, July 27. A minimum of, that is what market contributors are hoping for.

● Even considerably unclear information from the US labour market was sufficient to set off a DXY correction northwards and ship EUR/USD south. The ultimate observe of the working week was set at 1.1125. As for the near-term prospects, on the time of penning this evaluate, the night of July 21, solely 20% of analysts voted for the pair’s additional rise, 50% for its fall, and the remaining 30% took a impartial stance. As for technical evaluation, on D1, 75% of development indicators level up, 25% level down. Of the oscillators, 85% suggest shopping for, whereas the remaining 15% take a impartial stance. The pair’s nearest assist is situated round 1.1090-1.1110, 1.1045, 1.0995-1.1010, 1.0895-1.0925, 1.0845-1.0865, 1.0800, 1.0760, 1.0670, 1.0620-1.0635. Bulls will meet resistance round 1.1145, then 1.1170, 1.1230-1.1245, 1.1275-1.1290, 1.1355, 1.1475, and 1.1715.

● Undoubtedly, the important thing occasions of the upcoming week would be the FED assembly on July 26 and the ECB assembly on July 27, together with the next press conferences held by the leaders of those regulators. Moreover, on Monday, July 24, quite a few preliminary enterprise exercise information (PMI) will come from Germany, the Eurozone, and the US. The subsequent day, the Eurozone Financial institution Lending Survey might be revealed, and the worth of the US Client Confidence Index might be identified. On Thursday, information on sturdy items orders will arrive from america, together with actual property and unemployment statistics. Lastly, on the very finish of the working week, on Friday, July 28, we are going to study the preliminary information on inflation (CPI) in Germany, in addition to private consumption expenditure information within the US.


GBP/USD: 50 Foundation Factors or is it 25 After All?

● The subsequent assembly of the Financial institution of England (BoE) is about for August 3. Some market contributors are inclined to consider that at this assembly, the regulator will increase the bottom charge for the pound by one other 50 foundation factors (bps) to five.50%. Economists from the French monetary conglomerate Societe Generale have formulated three essential the explanation why the BoE will take this step.

Firstly, inflation within the service sector and wages could have peaked in June, however each indicators stay uncomfortably excessive. The Client Value Index (CPI), though it fell over the month from 8.7% to 7.9% (with a forecast of 8.2%), continues to be removed from the goal stage of two.0%.

Secondly, as Societe Generale believes, traders are avoiding UK bonds attributable to persistent inflation within the nation. Such excessive and secure inflation implies that traders require increased compensation for holding UK bonds in comparison with US Treasuries and German bonds. To reassure traders, it’s vital at this stage to proceed a strict financial coverage.

Thirdly, in current weeks the Financial institution of England and its governor Andrew Bailey have been closely criticized for sticking to a mushy financial course for too lengthy, thereby permitting a strong surge in inflation. And now the BoE could overdo it in its need to show that its critics are improper. This could result in extra aggressive actions, similar to a big charge hike. Nonetheless, we should additionally take into account the chance that the BoE may select a extra conservative 25 foundation level charge hike as a substitute.

Certainly, not everybody agrees with the arguments put forth by the French economists. As an illustration, their colleagues on the German Commerzbank have famous that client costs (CPI) within the UK grew at a a lot slower charge in June than was anticipated. Due to this fact, the market’s built-in expectations for a charge enhance are too excessive and require a downward correction. This, in flip, will result in a weakening of the pound. The same viewpoint was expressed by strategists on the Netherlands’ largest banking group, ING, who consider the speed might be elevated by a most of 25 foundation factors.

● The above-mentioned CPI information was revealed on Wednesday, July 19. Nonetheless, along with this, the Workplace for Nationwide Statistics (ONS) within the UK additionally revealed retail commerce information for the nation on Friday, July 21. It turned out that in June, the quantity of retail commerce elevated by 0.7% on a month-to-month foundation, in comparison with the anticipated 0.2% and 0.1% beforehand. The primary indicator of retail gross sales, excluding auto gasoline gross sales, elevated by 0.8% over the month in comparison with the forecasted 0.1% and 0% in Might. The annual quantity of retail gross sales within the UK fell by -1.0% in June towards the forecasted -1.5% and Might’s decline of -2.3%, whereas the bottom quantity of retail gross sales dropped by -0.9% towards the anticipated -1.6% and the earlier -1.9%.

After the discharge of those favorable information, the UK Finance Minister Jeremy Hunt acknowledged that “we are going to begin seeing outcomes if we persist with our plan to halve inflation”. The minister’s phrases may very well be interpreted as assist for additional tightening of the BoE’s hawkish coverage. Nonetheless, the markets virtually ignored them, and the strengthening greenback continued to strain GBP/USD, which ended the five-day buying and selling interval on the 1.2852 mark.

