On Friday (July 12), the US dollar index remained weak at 104.54. The US Consumer Price Index in June showed that inflation continued to soften, exacerbating the dovish pricing of the Federal Reserve's September rate cut. Gold surged overnight and then fluctuated at $2,408. Bitcoin faced selling pressure from the German government and the price of the currency fell below $57,000. Biden's gaffe of misrepresenting Zelensky as Putin hit his prospects for the November election. His presidential veto took effect, preventing banks from providing cryptocurrency custody services.
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Biden's gaffe led to veto of bank crypto custody service
Biden suffered a new blow Thursday when The New York Times reported that advisers have discussed ways to convince him to step down as the nominee and that his campaign is conducting polling on a hypothetical head-to-head matchup between Trump and Vice President Kamala Harris.
Biden surprised the crowd when he introduced Ukrainian President Volodymyr Zelensky as Russian President Vladimir Putin. Although the US president later corrected himself and said Zelensky would defeat Putin, the gaffe was quickly picked up by Republicans on social media, further highlighting Biden's tendency to make slips of the tongue.
Bloomberg reported that despite Biden's weeks of efforts to build support, these developments have only exacerbated persistent doubts among members of the party about whether he can defeat Trump in November and serve another four years. Biden's senior political advisers met with senators on Capitol Hill on Thursday afternoon to try to appease lawmakers who have been urging Biden to consider withdrawing from the race in recent days.
Sen. Richard Blumenthal of Connecticut said the meeting eased some of his concerns, but also heightened some of them. He did not elaborate. Sen. Bernie Sanders, who is running against Biden in the 2020 Democratic primary, expressed confidence in the president. "Biden is going to win this election," he said.
Separately, the number of House Democrats calling on Biden to withdraw has grown to more than a dozen, including Ed Case of Hawaii and Greg Stanton of Arizona.
On Thursday, the House of Representatives failed to overturn Biden's veto of the bipartisan repeal of SAB 121, falling short of the two-thirds majority needed to support the measure, which would have prevented banks from providing custody services for cryptocurrencies.
Staff Accounting Bulletin 121 (SAB 121) requires companies to record digital assets they custody as liabilities on their balance sheets, effectively preventing banks from providing digital asset custody services to customers.
Of the 433 House members who voted, 228 (including 207 Republicans and 21 Democrats) voted in favor. On the opposing side, one Republican and 183 Democrats supported the veto, and 21 votes were also deemed invalid.
As a result, the attempt to overturn the bill failed because the House of Representatives failed to reach the 2/3 threshold. This means that the controversial SAB 121 remains in effect because Biden's presidential veto is still valid.
The results suggest that the crypto industry may be stepping up its support for crypto-friendly candidates in the November elections.
US CPI intensifies dovish rate cut pricing, Powell continues earlier stance
Powell continued his earlier stance, reiterating that the Fed's work in managing inflation is not yet done, and even hinted that the Fed has more work to do. He said that the confidence to cut interest rates based solely on inflation is not enough, but he also pointed out that the Fed does not need inflation to be below 2% to start cutting interest rates.
In terms of data, the U.S. Bureau of Labor Statistics announced that the U.S. CPI fell 3% year-on-year in June, lower than 3.3% in May, while the core CPI rose 3.3% year-on-year, lower than the expected 3.4%.
Amid signs that inflation continued to soften, market participants became more confident that an interest rate cut could be in September, putting downward pressure on the dollar.
US Dollar Technical Analysis
FXStreet analyst Patricio Martín said the U.S. dollar index lost its 10-day simple moving average (SMA), triggering a negative outlook for the dollar, with both the relative strength index (RSI) and moving average convergence divergence (MACD) indicators entering negative trajectories.
The 100-day SMA threshold has been breached, further strengthening the bearish tone. The 200-day SMA level could be the next potential support for further declines, providing a critical floor for the market.
Gold Technical Analysis
Bruce Powers, an analyst at FXEmpire, said that gold triggered a continuation of the uptrend, reaching a high of $2,425. Since then, the rally has weakened intraday, but buyers remain in control and are currently trading near the day's high. The rally completed the 78.6% Fibonacci retracement at $2,415. Although there are signs of resistance near the 79.6% level, the pullback has been small so far.
If gold closes strongly in the upper quarter of the day's trading range, there is a chance that it will continue to rise into the end of the week. Also, pay attention to the relative close. There has only been one day when gold closed higher than today's high, and that was May 20, when gold hit its current all-time high of $2,450. A strong close sets the stage for gold to recapture its all-time high and continue to rise.
The next potential resistance is near the April 12 swing high of $2,431, with the 88.6% Fibonacci retracement level at the same price level, adding to its potential short-term significance. Since last week’s bull breakout, gold has remained strong above previous resistance levels defined by the descending trendline, the top trend channel line, and the 50-day moving average (orange).
The current rebound is further confirmation that demand for the precious metal is increasing. The question is whether the upward momentum can be sustained enough to push gold prices to the all-time high of $2,450, or will it first encounter resistance, leading to a retracement or consolidation phase.
The strength of the uptrend will be further confirmed by the 20-day moving average (purple), which is more sensitive to price changes as it is calculated using a shorter period, and is about to re-cross the 50-day moving average after having been below it since June 17. This will be another indication that demand strength is improving. In addition, the 20-day moving average and the 50-day moving average have recently converged as gold prices consolidate and volatility tapers off.
Now that a bullish breakout is in play, the bull trend should be ready to re-establish. This will increase the distance between the two moving averages as momentum improves and the uptrend continues.
Bitcoin Technical Analysis
Arkham tweeted that the German government has just sent another 5,000 BTC worth $286.44 million to Flow Traders, Coinbase, Kraken, Bitstamp, and addresses starting with 139Po and bc1qu. They have transferred a total of 10,627 BTC worth $615.33 million to market makers and exchanges.
The German government currently holds only 4,925 bitcoins, worth $282.45 million.
Manish Chhetri, cryptocurrency expert at FXStreet, said that over the past five days, Bitcoin prices have encountered resistance near the weekly resistance level of $58,375.
Additionally, Bitcoin is trading below a descending trendline that connects multiple swing highs from early June to mid-July.
If Bitcoin closes above the weekly resistance at $58,375 and breaks out of the downtrend line, it could surge by 9% and revisit the daily resistance at $63,956.
Furthermore, the lower low formed on the daily chart on July 5 contrasts with the higher high formed by the relative strength index (RSI) indicator during the same period. This development is known as a bullish divergence and often leads to a trend reversal or short-term rally.
However, if Bitcoin closes below the daily support of $52,266 and forms a lower low on the daily chart, it could indicate that bearish sentiment persists. This scenario could result in a 4% drop in Bitcoin price to revisit the February 23 low of $50,521.
