Bitcoin and other cryptocurrencies slump as momentum wanes

The Japanese yen was little changed on Tuesday as investors reflected on the latest employment numbers from the country. According to the statistics agency, the country’s unemployment rate rose slightly from 2.7% in October to 2.8% in November. This increase was worse than the median estimate of 2.7%. In the same period, the jobs to applications ratio remained intact at 1.15. Additional data showed that industrial production rose from 1.8% in October to 7.2% in November. The BOJ core CPI rose modestly to 0.8%. While the country’s economy is doing modestly well, the ongoing pace of low inflation is a challenge for the Bank of Japan.

European equities and American futures continued their bullish trend as investors cheered the strength of the American economy. This happened after a report by Mastercard showed that the country’s holiday sales rose to a record high this year. They rose by 8.5%, with e-commerce sales growing at a record 11%. Stocks also rose after the CDC reduced the quarantine and isolation time to 5 days of asymptomatic Americans who catch the virus. The agency said that there was more evidence that people with the virus are more infectious in the two days before and three days after symptoms develop. In the US, Dow Jones and S&P 500 futures rose by more than 0.25% while in Europe, the DAX and CAC 40 indices rose by 0.50%.

Cryptocurrency prices pulled back sharply after having a strong rally during the Christmas holiday. Bitcoin, the largest cryptocurrency in the world, fell by more than 3% and moved below the key support at 50,000. This decline led to a harsh reversal of other cryptocurrencies like Ether, Solana, LUNA, Cardano, and XRP. All of these coins declined by more than 3%, while the total market cap of all cryptocurrencies declined to $2.4 trillion. Still, most coins have more than doubled this year and outperformed key assets.

USD/JPY

The USDJPY pair has been in a bullish trend in the past few days. The pair managed to move above the upper side of the ascending channel that is shown in red. It also rose above the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) is slightly below the neutral level. It has also formed a break and retest pattern by testing the upper side of the rising channel. Therefore, the pair will likely keep rising in the coming days.

EUR/USD

The EURUSD pair has been in a narrow range in the past few days. It has moved sideways since Friday. On the four-hour chart, the pair is slightly below the upper resistance level at 1.1342. It is also hovering at the same level as the 25-day moving average. Also, it has formed an ascending triangle pattern while the Average True Range (ATR) has slumped. Therefore, the pair will likely remain in this range during the American session.

USD/CAD

The USDCAD pair tilted lower in thin trading. It is trading at 1.2790, which is slightly above Monday’s low of 1.2775. On the four-hour chart, the pair has moved below the 25-day moving average, while its tick volume has slumped. It has also formed a head and shoulders pattern. Therefore, the pair will likely have a bearish breakout in the near term.