yesterday’s market wrap
The US dollar has continued its decline since early last week as markets priced in a less hawkish stance from the Fed after a bearish week following reports of slowing June consumer and producer inflation (CPI and PPI). Weak retail sales and housing starts early last week also weighed on the US dollar. But by the middle of the week there were signs of a return of buyers and eventually a reverse strait arrived, with the Bucks ending the week on a bullish footing.
Sentiment improved as a decline in US unemployment claims suggested a tightening in the labor market. This, in turn, points to the potential for higher wages and increased demand in the coming months, which will be positive for the US dollar. On top of that, the drop had gone too far, giving it time to fight back.
On the other hand, risk assets such as the stock market turned bearish in the second half of the week as risk sentiment turned negative. The commodity dollar fell sharply last week amid heightened tensions between the United States and China over chip production, but the British pound was hit hardest as it fell more than 300 pips after consumer inflation fell below expectations in June.
Market Expectations Today
Traders, however, remain unconvinced as the three major central banks meet this week to decide policy. Indeed, the main event is Wednesday’s FOMC meeting, which is expected to resume a 25bps rate hike to 5.50%, but traders are seeking clues as to whether this will be the Fed’s last rate hike of the cycle or if the Fed is likely to follow its own projections with more rate hikes at future meetings.
The ECB Governing Council meets on Thursday and is expected to hike rates by 25bps, bringing the repay rate to 4.25% and the deposit rate to 3.75%. ECB President Christine Lagarde told the Governing Council in June that there was still “more room to cover” and that the ECB was “not done” on rate hikes, although inflation had cooled significantly in previous announcements.
The ECB is followed by a US GDP report for the second quarter expected at 1.7% and US PCE core price index release on Friday, which will have an impact on the US dollar if the Fed leaves another rate hike possible in September. No big results are expected at the BOJ meeting after Chairman Ueda signaled last week that there would be no change in BOJ policy.
The market was volatile last week, but unlike the previous week, which saw a one-way trade against the US dollar, this week was more complicated and saw a number of reversals. As a result, it became somewhat difficult to maintain long-term positions, so I mostly traded short-term signals that don’t last very long. We have opened a total of 31 Forex signals, mainly forex and commodities.
See the section below for update details.
intention Money Bouncing the 50 SMA?
After gaining nearly $100 since early July, the gold price (XAU/USD) turned down, losing about 3% to end the week at around $1,962. This was due to a sharp rise in US Treasury yields and a bullish reversal in the US dollar. Positive economic data included a decline in US unemployment claims to 228,000. As a result of this market sentiment, gold retreated and reached the 50 Simple Moving Average (SMA) on the 4-hour chart shown in yellow. The decline has stopped there, but the bullish trend could resume this week, but it will all depend on the Fed and US economic data over the weekend.
XAU/USD – 240 minute chart
Given the current market conditions, we offer the following trading signals:
- gold buy signal
- Entry price: $1,960 and up
- Stop Loss: $1,95o
- Take Profit: $1,975
USD/JPY resumption of uptrend
USD/JPY experienced a significant selloff last week, dropping more than 750 pips. However, the 200 SMA (purple), which has acted as support and resistance so far, turned support last week and maintained a pullback above 137. This is the perfect time to go long USD/JPY as the probability indicators are overnight on this pair. Prices have rebounded from the moving averages and are rising as the yen continues to weaken on reports that the Bank of Japan (BOJ) is not planning to adjust its yield curve control settings this week. Therefore, we remain bullish on this pair.
Cryptocurrency update
20 SMA Capped Bitcoin recently
BTC/USD – daily chart
We decided to open another Bitcoin buy signal on Monday to play range again and buy BTC/USD just above $30,000.
- Entrance fee: $30,293.2
- Stop Loss: $29.490
- Take Profit: $31,493.21
ethereum Find support with 100 SMA
Despite recent setbacks, Ethereum remains bullish this year. The moving averages, especially the 200 simple moving average (purple) on his H4 chart, are acting as support levels for this cryptocurrency.
The last long-term signal that started at the 200 SMA saw Ethereum price bounce back above $2,000, making it a profitable trade. As the cryptocurrency market is currently experiencing a recession, the price of Ethereum is once again returning to the 50 SMA. Based on this information, we are considering opening another buy signal at the 200 SMA in anticipation of a possible pullback from this support level. Given these trends, the current situation suggests whether it is the right time to consider buying Ethereum.
ETH/USD – daily chart
- Entrance fee: $1,860
- Stop Loss: $1,740
- Take Profit: $2,020
