Forex Signals Brief for July 22: The FOMC and ECB Calling the Shots
Rowan Crosby • 2 min read
The last week or two has without a doubt been dominated by the central banks. The FOMC has turned dovish and it is now up to the others to keep up.
In a week that is thin on market-moving data, it will be the ECB that is the major focus for traders. As I mentioned earlier today, the odds of a cut in the deposit rate are growing by the day and it might be the last lever the ECB has left to pull. We will be keeping a close watch on their forward guidance as the expectation is for rates to remain unchanged at this meeting.
For the US, the FOMC and numerous speakers have had plenty to say recently, with each passing comment jolting the USD back and forth. In reality, it might be US GDP, which is due for release on Friday that could sway the Greenback most of all. The expectation is for 1.6% this quarter which is down sharply from 3% in the prior period.
We also get a number of the major tech names releasing earnings this week, so the SPX and NASDAQ will likely be volatile. After recently hitting highs, markets have pulled back a touch as the expectation for larger rate cuts has diminished somewhat.
While there isn’t much data around, markets really are moving, but with no clear trends, traders need to stay on their toes.
Forex Signal Update
The FX Leaders Team finished with 8 wins from 14 signals for a 57% strike rate over the course of the trading week.
EUR/JPY – Active Signal
The EUR/JPY has been ticking ever closer to our take profit target, but just hasn’t quite pushed far enough just yet. As you can see the long term trend is very much in our favour and we will continue to ride that out.
EUR/GBP – Active Signal
Similar to our other signal, the EUR/GBP is still pushing higher on a long term level, but as yet hasn’t made all that much progress. It is still sitting around breakeven as we wait for another test of key resistance.
BTC has managed to reclaim the $10,000 level after last week’s sharp fall, but so far hasn’t made much more progress than that. There wasn’t a heap of movement over the weekend and we open Monday around the same levels in which we left off on Friday.
After a wild couple of weeks since the Libra announcement, we’ve seen price trade as high as $14,000 before dumping back to $9,000 as the US Government started an enquiry into the sector.
We are really due for a period of consolidation at the moment and we will watch both the $10,000 and $11,000 levels for a sign of a break out in either direction.