In this week's edition of "Monday Madness", we first take a look at the UK and the GBP/USD forex pair. Despite the Brexit deal being as uncertain as ever, GBP/USD ended the week with its uptrend firmly intact. The pair is moving up towards 1.28000 after UK retail sales beat expectations with 13.9% in June. It currently sits at 1.27906, which is only a few hundred pips away from its June high of 1.2815. It's important to note that recovering retail sales only paint a portion of the picture. The core idea behind the rise of GBP/USD seems simple: the United Kingdom has handled the coronavirus response much better than the United States, and the market responds as such. Without a Brexit deal in place, the GBP/USD future will continue to be uncertain. However, it does seem investors are moving off the sidelines, realizing the situation between the UK and the European Union will be a much more drawn-out ordeal than initially anticipated.
Moving now to EUR/USD, we can see the pair had a tremendous rally the past week. EUR/USD moved up nearly 2.5%, ending the week above 1.16 at 1.16541. This week marks the fifth week in a row of positive returns for EUR/USD. Like most forex pairs traded against USD the past few months, some of this move can be attributed to the weakness of the greenback. Of course, it's important to note the windfalls coming from the new EU stimulus package and overall EU response to the coronavirus. From a technical perspective, the near-term bias seems mostly in favour of the bulls. However, the entire 1.16 level will be important to watch going forward, as it lines up with several multi-year indicators such as trendlines, moving averages, and Fibonacci levels. Some consolidation might be likely going forward as EUR/USD prepares for its next move. Traders and investors should keep a close eye on how price reacts to the 1.16 resistance and the 1.15 support.
The final forex pair we will cover in today's edition will be USD/JPY. Unlike the Pound and the Euro, this pair has not been heavily impacted by USD's weakness, as we've seen tight ranging and consolidation for the past few months. However, as many analysts have alluded to, it seems USD/JPY is finally catching up with the other forex pairs. On July 24th, 2020, USD/JPY hit 105.682, its lowest level since March. It rebounded slightly before closing on Friday, with the pair sitting at 106.076 before Monday's open. It seems the risk-averse market environment continues to provide a boost to safe-haven JPY, while the US Dollar Index looks to post its lowest weekly close in nearly two years. The 106 level will be the one to watch going forward, but this break on July 24th might've been the start of a potentially bearish trend.
We conclude this edition of "Monday Madness" by taking a look at the cryptocurrency market. As we have covered in previous versions, the altcoin market has seen some pretty dramatic growth, while the leading players like Bitcoin and Ethereum have been stagnant. Over the last week, though, it seems that the major players are finally catching up. BTC/USD is up 8% from the local $9,000 bottom, currently sitting at $9,700. Bitcoin is not out of the range just yet, but it is pushing the very upper bounds as it approaches the ever-elusive $10,000 level. As for Ethereum, it seems the bulls have woken up for this coin as well. Price has continued to go up for nearly a week now, increasing 33% from $230 to $308. Volume is as high as one would hope for either move, but it is a promising sign of a cryptocurrency market rebound, especially given the recent performance in small-caps and mid-caps.
A Week In Finance History:
On July 25th, almost 150 years ago, the Terrible Panic reached its low point, which was the financial crisis that triggered an economic depression in Europe and North America that lasted from 1873 to 1879. The panic of 1873 was a result of over-expansion in the industry and the railroads, a drop in European demand for American farm products, and a drop off European investment in the US.