French Election, German Government's Crypto Moves Shake Euro and Bitcoin

French Election, German Government's Crypto Moves Shake Euro and BitcoinMarkets were stunned on Monday as both the euro and bitcoin experienced sharp sell-offs. The decline was fueled by the results of the French parliamentary election and a massive bitcoin transaction by the German government

French Election, German Government's Crypto Moves Shake Euro and Bitcoin

Markets were stunned on Monday as both the euro and bitcoin experienced sharp sell-offs. The decline was fueled by the results of the French parliamentary election and a massive bitcoin transaction by the German government. The left-wing NUPES party surprisingly surged in the French election, while the German government was found to have moved 700 bitcoins.

French Election: Left-Wing Surge Weighs on Euro

The second round of voting for the French parliamentary election on Sunday delivered a shocking result. The left-wing NUPES party led by Jean-Luc Mlenchon appears poised to win the most seats, with preliminary results showing it securing at least 174 seats.

Emmanuel Macrons centrist alliance Ensemble secured 146 seats, far short of the 289 needed to control the lower house. Marine Le Pen's National Rally was pushed into third place with 142 seats, an increase from the previous parliament but far short of their expectations.

Hung Parliament Looms, Pressuring Euro

Exit polls predict a hung parliament for the final round of the French parliamentary election. This means that no single party will have an absolute majority, requiring negotiations with other parties to form a government. The outcome could have significant implications for European political stability and economic development, causing market concerns.

The euro/dollar fell 0.11% on the day, trading at 1.0826. The decline reflects market anxieties over the French election results and the uncertainty that a hung parliament could bring.

German Governments Massive Bitcoin Transaction Triggers Market Panic

In tandem with the French election results, on-chain analyst Yuji monitored a transfer of 700 bitcoins, approximately $40.47 million, from a German government address to the address 139...bVu. This marks the second massive bitcoin transaction by the German government after it sold 1800 bitcoins last week.

Reports suggest that the receiving address belongs to an asset management firm, which will disperse the coins to centralized exchanges like Coinbase, Kraken, and Bitstamp. The news sparked market speculation that the German government might sell these bitcoins, leading to a drop in the cryptocurrency's price.

Bitcoin plummeted to the $55,500 level at the Asian market open. The drop reflects market panic over the German government's massive bitcoin transaction and the potential for a sell-off.

Fed Rate Expectations Boost Dollar Index

While the euro and bitcoin experienced a sell-off, the dollar index rose against the trend. The increase is primarily attributed to Fed rate expectations and strong US non-farm payroll data.

The US added 206,000 jobs in June, exceeding expectations of 190,000 but with downward revisions for April and May to 108,000 and 218,000, respectively. Average hourly earnings (AHE) rose 3.9% year-over-year, meeting expectations, while the unemployment rate rose from 4% to 4.1%.

On Wednesday, the Federal Open Market Committee (FOMC) released the minutes from its June meeting. The minutes revealed that most participants believed that the current policy stance was restrictive, but they left the door open for additional rate hikes. Decision-makers acknowledged that the economy is cooling and might respond to unexpected economic weakness.

According to the CME Groups FedWatch tool, the probability of a 25 basis point rate cut by the Fed in September stands at 70%, up from 66% on Thursday. Federal funds futures contracts for December 2024 imply a 40 basis point easing by the end of the year.

"Dovish" Non-Farm Payroll Data Limits Dollar Futures Market Bets on 40 bps Rate Cut

While the minutes from the Fed's June meeting suggested an openness to rate hikes, the strong US non-farm payroll data was interpreted by the market as a "dovish" signal. This limited the dollar futures market's bets on a 40 basis point rate cut, leading to a strengthening of the dollar index.

Dollar Technical Analysis: Limited Short-Term Support and Resistance, Sellers May Remain in the Driver's Seat

FPMarkets analyst Aaron Hill notes that while the dollar index is showing a long-term uptrend on the monthly chart, there is limited support and resistance in the near term. A break above the 50-day simple moving average (SMA) at 105.12 and the daily support level at 105.04 is crucial. Surpassing these levels would shift the technical pendulum towards bears, with a target of the 200-day SMA at 104.49, followed by support at 104.09.

The short-term outlook on the H1 chart also suggests that there is room for further exploration into deeper levels after a breakout above the resistance at 105.13. The next downward support target on the H1 can be seen at 104.73, while a break of that level will expose the H1 support at 104.37, which shares space with the 200-day SMA.

With a lack of daily support around 105 and supporting technical evidence from the daily and H1 charts, sellers may continue to be in charge, targeting the H1 supports of 104.73 and 104.37.

Gold Technical Analysis: Gold Breaks Head and Shoulders Pattern, Bulls in Control

FXStreet analyst Christian Borjon Valencia notes that gold has decisively broken through the head and shoulders pattern, with spot prices reaching around $2,390, indicating that bulls are in control, paving the way for further price gains.

The bullish movement of the Relative Strength Index (RSI) suggests that momentum has turned in favor of buyers. The daily close above the June 21st high of $2,368 could open doors for a higher trading range in the $2,370-2400 range, with buyers eyeing higher prices.

If prices break above $2,400, it will break through the year-to-date high of $2,450 and then challenge $2,500. On the other hand, if sellers push spot prices below $2,350, the next downside target would be $2,300. If this level breaks, the next demand area would be the May 3rd low of $2,277, followed by the March 21st high of $2,222.

Bitcoin Technical Analysis: Fourth Consecutive Weekly Decline, but Weekly Chart Structure Hints at Potential Rebound

Bitcoin has experienced a fourth consecutive weekly decline, currently showing early signs of a long-term downtrend on the weekly timeframe. The new low formed last week was $53,412, the lowest since late February.

However, the weekly chart structure suggests a potential for a rebound. Support resides at $56,796, and the channel support level at a low near $60,717, where the recent price action has encountered a wall. In case bears step aside at this level and bulls start taking charge, the market may still see a possible bullish flag pattern plotted from the upper low near $60,717 and the cryptocurrency's all-time high of $73,845.

However, the risk of further declines remains, given the recent downtrend, and could potentially reveal a subsequent sell-off, seeking another layer of support at $51,948.

On Thursday, trendline support broke, starting from the low at $26,665. Notably, price action also fell below the 50-day simple moving average (SMA) of $64,758, but the market hasnt seen the unit break below the 200-day SMA of $51,698.

Despite bearish signals, Friday remained closed at $54,678 with a 100% prediction ratio and assisted by a 38.2% Fibonacci retracement ratio. Below this, the decision point area to watch is $50,601-53,015, followed by another layer of support at $48,007.

For the week, on the seller side, the market paints an early downtrend through price structure, along with the trendline support and 50-day SMA breakdown on the daily timeframe. However, sellers must contend with heavyweight support on the weekly and daily timeframes, at $56,796 and $54,678, respectively.

It should also be noted that if these levels break, the decision point area on the daily timeframe at $50,601-53,015 will be an area of interest. This is followed by another layer of support at $48,007. If the price breaks below this level, the next strong support level to look at is the 200-day SMA, currently being tested at $51,698. If this level breaks, we