The financial markets today don’t seem to be working as they usually do. They have behaving strange for quite some time, but today they look to be out of sync, hence the low number of forex signals. There is no economic data today and the US is off, so liquidity is thin. Perhaps this has made things worse today.

Financial markets are behaving strangely today

Forex and Bonds Have Lost the Correlation

All financial markets are connected in a way or another. The forex market and the bond market are connected through cash flows. For instance, when the US bond market surges, USD/JPY goes up too.

The idea behind this move is that the cash flows into the USD and out of the JPY when US bonds rally. Investors want higher returns, so they switch to US bonds when the yields go higher.

Today though, the US Dollar and the US bonds are moving in different directions. The Buck is falling off a cliff and there’s no real reason behind this move, it’s just the market sentiment. The yields for the 10 year US bonds are going up at the same time. I’m sure they will correlate again soon, but this shows that the markets are not trading correctly today.

By the way, the decline in the US Dollar seems to have stopped right now. This constant USD selloff has taken most major forex pairs to some interested levels and we just took a long term forex signal in AUD/USD. Although, we will post another forex update about it shortly after this US session brief.

The Chinese Don’t Like Cryptocurrecnies

Last week, the South Korean lawmakers ruled against cryptocurrency trading. They decided to ban crypto trading in Korean exchanges. That sent the cryptocurrency market tumbling for a while, but it didn’t last. Not that altcoins have resumed the uptrend, but at least they aren’t declining any more.

The Chinese are following the same path as their smaller but richer neighbours. They want to top the access to cryptocurrency trading by targeting companies and individuals that provide this service. We don’t know how successful they will be, but that shouldn’t be a good thing for altcoins.

But, there’s no reaction in this new financial market today. Last week, when the Koreans announced the same thing, Bitcoin lost about $2,000. Today, Bitcoin is higher if anything.

That said, the move higher seems too weak so far. So, we’re not going down and we’re not moving higher either. It seems as the crypto market is just trading sideways before the next move. Taking the history into consideration, the chances are that the next move will be up, although we don’t know when that will come.

Bitcoin is trying to climb today but the moving averages loom above

Trades in Sight

Bullish EUR/USD

• The uptrend is bullish
• The upside has gained further momentum today
• The 1.22 level will surely provide some support
• The 20 SMA is standing right at 1.22

1.22 looks like a great place to go long from

The price got close to 1.23 today but reversed back down just three pips short of that level. The uptrend has gained further pace today while the USD is still under heavy selling pressure. So, our bias for this pair is long and we plan to open a buy forex signal at 1.22 in EUR/USD.

In Conclusion

The cash flows and the market sentiment are moving financial markets today. Most of these moves don’t make much sense, so we are trying to be careful with forex signals. Although, we will get long on EUR/USD and probably on the commodity Dollars, as soon as this retrace is over. Get ready for more forex signals today.