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Monday, 19 October 18:45 (GMT -05:00)



Foreign exchange market

Bitcoin Will Decline, Dollar Will Grow, NordFX Predicts


Whether we are aware of this or not, currency exchange rates have been affecting our lives for decades. However, more and more retail traders and investors are now getting increasingly interested in financial markets in general and Forex in particular. or the most part, all of those changes in exchange rates are they key factors determining their financial results at the end of the day.
 
Roman Boutko, an expert from NordFX has released another forecast for the current trading week. For starters, he offers to take a look at the previous trading week to evaluate how precise it eventually turned out to be. When creating this consensus forecast, they expert analysed the forecasts made by a number of experts, who make use of different analytical methods and techniques. This is what the current consensus forecast looks like:
 
When evaluating the current situation in EUR/USD, most of the experts under review are surprisingly unanimous. On top of that, ever since the past trading week closed on Friday, 100% of the oscillators and trading indicators on H4 and D1 have been in the red zone. 70% of the experts are bullish on the dollar and bearish on the common European currency. The key reason is interest rates.
 
The thing is, they are expecting the Fed to raise the interest rates on Wednesday, Dec 19. The Fed is expected to raise the key interest rate from 2,25% all the way up to 2,5%. On top of that, the market is pretty sure that the Fed is planning to implement at least one more interest rate hike in 2019. At the same time, the experts are not sure about the likelihood of the ECB following the Fed in terms of interest rate hikes, which is why the bias is clearly bearish for EUR/USD.
 
The thing is, ECB president Mario Draghi promised to keep the key interest rate at zero at least till summer 2019. However, the expected summer hike is questioned as well. That's why most investors anticipate a plunge all the way down to the 12-month low at 1.1215. The low was set in November. This seems to be the key goal for the bears. The closest level of support is located at 1.1265.

1544877142_EURUSD_17.12.2018.png

There is an alternative scenario backed by the remaining 30% of the experts. They anticipate a rally up to 1.1300 and above. They don't even deny a break above the top of the 3-week range at 1.1360. If that's the case, the next targets are 1.1400 and 1.1440.
 
The current trading week is going to be rich in events capable of affecting GBP/USD. On December 19, the Bank of England is to release another monthly inflation report. If the inflation has grown once again, the market is likely to see this as a sign of weakness caused by  the so-called Brexit. In this case, the British Pound is very likely to go down against the U.S. Dollar. On Thursday, the Bank of England is expected to announce its interest rate decision. Most likely, the interest rate will stay unchanged. If that's the case, such a decision will definitely play against the British currency. Friday's GDP figures are unlikely to affect the currency pair a lot if the bias is bearish. This scenario is backed by 90% of the indicators and 50% of the experts. The scenario implies a possible move down to 1.2475, only to see another 75-point move down. 20% of the experts are neutral on GBP/USD. The remaining 30% of the experts anticipate a rally up to 1.2670-1.2700.
 
As for USD/JPY, the indicators are controversial, which makes their predictions unclear. The experts are almost equally divided over the direction of the next price move as well. The uncertainty is quite understandable if to consider the fact that the price is currently in the middle of the 112.30-114.00 flat range. The Bank of Japan's meeting scheduled for the week is unlikely to influence the situation this time. With that being said, the only event capable of triggering a trend is the Fed's interest rate decision. If the Fed is indeed willing to raise the interest rates, the USD/JPY exchange rate may well aim for the 114.55-114.75 area.
 
As for the cryptocurrency market, some 60% of the experts expect Bitcoin to go further down in value, probably all the way down to the 2,500-2,700 area. The closest area of support is located at 2,940-2,050. The bearish bias is backed by both the current dynamics as well as the situation seen at the end of 2017, when most of the market players decided to reduce their exposure to Bitcoin and turn some of their BTC investments back into fiat money. On the other hand, the recent dynamics of the BTC futures indicates a slight increase (around 10%) in the amount of long positions. Given this fact, 20% of the experts anticipate a flat market and the remaining 20% anticipate growth all the way up to 4,500.
 

 

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