Forex Forecast And Cryptocurrencies Forecast For April 19 - 23

Four Assorted Cryptocurrency Coins

First, a review of last week’s events:

EUR/USD

The past week was marked by two important economic events: impressively strong macro-statistics from the USA and a collapse in the yield of 10-year US government bonds.

According to the data published on April 15, US retail sales jumped by +9.8% in March (against the forecast +5.9% and a fall of -2.7% in February), which is the best indicator for the last 10 months. What is happening on the labor market also shows an active recovery of the country's economy. Thus, the number of initial applications for unemployment benefits fell from 769,000 to 576,000. And this is not just better than the predicted 700 thousand, this is the lowest level since the beginning of the COVID-19 pandemic. Industrial production grew by 2.7%.

All these figures clearly indicate the rapid growth of US GDP in the first quarter of 2021 and allow us to speak with confidence about its continuation in the coming months.  Against this background, the collapse in the yield of American Treasuries, the strongest since the beginning of last November, looks surprising. If at the end of March, the yield on 10-year bonds reached a local multi-month maximum of 1.775%, now it has fallen to 1.583%.

Along with bonds, the dollar is weakening. The USD DXY index is trading in the 91.5 zone on Friday, April 16, which is 180 points below this year's high of 93.3. As a result, as predicted by most experts (65%), the EUR/USD pair continued its growth last week, coming close to the important support/resistance level of 1.2000 and ending the five-day period at 1.1980.

This situation suggests that strong economic statistics from the United States can no longer provide serious support to the US currency. And the latter is now more correlated with the yield on Treasury bonds. Apparently, the rate of vaccination against coronavirus has already been taken into account in the USD quotes. And new fiscal stimulus programs and endless printing of new money by the Federal Reserve started working against the dollar. Its weakening has already gone beyond the usual correction, heating up the risk sentiments of investors: in addition to the euro, the currencies of commodity and developing countries are also growing, and the S&P500 index renews its all-time high for the 22nd time this year;

GBP/USD

The weakening dollar supported the British currency, the fall of the GBP/USD pair stopped, and it even managed to climb 120 points. Thus, its movement over the past four weeks can be defined as lateralin channel 1.3670-1.3920. As for the last chord, the pair placed it in the central zone of this channel, ending the trading session at 1.3840;

USD/JPY

 It was said above about a sharp drop in the yield on 10-year US Treasury bonds. Experts call the coverage of short positions by hedge funds, as well as the return of Japanese buyers to the market, among the possible reasons for this collapse. They were actively getting rid of American bonds at the end of the financial year, but they began to replenish their investment portfolios with them now. This led to an increase in demand for the yen, which, thanks to the negative interest rate, they use to finance such operations.

One of the scenarios pronounced a week ago suggested that the weakening of the dollar and the strengthening of the yen would push the pair USD/JPY towards the support of 108.40. This is exactly what happened: starting from the level of 109.65, the pair dropped to the horizon 108.60 by Thursday, April 15, followed by a small rebound and a finish at 108.80;

Cryptocurrencies

What has been so much anticipated over the past eight weeks has come true: Bitcoin has finally broken through the $60,000 horizon and is now trying to gain a foothold above this important psychological level. The new historical high was the height of $64,800, which the BTC/USD pair reached on Wednesday, April 14. However, a correction followed, and the bulls were struggling to prevent the main cryptocurrency from falling below $60,000 for the whole of Friday, April 16.

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Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is ...

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