Cryptocurrencies are having a bad year and had collapsed during the second quarter and the broad crypto rout, but have generally managed to contain the fall at the start of the new quarter, with FXCM's CryptoMajor Basket rising by 50% last month.
ETH/USD had one of the most impressive recoveries in July, since it gained around 70%, following June's 17 month-lows (995.50), taking advantage of the US Dollar's exhaustion amidst lower expectations around the Fed's rate hike cycle.
The US central Bank increased rates by another 0.75% last week and offered no forward guidance in regards to the upcoming meeting in September, pivoting to a month-by-month approach. Chair Powell noted that it will "likely will become appropriate to slow the pace of increases", which makes sense as it gets closer to this year's target.
As such, the Fed's hawkishness may have peaked or nearing a peak, but its resolve to bring down inflation remains unwavering. Friday's latest data don't allow much diversion form the aggressive tightening path, which has been the US Dollar's main source of strength, since PCE jumped 6.8% in June year over– the highest level since 1982.
ETH/USD closed last week comfortably above 23.6% Fibonacci of the Q2 High/Low drop and this brings 38.2% in the spotlight (1,984), but 2,289 is distant.
Despite the recent relief rally, the current month begins on the back foot and the popular altcoin could face renewed pressure. The broader 1,470-1,350 region has the ability to contain declines, since it includes the EMA200, the ascending trendline form the July lows and the lower border of the daily Ichimoku Cloud.
Above this area, bulls are in control, but a break below would shift near term bias back to the downside, although another test of parity does not look easy at this stage.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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