The US Dollar made a sudden turnaround yesterday which must have caught many forex traders on the wrong foot. It ruined our history table full of winning forex signals but we’re back on our feet. Cryptocurrencies are enjoying some strong bids again today, as Bitcoin approaches the $10,000 level.

Trump is still tormenting the US Dollar

What the hell happened to the US Dollar?

Yesterday, the US inflation report came out really positive. The core CPI (consumer price index) number came at 0.3% for the month, a tick above expectations, while the headline inflation number came at 0.5% from 0.1% the previous month. The yearly numbers picked up as well, with the main inflation number at 2.1%. That’s above the FED’s target which remains at 2%.

That sent the US Dollar surging around 70-80 pips higher in no time, as it should. Inflation, which has been one of the two weak spots of the US economy, together with wages, is picking up. This should make the FED more hawkish in raising interest rates.

We already have a rate hike in schedule for the next meeting in March. This was decided before yesterday’s inflation report, so now, rate hike odds for this year should have moved higher, meaning that we should see more hikes from the FED.

But, the market doesn’t agree. The USD made a sudden turnaround and today it sits near the lows. EUR/USD broke above 1.25 again, while USD/JPY tried to have a go at the 106 level. So, it is looking totally gloomy for the US Dollar.

The market is not convinced yet that the Dollar can reverse. Trump remains a hawk for the Buck and the FED seems scared of him. Although, yesterday’s inflation figures should have kept the bids coming for the USD. But they didn’t and it is not good for the Buck.

It Seems Like Cryptocurrencies Are Back on the Long term Uptrend

The rough times seem to have ended for cryptocurrencies. They have been climbing higher for about two weeks, so the selling is over. All the period from late December until early February was a tough time for crypto traders. The volatility was enormous and nothing seemed to stop the selling.

But now, the downtrend is over and altcoins are climbing higher, taking out level after level on the way up.  In the last two days, the uptrend has picked up pace Ethereum is targeting the $1,000 level, while Ripple coin has broken above $1 and it is staying there.

So, the buyers are becoming more confident as cryptocurrencies move higher. Well, the steep decline of the last two months scared the hell out of crypto traders, but on the other hand, no one wants to miss the party.

In fact, Litecoin started the surge of the last two days. Litecoin is introducing debit cards and a new and quick payment method for businesses, so the interest for Litecoin has increased recently. This cryptocurrency has surged from $150 to $237 in the last few trading sessions. That has pulled the rest of the market up with it, so it all looks good for cryptos now, the dark times are behind us.

Litecoin is retracing before the next move higher

Trades in Sight

Bearish EUR/CHF

1. The bigger trend is still bearish
2. The retrace up is over
3. The reverse is happening already

It seems like the downtrend is resuming

We opened a sell forex signal in EUR/CHF a while ago. We tried the same yesterday, but the horrible reverse in USD screwed the forex market and this pair popped higher. So, we decided to give it another try today and this trade looks pretty good now. The retrace up is over on the H4 chart since stochastic is overbought. We are just a few pips above the take profit target, so this was a good decision.

In Conclusion

The forex market was calming down, which was easier to trade. But, the USD reverse yesterday ruined everything and every chart setup. The forex market has turned into a lunatic again, so we will pick our trades carefully today. I’m looking at commodity currencies for a trade or two, but will post the plan on the next forex updates.