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EUR/USD reaches 1.20 then crumbles!

USD/CAD – Daily Candlesticks
Source: GKFX / MT4 (September 2, 2020)

USD/CAD just touched a long-term potential support level at the 2019 lows near 1.30. The currency pair has done a full round trip for 2020, starting near 1.30, reaching over 1.46 and is now back to 1.30.
 

TAKEAWAYS


•    EUR/USD reaches big 1.20 figure, then crumbles over 100 pips
•    Zoom shares spike +40% after earnings jump
•    FTSE 100 slumps to 3-month low
•    Ethereum jumps 10% to a fresh 2-year high
•    DAY AHEAD: Australia GDP, US ADP Unemployment
 

MARKETS


The euro popped above 1.20 momentarily on Tuesday, brushing off Eurozone data showing deflation for the first time in 4 years earlier in the day but eventually rolled over by the afternoon after US manufacturing data came in hotter than expected. There were similar moves in other currencies with the dollar reaching 1.30 Canadian dollars and the pound hitting another 8-month high over 1.34, which all saw some reversal.

The Nasdaq and S&P 500 notched up yet another record high while the Dow added 200 points fuelled by a rise in tech shares, notably Zoom (ZM) which soared +40% after earnings. Walmart shares added 6% after announcing a new membership program called Walmart+ to rival Amazon Prime. 

The FTSE 100 index of blue chip UK shares was a notable underperformer, sliding to a 3-month low. A standout piece of analysis showed that Apple is now more valuable than the entire FTSE 100. Asian markets were set for a mixed open on Wednesday with Australia set to release GDP data.

Gold futures rose back over $2000 per oz but spot prices failed to do so and the precious metal turned lower alongside the late rise in the dollar.
 

GURU WISDOM

“Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return.” ― Warren Buffett
 

Start of a USD rebound?


Now that the Fed has announced the average inflation target policy shift, the big institutional investors that had predicted it will be beginning to unwind their short dollar trades. It’s not to say the dollar downtrend must reverse but there could be a bigger pullback in the euro on the horizon. 

Calling a top is always an unwise move, but in this week’s webinar we highlighted the unusual rising channels patterns at the end of long up-moves in EUR/USD, GBP/USD and AUD/USD that do not conform to the typical ‘flag pattern’ and could be bearish.

Ethereum & DeFi


ETH/USD is now up over 20% since Friday in a blistering price rally that has seen it outperform its big brother Bitcoin. The price moves build on top of Etheriums’s already 260%+ price move year-to-date. 

The successful first stages of the ETH 2.0 launch and the rising popularity of decentralised finance (DeFi) networks, which are built ontop of the Etherium network are creating organic demand for ETH tokens. If the DeFi boom gathers pace, its conceivable that the ICO boom that led to the 2018 highs in digitial currencies can be recreated. 
 

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