Forex Signals Brief for July 14: Will EU Economic Forecasts Send EUR/USD Below Parity?

Yesterday’s Market Wrap

On the first two days of this week, the risk sentiment was off in financial markets, with risk assets such as cryptocurrencies, stock markets and risk currencies tumbling lower, while the USD was making decent gains. Yesterday markets were quiet during the European session, as traders were expecting the US CPI inflation report for June, which was expected to show an increase to 8.6% from 8.3% in May, but we saw a 9-point jump which took the CPI inflation YoY to 9.1%.

That sent the USD higher and everything else lower initially, but we saw a reversal, after EUR/USD failed to push below parity for the third time. Bank of Canada (BOC) also raised interest rates, by a hole 1%, from 1.50% to 2.50%, sending USD/CAD back below 1.30, although the reversal in the USD did most of the job there.

This rate hike by the BOC opens the door for larger hikes by other central banks. The odds of a 100 basis point hike from the FOMC are now up to 38% from about 28% before the BOC. The odds of 50 bps from the ECB have also ticked to about 25%.

The Data Agenda Today

Early today the Reserve Bank of New Zealand delivered the Statement of Intent after the third 50 bps rate hike the day before, while the Australian employment report showed a slowdown in the number of jobs from the previous month. The revised industrial production from Japan came out negative again.

Later today the US PPI (producer price index) inflation report will be released, indicating how the CPI inflation will be in the coming months, while the US natural gas storage report will have an impact on the gas prices which have shown some bullish momentum in recent days. But before that, the EU will release its economic forecasts which will likely have a negative impact on the Euro.

Forex Signals Update

Yesterday we had yet another great day regarding our trading signals, after we opened several and all of them closed in profit. We remained long on the USD once again and booked profit post-US CPI report, which sent the Buck higher. So, we’re having a great run with our forex signals for the second week.

GOLD – Sell Signal

Gold has been bearish since March but the decline picked up pace earlier this month and we have been selling the retraces higher to the 50 SMA (yellow) on the H1 chart. Yesterday we opened the same Gold signal as the price was retracing below the 50 SMA and booked profit after the crash after the CPI report was released and before the next reversal higher.

XAU/USD – 60 minute chart

NZD/USD – Sell Signal

NZD/USD resumed the bearish trend at the beginning of June, after a retrace higher in May and moving averages have been helping keep it bearish. The 50 SMA (yellow) in particular has been doing a good job on the H4 chart where we decided to open a sell forex signal in this pair. We booked profit as the price reversed back down.

NZD/USD – 240 minute chart

Cryptocurrency Update

Cryptocurrencies have turned bearish since Sunday, after being bullish for most of last week, bouncing from the bottom to the top of the range that the crypto market has been trading in since the middle of June. Although we have taken advantage of this bearish momentum and have opened several sell signals in BITCOIN and Ethereum, which have ended in profit.

Booking Profit in ETHEREUM Again

Ethereum has been bearish during the second week of this month, after a decent bullish attempt in the first week, although buyers failed to push above $2,300. Since then the 20 SMA has been acting as resistance at the top and we opened two sell signals yesterday at the 50 SMA (yellow) on the H1 chart, after the first one closed in profit, following the crash from the US CPI report.

ETH/USD – H1 chart

MAs Pushing LITECOIN Down

Litecoin has been bearish since last November after a failed attempt to surge higher back then. Moving averages have been doing a good job as resistance indicators, pushing the price lower, with the 20 SMA (gray) taking over in recent months as the decline has accelerated. But buyers are putting up a fight and pushing Litecoin against the 50 SMA (yellow).

LTC/USD – Daily chart