Welcome to this week's Saturday Sit Down by Overbit.com, where we will try to cover the expansive view of the global financial markets. In last Wednesday's Worldview, we start by covering the recent bullish momentum of the USD, and on this Saturday, we will cover the same, given the amount of impact USD has on the world's FX and Digital Asset Markets -- the theme? Inflation, Recovery, and Assets.
Kicking off with the USD/DXY, it appears that the bullish momentum dating back to July 31st has started to fade and reversed into a bearish trend, making it the worst-performing currency on Wednesday, August 5th. From a technical standpoint, it appears that the USD could bounce here, creating a double bottom, but it could be wise to be careful as a breakthrough could signal a further bearish confirmation, especially as investors are looking to safeguard their wealth through alternative assets such as Gold, Silver, Bitcoin, and Ethereum.
Touching on Gold briefly, XAU/USD broke through $2,000 a very historically and psychological resistance point, and an ALL-TIME high (ATH). This new ATH can't be emphasized enough, a consolidation above the ATH could see Gold as a hot asset going into the decade of the '20s, a significant difference from the days gold being boring in the '90s and early 2000s, it's not hot again, and for real reasons - the (perceived) devaluation of FIAT currency globally - short answer - long Gold.
It seems the demand for scarce and deflationary assets is not limited to Gold, however. We continue to see digital assets, specifically BTC/USD and ETH/USD, consolidate above long term resistance levels of $11,000 and $375, respectively. That's not without mentioning the flash crashes of both currencies earlier this week, Crypto is volatile, due to its "small" liquidity, compared to FX markets for example, and 24/7 markets. Algorithms and trading bots work 24/7 arbitraging opportunities, and derivatives can enhance this volatility. Long story short, it's not for the faint of heart, but what it does look like is, a macro trend to the up for BTC/USD and ETH/USD.
Next, we're heading into FX markets, covering GBP/USD, EUR/USD, and USD/JPY, and first up, the Euro. Midweek, we saw the EUR/USD rally again, as the USD imploding theme continues to play out. EUR/USD found buyers at the 1.1700 range and continues to show upward momentum, with the next stop 1.1900, which was a major hurdle last week, and a stretch goal for the EUR/USD would be the 1.2000 range, which is an important technical and psychological level for the pair. If the USD continues to slide, we can see the Euro is one of the main beneficiaries.
The last two pairs we're covering is the Pound Sterling, and the Japanese Yen, with the Pound being first. We can see the GBP/USD pair gaining ground, as the Euro did, based upon the US Dollar Weakness. Not without saying we could see a violent shift of the GBP/USD pair, based upon any BoE monetary policies that are upcoming. Quick answer, short the dollar. Signing out FX markets with the Yen, we see the USD/JPY sliding to the lowest level since last Friday, again with the underlying theme of USD weakness, sitting under 106 at 105.5, and without any game-changing news, or significant economic reports, we could see the USD/JPY pair continue to slide down, with some support at significant trading levels, such as the EMAs.
Closing out this week's edition of "Saturday Sitdown," we think it's important to take a step back and evaluate the current timing of the market. The first week of August is coming to a close, and we are inching closer and closer to the end of the summer season, which is historically the lowest volatility season. (where the phrase "sell in May and go away" comes from). Looking at the current state of the market, it's clear markets are heating up in terms of volatility and momentum. For investors and traders, we believe now is the time to focus on the macro trends for assets. If you want to invest in your future and avoid getting chopped up in late-summer price action, now is the best time to join Overbit.com
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