The break of 30,000 in BTC produced little in the way of fireworks

This Daily Digest will cover:

• 👉 Crypto steady, watching the ETH upgrade tonight
• 🔥 Inflation in focus with CPI and FOMC minutes
• 🔎 Eur/usd double top or trend break higher?

The break of 30,000 in BTC produced little in the way of fireworks as the market is keeping a close eye on the effects of the ETH upgrade expected later. My thoughts here are unchanged from yesterday and should we get a meaningful dip it is a buy medium term. That said, I am not sure we get much of one as every conversation I have included the words underweight, squeeze and overdone. The broader market simply feels like it does not have the trade on in meaningful size which generally means it is not over. Straight up is the pain move and I expect BTC to test 32,500 and ETH 2100 this week.

Today we focus on Inflation. First up is the US CPI, which is expected to slow dramatically from 6% to 5.1%. Should we get this size fall or even, as I suspect, print on a 4 handle the USD is going to get sold heavily. I remain short usd/jpy and admit thus far I have backed the wrong horse but remain comfortable unless we get an upside surprise. This evening we get the minutes from the FOMC with The Wall Street Journal reporting it was the closest decision they have made since the rate hike cycle started. There are the ingredients for a proper USD sell off in the pot today, the question is will the news give us a big enough spoon to stir them?

If we do then Euro/Usd is at a critical point. The chart below shows that we are at a crossroads. Do we make a double top and head lower, or do we break through 1.1000 which would open up a confirmed trend higher targeting 1.1500?It is a day to react rather than preposition and hope for the best, but I admit to favouring the topside break.

As always, good luck.

Richard Usher
Head of OTC Trading