Cryptocurrency prices declined sharply during the weekend as sentiment in the industry waned. Bitcoin, the biggest cryptocurrency in the world, dropped by as much as 20% on Saturday. Other cryptocurrencies like Ethereum, Solana and Dogecoin also retreated. There was no immediate cause for the sell-off. But some analysts attributed the decline to the sell-off in growth stocks that happened on Friday. The tech-heavy Nasdaq 100 index declined by more than 390 points on Friday. There are concerns that the hawkish Fed will spur investor exodus from tech stocks and risky assets like Bitcoin. Another explanation was the unwinding of heavily shorted derivatives.
The US dollar remained in a tight range on Monday morning as the market reflected on the latest American jobs numbers. Data published by the Bureau of Labor Statistics (BLS) on Friday showed that the country’s unemployment rate continued dropping in November. The rate stands at about 4.2%, which is the lowest it has been since the pandemic started. This happened even as the number of jobs added in November was disappointed. The economy added about 240k jobs in November after it added more than 500k in the previous month. Still, these numbers mean that the Fed will maintain a hawkish sentiment next week.
The economic calendar will be relatively muted today. The only key data to watch will be the latest German factory order numbers. Analysts expect that these orders declined by 0.5% in the previous month. Analysts will be watching how countries will react to the rising number of Omicron variant infections. For example, during the weekend, Germany controversially announced that it will mandate everyone to be vaccinated by February. Meanwhile, investors will focus on the Australian dollar since the RBA started its monetary policy statement today.
EURUSD
The EURUSD pair has moved sideways in the past few weeks. The pair is trading at 1.1315, where it has been in the past few days. The pair is trading at the 25-day moving average. It has also moved slightly below the dots of the Parabolic SAR indicator while the Relative Strength Index (RSI) is moving sideways. Therefore, the pair will likely remain in the current range in the near term.
GBPUSD
The GBPUSD pair tilted lower as investors assess the next action by the Bank of England (BOE). The pair is trading at 1.3225, which is slightly higher than last week’s low of 1.3200. On the four-hour chart, the pair is below the 25-day moving average. The MACD and the Relative Strength Index (RSI) have also dropped. Therefore, the path of the least resistance is lower since the Fed has already hinted at being hawkish.
AUDUSD
The AUDUSD sell-off accelerated as investors wait for the upcoming RBA interest rate decision. The pair fell to a low of 0.700, which was the lowest level since June last year. On the four-hour chart, the pair is below the 25-day moving average. It is also along the lower line of the Bollinger Bands. Therefore, the pair could see a brief rally ahead of the RBA decision.
