Forex Signals Brief for May 23: Will the USD Retreat End This Week?
Skerdian Meta • 3 min read
Last Week’s Market Wrap
Last week the sentiment in financial markets drove prices around, as the sentiment improved from the previous week for most assets, but not for the USD and US stock markets. They ended the week lower after several major retailers reported low profits in April after the jump in producer prices in March.
That was the biggest event of the previous week, giving us a glimpse of further consumer inflation in the months to come. The USD was the laggard throughout the week, as it declined against all currencies, although this retreat was due after a really strong uptrend. Inflation reports for April showed another increase in UK and Canada, so the trend is clear.
The Data Agenda This Week
This week we have the manufacturing reports to be released from Europe and the US, which have taken increased importance after the contraction in China and the jump in producer prices. The Reserve Bank of New Zealand is expected to hike interest rates again by 50 bps after doing so in the last meeting, taking them to 2.00%.
It’s not certain that this will help the NZD, after the last rate hike didn’t offer much for the NZD, which kept declining as the sentiment was negative. But, now the sentiment has turned positive for commodities and risk currencies; although, let’s see if this will continue long, which I doubt.
Forex Signals Update
At the beginning of last week, we had some difficulties with our signals as the USD turned bearish after making major gains in the previous weeks. But we pressed on and improved in the second half of the week, closing in profit once again, after having a couple of winning signals on cryptocurrencies.
WTI – Buy Signal
Crude Oil has been bullish for more than two years now, although you can still make money selling it. My colleague opened a sell Oil signal on Wednesday as US WTI reversed from $113 and we booked profit on this trade before the reversal higher again on Friday.
US WTI – Daily chart
NZD/USD – Sell Signal
NZD/USD has been heavily bearish, after losing more than 5 cents from earlier this year, although we saw a big bounce last week as sentiment improved. We have been bearish on this pair but last week we turned bullish and decided to buy against support levels and moving averages. Most signals here closed in profit as the retreat in the USD continues.
NZD/USD – 60-minute chart
After the decline in the previous weeks, last week the crypto market traded sideways, as most altcoins consolidated the losses. BITCOIN traded around the $30,000 level during most of the week while Ethereum consolidated around $2,000. Could this be just a consolidation period before the decline resumes again or will we see a bullish reversal from here?
Is This the End of the Retreat for ETHEREUM ?
ETH/USD failed in November below the $5,000 level for the second time and that coincided with the reversal in the crypto market sentiment. Ethereum has been bearish since then apart from a failed attempt to turn bullish in March. In the last two months, the bearish momentum resumed again and this cryptocurrency pierced below the 20 SMA (gray) on the monthly chart.
But, the decline stopped just below the major support zone around $1,700 and the price has retreated above the 20 SMA again now. So, this might be the end of the retreat for Ethereum which means that this could be a good place to open a buy signal. Although it is a bit early to tell, we will follow the price action a bit longer before deciding.
The support zone is holding for BTC
ADA/USD Still Trading Below the 50 SMA
Cardano has been declining since September last year and then the decline picked up pace in November as the sentiment in the crypto market turned negative. Moving averages have turned into resistance although the previous resistance at $0.40 held as support last week.
Now the price is returning lower again, so let’s see if this support will hold. If it does, we might go long on Cardano from there.
ADA/USD – Daily chart