Thursday became the tipping point for the world's stock markets as a decline was registered everywhere from the US to China. India will tax 30% on capital gains from cryptocurrencies. The US will sell strategic oil reserves to help the lacking supply meet the increased demand.
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Tesla ↑ +6.63%
Trading up with a $100 and X20 multiplier could have been worth $132.60.
EUR/GBP ↑ +1.09%
Buying this currency pair with a $100 and X500 multiplier could earn you $545.00.
Silver ↓ -3.75%
Selling silver with a $100 and X50 multiplier would earn you $187.50.
EUR Pairs May Offer Trade Opportunities
The euro currency market has been very active lately. Volatility and trading volume of EUR/GBP, EUR/JPY, EUR/CHF, and EUR/CAD rose. On Friday, the yearly Eurozone CPI was 7.5% against the 6.6% forecast. While this added positivity to the EUR outlook, most EUR crosses stayed relatively flat.
Eurogroup meetings that have started on Monday this week may bring changes to the economic landscape with new government projects. In the meantime, this week’s economic calendar is almost empty and factors influencing EUR or USD are very few. Next week, we recommend following any event risk that may push the ECB to hike rates. Previously, the ECB President Christine Lagarde said they would not raise rates after the US Fed and that “it may be some time” before they do.
In addition to the Ukraine conflict, the US Fed’s interest rate is most impactful on currencies. Recently, the US dollar gained value against most currencies. We believe the Non-Farm payrolls will affect the USD going into next week.
Economic news will likely slow its growth because the USD is already overstretched. EUR/USD’s daily graph shows little room for the USD’s strengthening. The latter would first have to break a substantial support trendline. In the meantime, the global trend is mostly bearish, and an appreciation of the USD is very likely.
Uncertainty Hits the Markets
This week, the earnings season for the 1st quarter of 2022 has started. While the S&P 500 is the main indicator of risk trends and market sentiment, the VIX volatility index is another investor mood and risk aversion indicator. Olymp Trade offers a 1.5x version of VIX, so you can use that tool to effectively measure market fear. Specifically, if the S&P 500 Volatility 1.5x ETF grows, panic moods and sell trades will likely spread in the US markets.
Last three weeks, the S&P has been mostly growing. That was the most productive period since January. We expected the index to stay flat but sporadic growth persisted for most of last week. On Thursday, the market tumbled at the end of the trading session. That was a game changer indicating that the US market may be less committed to growth than traders think.
Fundamentally, there may be little reason for the markets to keep growing. Mainly, there is uncertainty instead of financial safety. On top of that, true life dangers threaten Russians and Ukrainians because of the conflict, and that pushes the markets further out of balance.
S&P 500’s Performance
The monthly chart of the S&P 500 shows long downward candlestick wicks during the last three months. These indicate reversals and could mean that traders are likely to continue speculating on momentum. Alternatively, they could keep this market from capsizing and sinking. We believe that both strategies are present to a certain extent. At the same, institutional players that “make the market” may buy stocks from the S&P list to keep the optimism or at least neutral moods on the stock market. The three-week rally that we saw was truly impressive.
In the meantime, positive US economic data may change the situation, and the effects can echo into the new quarter.
Interest rate expectations continue to rise together with the inflationary pressures.
Apart from the US, other world’s economic regions turned bearish. In fact, the entire global market was pessimistic on Thursday last week. Nikkei, Euro Stoxx, DAX, and the Hang Seng indices all turned red at the end of the trading session.
Trying to Stabilize Prices, Countries Increase Oil Production
On March 31, US President Joe Biden announced the release of oil from the US Strategic Petroleum Reserves starting in May. For six months, the US will release 1 million barrels per day, or bpd, of crude oil, and that will be the largest such case in US history.
The International Energy Agency expects the world to lose 3 million bpd of Russian oil in April due to sanctions imposed on Russia because of its continued operations in Ukraine. Trying to slow the rising gas prices in the US, Joe Biden is urging oil companies to drill more. Moreover, IEA member countries met on Friday to discuss additional emergency oil releases.
