Bitcoin spikes as El Salvador approves it as legal tender

Bitcoin jumped by more than 5% and partially offset some of the losses made on Tuesday after El Salvador became the first country to approve the coin as a legal tender. This means that companies will be at liberty to accept the cryptocurrency while residents will be free to pay their taxes using Bitcoin. Also, residents will not be taxed for exchanging Bitcoin to other fiat currencies. Still, El Salvador is still a relatively small country and it is unclear whether other countries will follow its footsteps. It is also unclear the number of companies that will start accepting the currency that is well-known for its volatility. Other altcoins rose, providing further evidence that they tend to track Bitcoin.

The euro rose above a key level of resistance as the ECB started its monetary policy meeting. The bank will deliver its decision tomorrow and provide more pointers to what it plans to do. Analysts see the bank leaving and quantitative easing unchanged. Earlier today, data from Germany showed that its trade volume declined in April. In total, exports declined from 1.3% in March to 0.3% in April while imports fell from 7.1% in April to -1.7%. As a result, its trade surplus increased to 15.9 billion euros. The numbers came a day after the country published weak industrial production numbers.

The Canadian dollar strengthened slightly against the US dollar ahead of the Bank of Canada (BOC) interest rate decision. The bank is expected to leave its interest rate and quantitative easing policies unchanged. Some analysts expect to sound a bit dovish with the goal of devaluing the Canadian dollar, which will hurt its exporters. The currency is the best performer among all G7 countries and is closely followed by sterling. Data published yesterday showed that Canada’s imports and exports declined in April while those published on Friday showed that the country lost jobs in May and April.

BTC/USD

The BTCUSD pair rose from yesterday’s low of $30,852 to $34,800. On the four-hour chart, the pair remains below the 23.6% Fibonacci retracement level and the 25-day and 15-day moving averages. It also moved below the lower side of the bearish pennant pattern while the Relative Strength Index (RSI) has moved from the oversold level to 50. Therefore, the pair remains in a bearish trend so long as it is below the resistance at 39,000.

USD/CAD

The USDCAD pair turned lower ahead of the BOC decision. It dropped to 1.2080, which was slightly below the intraday high of 1.2118. It remains between the support and resistance levels at 1.2023 and 1.2145, respectively. Also, the pair has moved slightly below the 25-day moving average while the MACD is slightly above the neutral line. Therefore, the support and resistance levels mentioned will be the key reference points after the BOC decision.

EUR/USD

The EURUSD rose slightly ahead of the ECB decision. It managed to move slightly above the upper side of the descending channel and the 25-day EMA. This is still not a bullish breakout since volume remains significantly low. Similarly, the Relative Strength Index rose to 58. Therefore, sustained moves above this resistance will see the pair keep rising as bulls target the YTD high of 1.2150.