Forex Signals Brief for May 31: Will European Inflation Beat Estimates?

Yesterday’s Market Wrap

Yesterday the sentiment in financial markets was positive, continuing last week’s improvement, which has led to further gain in risk assets, such as commodity dollars and stock markets. The USD continued the retreat that we have witnessed in the last two weeks after some major gains in previous months despite comments from FED member Waller for several 50 bps rate hikes in the coming meetings.

Inflation figures from Spain and Germany showed another increase this month. CPI inflation increased to 7.9% in May from 7.4% in April, while in Spain CPI inflation increased to 8.7% from 8.3% in the previous month. The ECB won’t hike interest rates until July, although this is proving to be a better strategy than most central banks which have been increasing rates several times already.

The Data Agenda Today

Today industrial production is expected to show a contraction in Japan for April, while manufacturing and services PMI from China are expected to show some improvement, but still remain in contraction as well as the Shanghai starts to reopen. Eurozone inflation numbers will be released during the European session which are expected to increase, but after the Spanish and German figures yesterday, we expected the Eurozone figures to come above estimates. Besides that, the GDP report from Canada will be released in the afternoon.

Forex Signals Update

yesterday we opened several signals, two of them in commodities and two of them in cryptocurrencies. we refrained from trading forex yesterday to see which side the risk sentiment would go this week after some dramatic moves in previous weeks. Now after confirming the positive sentiment, we will try to buy risk assets until the sentiment reverses again.

SILVER – Buy Signal

Silver was on a steep bearish trend from the middle of April until the middle of this month, when precious metals reversed higher as the sentiment started to improve and the USD started to retrace lower. Moving averages that were providing resistance during the decline have turned into support, particularly the 20 SMA (gray) and the 50 SMA (yellow). We decided to open a buy signal at the 50 SMA last Friday after the retrace down and are waiting for the bullish trend to resume.

XAG/USD – 240-minute chart

EUR/GBP – Buy Signal

EUR/GBP turned higher last week, as the Euro started increasing more than the GBP, but eventually, the buying pressure ended and this pair was slowly retreating lower. We decided to open a sell signal after the price formed a doji candlestick on the H1 chart at the 50 SMA (yellow), which acted as support for a while. We saw a bounce off that moving average and the price approached our TP target, but then this pair reversed lower suddenly, although the 20 SMA (gray) held as support and we’re seeing a bounce again.

EUR/GBP – Daily chart

Cryptocurrency Update

Cryptocurrencies turned quite bearish earlier this month, but in the last 2-3 weeks they have been consolidating in a tight range although, with a bearish bias as highs have been getting lower. Yesterday we saw a small jump as the sentiment improved, but the jump stopped so we decided to open a couple of signals on cryptos.

Shorting RIPPLE at the 50 Daily SMA

XRP/USD crashed to $0.38 earlier this month during the fall in crypto market, but has been consolidating since then. Although, highs have been getting lower and after yesterday’s gain stalled at the 50 daily SMA (yellow) we decided to open a sell signal below that moving average, as the stochastic indicator became overbought, suggesting a bearish reversal soon.

The support is still holding for now

FTM/USD Pushing Above the 20 Daily SMA

Fantom crypto was showing strong bullish pressure until the middle of January, when it retested the previous highs below $3.50. But eventually, the negative sentiment in the crypto market and the Wonderland controversy pulled this cryptocurrency down.

Then, two of the most prominent personnel left the fantom team, such as Andre Cronje who is a prolific developer and Anton Nell, a senior solutions architect weighed on FTM/USD further sending it below $1 at first and then to $0.25. Although Cronje might return to Fantom after some rumors we heard, which would be great news for FTM. The 20 daily SMA (gray) rejected the price on Monday, but we are seeing if the support from last summer at around $0.15 will hold.

FTM/USD – Daily chart