● As for the pair’s motion, it should, after all, rely on the selections and statements of the Ate up July 26. Undoubtedly, the ECB’s assembly on July 27 may also affect the pound by way of EUR/GBP. However all that is within the close to future. As for the current, on the time of penning this evaluate, the median forecast of specialists for GBP/USD seems maximally impartial: a 3rd of them voted for the pair’s development, a 3rd – for its fall, and a 3rd maintained neutrality. On D1 oscillators, 35% are colored inexperienced, 25% – crimson, and the remaining 40% – impartial gray. Amongst development indicators, 60% sided with the inexperienced, and 40% sided with the crimson. In case of the pair’s motion south, it should meet assist ranges and zones at 1.2800-1.2815, then 1.2675-1.2695, 1.2570, 1.2435-1.2450, 1.2300-1.2330, 1.2190-1.2210. In case of the pair’s development, it should meet resistance at 1.2940, then 1.2980-1.3000, 1.3050-1.3060, 1.3125-1.3140, 1.3185-1.3210, 1.3300-1.3335, 1.3425, 1.3605.

 ● Other than the FED and ECB conferences, one other notable occasion within the upcoming week’s calendar is on Monday, July 24, when the preliminary enterprise exercise information (PMI) for numerous sectors of the UK economic system might be revealed.


USD/JPY: Two Steps Ahead, One Step Again

● The Russian revolutionary Vladimir Lenin wrote a e book in 1904 titled “One Step Ahead, Two Steps Again”. What occurred to the yen over the previous three weeks will be titled as “Two Steps Ahead, One Step Again”. For the primary two weeks of July, the Japanese foreign money grew, and for the third, it gave again greater than half of its features. And whereas its friends – the euro and pound, retreated because of a stronger greenback, within the case of USD/JPY, a big blow to the nationwide foreign money was not dealt by the US, however by a fall in inflation in Japan.

● It needs to be recalled that on the time of writing the earlier forecast, the variety of supporters of yen weakening was 3 times the variety of these anticipating its additional strengthening (45% versus 15%). And the bulk turned out to be appropriate. The Inflation Report revealed on Friday, July twenty first, despatched the Japanese foreign money right into a knockdown. USD/JPY jumped by greater than 1%. It turned out that regardless of the ultra-dovish coverage of the BoJ and a destructive rate of interest of -0.1%, client value development has decreased. Regardless of a forecast of three.5%, in actuality, inflation (CPI) in June was 3.3%. The buyer value index excluding meals and power fell to 4.2% in comparison with the earlier worth of 4.3%.

These information, if not utterly, then not less than for a very long time, buried hopes for a tightening of the financial coverage of the Japanese Central Financial institution. Furthermore, the Prime Minister Fumio Kishida, who spoke the day earlier than, supported the present financial coverage of the regulator. Due to this fact, with a excessive diploma of likelihood, at its assembly on Friday, July 28, the Financial institution of Japan will go away the rate of interest unchanged. And to take care of the course of the nationwide foreign money, if vital, as earlier than, it should resort to foreign money interventions.

Within the meantime, to cease the yen’s fall, Japan’s Chief Forex Diplomat Masato Kanda stepped in with a “verbal intervention”. Specifically, he acknowledged that he “by no means felt a restrict to the probabilities for foreign money interventions” and that in terms of them, he takes numerous steps to keep away from working out of “ammunition”.

● The scenario has considerably calmed down after the feedback made by Masato Kanda, with USD/JPY ending the previous week at a mark of 141.80. On the time of penning this evaluate, 25% of analysts predict the pair will proceed its upward motion within the upcoming days, 55% voted for a downward development, and 20% took a impartial place. The readings of the D1 indicators are as follows: among the many oscillators, 25% are colored crimson, 50% inexperienced, and 25% gray. Pattern indicators present a transparent benefit for the greens at 90%, with solely 10% on the alternative aspect. The closest assist stage is situated within the zone of 141.40, adopted by 140.45-140.60, 139.85, 138.95-139.05, 138.05-138.30, then 137.25-137.50, 135.95, 133.75-134.15, 132.80-133.00, 131.25, 130.60, 129.70, 128.10, and 127.20. The closest resistance is at 142.20, adopted by 143.75-144.00, 145.05-145.30, 146.85-147.15, 148.85, and eventually the height of October 2022 at 151.95.

● Apart from the Financial institution of Japan’s assembly, no vital financial info pertaining to the nation’s economic system is anticipated within the upcoming week.


CRYPTOCURRENCIES: Litecoin Halving – Rehearsal for Bitcoin Halving

● Observers observe that the height of the Greenback Index DXY in 2023 virtually coincided with bitcoin’s trough. There’s nothing shocking about this: BTC/USD is sort of a scale. If the greenback will get heavier, bitcoin turns into lighter. Final week, the rise of the American foreign money led to a weakening of the digital one. It is value noting that bitcoin is desperately making an attempt to carry onto the assist zone at $29,850 and keep away from a collapse to the June lows round $25,000.

