Jumping right into this week's edition of Overbit's Monday Madness, we first head into the GBP/USD pair. For the second week in a row, we have seen the GBP/USD pair move higher. The weakness seen by the US dollar characterized part of this rise, yet there was still good news on the UK side of things, which helps to explain the Pound's recent surge. Chancellor Sunak delivered honest but optimistic remarks during his Summer Statement for starters, focusing on a "plan for jobs" to help support and rebuild the British economy. After being one of the worst-performing currencies in May and June, the mid-July daily chart shows that bulls have finally retaken control. This bullish rise has helped lift the Pound closer to its 200-day moving average at the 1.2700 level. This 1.2700 level will be essential to watch in July, as GBP/USD has failed to clear it since the pandemic took hold in March.
Moving onto the EUR/USD pair, it seems the Euro has continued to rock and roll between recovery hopes and coronavirus fears. On Friday, July 9th, the EUR/USD reached its monthly high. However, the pair quickly failed to continue this bullish advance and fell back below the 1.1300 level and into its more recent range. Looking forward, the current July daily chart is painting a mixed picture. The current range of EUR/USD is broad, extending between 1.1160 and 1.1415. We could continue to see stability for the pair going forward, but with an empty economic calendar going forward regarding the Euro, as well a failed bullish attempt in the rearview, it seems a drop soon is likely. The FXStreet Poll gives credence to this argument, "showing gradual drops after short-term stability".
Pivoting to USD/JPY, we also see a trading pair rangebound. As FXStreet pointed out, "the pair has been in a two big figure range for a month now.". All of July, the currency pair has waddled between the support of 106.50 and the resistance of 108.00, with neither of them being challenged in the slightest. Improving US statistics and rising COVID case leaves the pair without a firm direction On a technical level, it appears most of the indicators (MACD, RSI) are oversold, indicating future optimism for the pair. However, for the most part, it seems the forex market has been in the doldrums for the summer months, giving little sign for short-term relief.
We will take a look at the world of digital assets next. Starting with the foremost currency, BTC/USD, we can see that Bitcoin ventured a rally outside the range, but bulls failed to snatch the initiative. Similar to the forex market, we could continue to see Bitcoin rangebound for the next week, and even for the rest of July. A recent report stated that a cluster of over 1.3 million addresses holding over nearly 800,000 BTC has a breakeven point in the range from $9,350 to $9,550, which would explain why BTC bulls have a hard time pushing the price above this area.
Today, Bitcoin's market capitalization reached $169 billion, with an average daily trading volume of over $17 billion. Regardless of current prices, it's clear Bitcoin, and other digital assets are gaining investor respect (and funds) daily.
The elephant that continues to be in the room, COVID, makes all economic news hard to take at face value. This had led to a plethora of economic themes ranging everywhere from V-Shaped recoveries to "the sky is falling", and investors must make do with what information they have available. With that said, your best bet as an investor is education and attention, and here at Overbit's Monday Madness, we'll do our best to keep you informed.
A Week In Finance History:
Almost fifty years ago, the Bretton Woods agreement eventually failed to peg gold to the US dollar. In 1971, President Richard M. Nixon ended the Bretton Woods system, which soon led to the US Dollar's free-floating against other foreign currencies.