Cryptocurrency flash crashes on higher capital gains tax worries

OctaFx Analyst Team OctaFX

Cryptocurrency prices crashed in the overnight session as the market worried about a new tax proposal by Joe Biden. According to Bloomberg, the president has suggested doubling the capital gains tax for the wealthy. US investors already face this tax if they hold their holdings for more than a year. Indeed, the Internal Revenue Service (IRS) has started putting more emphasis on this type of enforcement. Bitcoin declined briefly below $50,000 while other coins like Ether, XRP, and Dogecoin fell by more than 10%.

The Japanese yen was little changed against the US dollar after mild Japanese inflation data. According to the country’s statistics agency, the headline consumer price index (CPI) rose from 0.1% in February to 0.2% in March. This pushed the annualized growth down to -0.2%. Core CPI improved from -0.4% to -0.1%. These numbers are significantly below the Bank of Japan target of 2%, meaning that the bank will have a difficult time abandoning the easy money policy. Meanwhile, data by Markit revealed that the manufacturing PMI rose from 52.7 in March to 53.3 in April.

The economic calendar will have some key events today. In the morning session, the Office of National Statistics (ONS) will publish the latest UK retail sales numbers. The median estimate by analysts is that the headline retail sales rose by 1.5% in March after rising by 2.1% in the previous month. On an annualized basis, the sales are expected to rise by 3.5%. Core retail sales are expected to rise by 4.5%. Markit will also publish key flash manufacturing figures from select countries like the US and the Eurozone. In the United States, we will receive the latest new home sales data.

ETH/USD

The ETH/USD price erased most of the gains made early this week. It fell from a high of 2,642 to a low of 2,118. This was the worst intraday performance in months. On the four-hour chart, the pair has moved below the short and longer-term moving averages. It has also moved between the middle and lower lines of the Bollinger Bands while the Average True Range (ATR) has surged. Therefore, the pair may keep falling as bears attempt to move below 2,000.

EUR/USD

The EUR/USD declined after the relatively dovish ECB decision. The hourly chart shows that it first retested the upper side of the ascending channel and then moved to the lower side. It is now attempting to move back up and has risen above the 25-day moving average. The signal line of the MACD has also made a bullish crossover. Therefore, the pair may keep rising as bulls attempt to retest yesterday’s high at more than 1.2056.

USD/JPY

The USD/JPY pair declined to a low of 107.93, which is the lowest level it has been since March 5. On the four-hour chart, the downward trend is being supported by the 25-day and 15-day moving average while the Relative Strength Index (RSI) has made a bullish divergence. The signal and main line of the MACD are below the neutral level. Therefore, the pair may keep falling in the near term.

Author

OctaFx Analyst Team

OctaFX

OctaFX is a market-leading forex broker, providing personalised forex brokerage services to customers in over 100 countries worldwide.

USD/JPY consolidates near 160.50 intervention zone ahead of FOMC decision

USD/JPY remains close to the 160.50 intervention zone during the Asian session on Wednesday. Despite the BoJ's rate hike to its highest level since 1995, Japan's borrowing costs remain significantly lower than those of peer nations such as the US. Moreover, the BoJ's more cautious stance on bonds undermines the Japanese Yen and supports the currency pair. Meanwhile, the US Dollar remains on the back foot amid the optimism over the US-Iran peace deal and ahead of the Fed policy decision, capping spot prices.

AUD/USD holds steady above 0.7050; looks to Fed decision for fresh impetus

AUD/USD is seen consolidating above mid-0.7000s during the Asian session as traders await the outcome of a two-day FOMC meeting later this Wednesday. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the currency pair.

Gold remains below 200-SMA as traders await FOMC rate decision

Gold preserves weekly gains registered over the past two days, though it remains below a technically significant 200-day SMA through the Asian session on Wednesday. Traders now seem hesitant and are keenly awaiting the highly anticipated Fed rate decision before placing fresh directional bets. In the meantime, the US-Iran interim peace agreement keeps the US Dollar bulls on the defensive, which might continue to act as a tailwind for the bullion.

Ethereum: Whales buy the dip, but institutional and US demand remain absent

Ethereum large holders have leveraged the price dip from the past two weeks to expand their holdings. Wallets with a balance of 10K-100K ETH have added roughly 510K ETH to their collective balance since June 5, when the top altcoin approached the $1,500 level. This dip-buying pressure has partly helped push ETH toward $1,800.

1% rate, 160 Yen: Why Japan’s historic hike changed little

The Bank of Japan (BoJ) pushed its short-term policy rate to 1% on Tuesday, the highest setting since 1995 and a 31-year milestone in a normalization cycle barely two years old. It is the kind of number that should mark a turning point for the Yen, and it did almost nothing.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.