After Joe Biden’s announcement of increased oil production, Brent dropped to $102.779 and trend line support and WTI went down to $97.656.
European Countries May be Cut Off from Russian Gas
The Russian government set April 1 as a deadline for the nations it classified as unfriendly to start paying for Natural Gas with Russian rubles. Russian President Vladimir Putin said that the supplies would be stopped if they paid in any other currency. This comes as a response to freezing much of Russia’s reserves abroad.
Some countries vow to process payments in Euros and US dollars as it was previously done. That puts more pressure on the already soaring gas prices fuelled by the fears of supply disruptions. On the Daily chart below, Natural Gas reached the level of 5.849 MMBTU ahead of the deadline to start paying in Russian rubles on March 31, 2022. With the first payments from Europe expected in mid-April, upside potential remains.
30% Tax on Crypto in India
India will impose a 30% tax on capital gains from cryptocurrencies starting on April 1, 2022. Although digital currencies have been increasingly adaptive in different global regions, this clouds the perspectives for crypto assets.
European Union members voted to outlaw anonymous crypto transactions, and that put more pressure on the crypto market. This may limit innovations and break the privacy of interactions in the sphere.
On March 31, a member of the European Union, Markus Ferber, pointed out that with such steps "the European Union will fall further behind other, more open-minded jurisdictions.”
In the US, the democrat senator from Massachusetts, Elizabeth Warren, said that it’s time for the United States to create its own central bank digital currency. In the meantime, the United Arab Emirates tends to support cryptocurrencies. Binance, the world’s largest crypto exchange by trading volume, has more than 100 vacancies in the country. The regional head of Binance, Richard Tend, said that the exchange is also helping to shape Dubai's new virtual assets regulations.
In the meantime, there was an April Fool’s Day attack on the popular messaging service Discord. Hackers used malicious links to steal NFTs and the wallet information when users clicked those links to mint the limited edition NFTs.
On April 1, a tweet from the Bored Ape Yacht Club stated, “STAY SAFE. Do not mint anything from any Discord right now. A webhook in our Discord was briefly compromised. We caught it immediately, but please know: we are not doing any April Fools stealth mints/airdrops etc. Other Discords are also being attacked right now.”
In the below image, the fear and greed index is at a neutral 50. The global crypto market cap is $2.06T. As of April 1, 2022, the total crypto market volume has been $139.02B.
Bitcoin Breaks Out of 2022 range above $45,000
On March 28, Bitcoin opened with a gap up and mostly traded above the critical resistance level of $45,000. The main crypto currency has been trading in a range since January 2022, unable to break above $45,000.
BTC finally broke out during the last week of March and reached $48,192. The price is now retesting the broken level and the local trend line support. The upward momentum and breakout may push it higher.
If the price does not get back into its main range in 2022, its next key resistance level will be $50,000-$52,000. Breaking this level will likely push BTC towards $60,000.
Risk warning: The content of the article does not constitute investment advice and you are solely responsible for your trading activity and/or trading results.
Non-farm Payrolls show how the number of employed people changed during the previous month, excluding the farming industry. As consumer spending accounts for the majority of economic activity, job creation is its primary indicator.
A shadow, or a wick, is a line above or below a candlestick’s thick part. It indicates stock price fluctuation in relation to the opening and closing prices. Essentially, these shadows indicate the highest and lowest prices ever reached by the stock price during a specific period.
A bank rate is the interest rate charged by the country’s central bank when other domestic banks borrow money from it. The rates charged by central banks are largely used as an economic stabilization tool.
The International Energy Agency is a Paris-based autonomous intergovernmental organization established in the framework of the Organization for Economic Co-operation and Development in 1974 in the wake of the 1973 oil crisis.
MMBTU stands for Metric Million British Thermal Unit. It is a heat content measurement tool. One MMBTU is the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
A central bank digital currency, or CBDC, is a digital form of cash issued by a country's central bank.
NFT stands for non-fungible token. It is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio.
Gaps are “empty spaces” that happen when an instrument price “jumps” up or down, without or with little trading in between the price levels.