The connection between BTC and USD is logical and comprehensible. Nonetheless, some crypto fans are attempting to place bitcoin as the first, main asset, with the greenback trailing behind like a canine’s tail. As an argument, they cite, for instance, the truth that bitcoin entered a horizontal channel by the center of final 12 months, whereas the Greenback Index caught up with it just a few weeks later. In the event you look carefully, you’ll find many such moments on the charts. However in our opinion, one shouldn’t overestimate the importance of the principle cryptocurrency.

● In the mean time, many specialists and influencers proceed to color a shiny future for bitcoin. Though the heights of goal horizons differ by occasions, generally even by tens of occasions. For instance, Commonplace Chartered economist Geoff Kendrick lately acknowledged that his monetary company has adopted a extra optimistic forecast for bitcoin’s market worth, concentrating on the $120,000 stage by the top of 2024.

In response, BBC World analyst Glen Goodman wrote that these $120,000 “appear extra like a determine pulled out of skinny air than a genuinely justified forecast.” He believes that the authors of such predictions are siding with the bulls and are usually not contemplating a lot of key components. A very powerful of them is that the US monetary regulators are ruthlessly cracking down on the crypto trade, inundating its contributors with lawsuits and investigations. Furthermore, Goodman refers to forecasts by American economists who anticipate a protracted recession subsequent 12 months, the results of which might significantly suppress exercise within the monetary markets, together with the digital asset market.

In contrast to Glen Goodman, Actual Imaginative and prescient CEO and former Goldman Sachs prime supervisor Raoul Pal believes that financial troubles, confusion within the banking sector, and the actual property market disaster are useful for bitcoin, which serves as a defensive asset towards this backdrop. In line with Raoul Pal, a bullish rally for digital gold is inevitable, and BTC can simply attain the $50,000 mark later this 12 months.

● Famend analyst underneath the nickname PlanB, however, doesn’t consider {that a} highly effective pump of the flagship cryptocurrency can happen earlier than the halving in April 2024. His forecast relies on utilizing the MA-200 as an indicator. This line will increase on common by $500 a month, so in 9 months will probably be on the $32,000 mark. In line with PlanB, it’s attainable that the coin’s value may even be about 50% above this mark, however even then, it could be solely $48,000.

● Michael Van De Poppe, the founding father of enterprise agency Eight, has clarified his prediction from final week. He believes that the present development is breaking the minimums, because of which bitcoin may drop to $29,500 and even $29,000. Nonetheless, he thinks that such a value motion may precede a bullish rally, throughout which the principle cryptocurrency will increase its charge first to $32,500, then to $34,000, adopted by a surge to $38,000.

● Shifting from short- and medium-term forecasts to long-term, one may point out the opinion of Catherine Wooden, CEO of ARK Make investments. It appears that evidently she is just not significantly occupied with jumps to $38,000 and even to $120,000. As soon as once more, she reaffirmed her forecast that in about seven years, towards the backdrop of inflation and a banking disaster, bitcoin will commerce at $1,500,000 per coin, or not less than at $625,000.

In opposition to the backdrop of Catherine Wooden’s boundless optimism, information from CryptoVantage, whose workers surveyed 1,000 crypto traders from the U.S., comes as a chilly sobering bathe. It turned out that solely 23% of them consider that the Bitcoin charge will attain its historic most of $68,917 subsequent 12 months. 47% assume that the coin’s value will rise to this mark inside 5 years. 78% are assured that BTC will finally return to its all-time excessive, however in an unsure future. And 9% consider that this can by no means occur once more.

● We have paid vital consideration to the upcoming bitcoin halving in April 2023 in our earlier opinions. Let’s now keep in mind that the Litecoin halving is due fairly quickly, on August 2nd of this 12 months. The reward for mining a block might be decreased to six.25 LTC. Provided that Litecoin is a fork of bitcoin, and its whole emission is capped at 84 million cash, will probably be fascinating to look at the modifications in Litecoin’s value and try to forecast bitcoin’s efficiency after its future halving primarily based on these observations.

● On the time of penning this evaluate, on the night of Friday, July 21, BTC/USD is buying and selling round $29,850. The full capitalization of the crypto market has barely modified and stands at $1.202 trillion ($1.198 trillion every week in the past). The Crypto Worry & Greed Index is within the Impartial zone, at 50 factors (down from 60 factors every week in the past).

NordFX Analytical Group



Discover: These supplies are usually not funding suggestions or tips for working in monetary markets and are meant for informational functions solely. Buying and selling in monetary markets is dangerous and may end up in a whole lack of deposited funds.


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