Rupiah, Euro and Bitcoin in Focus

Written by Lukman Otunuga, Research Analyst at FXTM

Indonesia’s Rupiah was steady against the Dollar on Thursday with the USDIDR trading around 13345 as of writing. With political uncertainty in the United States likely to pressure the Dollar, this could support emerging market currencies with the Rupiah falling into the category. Technical traders will continue to observe if the USDIDR breaks below 13320, which could open a path towards 13300.

 

Global stocks venture higher

A strong sense of optimism over sustained global growth continues to stimulate investor appetite for riskier assets, supporting World shares.

 

Asian stocks marched to record highs on Thursday before ending mixed, following reports that China’s economy grew 6.9% in 2017 – the fastest pace in two years and well above market expectations. In Europe, shares were buoyed by improving market sentiment and strong corporate earnings. With the Dow Jones closing above 26,000 for the first time on Wednesday, Wall Street could remain supported as US equity bulls linger in the vicinity this afternoon.

 

Currency spotlight – EURUSD

The Euro hailed mighty against major currencies last year and has already entered 2018 on an incredibly positive note.

 

Market optimism over Europe’s improving economic conditions and prospect of the ECB potential ending its’s QE program this year could boost buying sentiment towards the Euro. With the US Dollar still at the mercy of heightened political uncertainty in Washington, the outlook for the EURUSD remains bullish. From a technical standpoint, the currency pair is firmly bullish on the daily charts. There have been consistently higher highs and higher lows, while prices are trading above the 50 Simple Moving Average. The Breakout above 1.2200 could open a clear path towards 1.2320 and 1.2440, respectively. A scenario where the EURUSD breaks back below 1.2200 could trigger a decline towards 1.2090.

 

 

Bitcoin – Opportunity or dead end?

The dramatic plunge in Bitcoin and other cryptocurrencies over the past two days erased almost $300 billion dollars in total market cap. Investors who bought Bitcoin around its peak of $20,000 would have suffered the most as the price fell below $10,000 on Wednesday. It is even more painful for people who decided to borrow money and buy the digital currency, fearing that they would miss the greatest opportunity ever in financial markets.

 

Finding a fair value in cryptocurrencies is an impossible mission, as animal spirits will remain the key driver. Most people who were buying bitcoin and other cryptocurrencies most recently, are not using them for transactions, but holding them in the expectation of profiting from the endless rising price. Whether the animal spirits have already released their grip, remains to be seen and this cannot be ascertained from a two-day slump.

 

Commodity spotlight – Gold

Gold bulls displayed early signs of exhaustion on Wednesday after struggling to maintain control above $1340. Prices are currently trading around $1328.50.

 

From a technical standpoint, Gold still fulfills the prerequisites of a bullish trend based on the consistently higher highs and higher lows. A technical correction seems to be in process, with the next level of interest at $1325. If bulls are able to re-awaken before the $1325 level, the price could re-test $1340 and $1360, respectively.

 

 

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