Forex Signals Brief for July 18: More Rate Hikes and Inflation Reports This Week
Last Week’s Market Wrap
Last week we finally saw a breakout of the parity level in EUR/USD, as this pair fell below 1 after 20 years. Eventually, the price closed above this level, but that opened the door for another attack from sellers which might come this week. The sentiment remained mostly negative as central banks continued with rate hikes, with the Reserve Bank of New Zealand (RBNZ) raising rates by 50 bps, while the Bank of Canada delivered a 100 bps rate hike, opening the door for other central banks to do so.
The US inflation data was the most important economic release though. US CPI (consumer price index) came at 1.3% MoM for June and at 9.1% YoY, while the PPI (producer price index) report released on Friday showed an 11.3% increase YoY, which increased odds for a 100 bps (1%) hike in the next meeting. Commodities and stock markets remained mostly bearish as well, as prospects for a global recession increased further.
This week we have several CPI inflation reports coming out, such as the one released last night from New Zealand, the final CPI inflation report from the Eurozone tomorrow, the UK CPI inflation figures and the Canadian CPI on Wednesday. Although, the most important event will be the rate hike from the European Central Bank (ECB) scheduled for Thursday, which is expected to be 25 bps, followed by another hike in September worth 50 bps. The Eurozone service and manufacturing figures on Friday will also be important since last month we saw a considerable slow down in activity, heading toward contraction.
Forex Signals Update
Last week, we continued the positive run with our trading signals and even improved the performance, since we only lost two signals out of 24 signals. We traded all markets but our favorites were short JPY and Gold signals, as the Bank of Japan (BOJ) pledged to keep the monetary policy loose while Gold continued to get hammered.
GOLD – Sell Signals
We opened several Gold signals last week, all of which closed in profit. Gold continued to remain bearish last week and we seized the opportunity to sell every retrace higher on the smaller timeframe charts. Moving averages continued to provide resistance at the top, so we kept opening sell forex signals at these moving averages, all of which closed in profit.
XAU/USD – 60 minute chart
[[GBP]] – Sell Signals
GBP/USD has also been bearish and since the middle of June when the price fell below moving averages, it has remained below them and the 50 SMA (yellow) has been pushing the price down on the H4 chart. We opened two sell forex signals on this pair last week which closed in profit as the downtrend continued.
GBP/USD – 240 minute chart
Cryptocurrency Update
This past eek we saw some decent pricer action in cryptocurrencies although they continued to trade in a range, bouncing up and down. In the first half of the week we they continued lower to the bottom of the range and we closed two winning signals in BTC and ETH, but lost a signals as the price reversed higher, although we plan to trade the range again this week.
Trading the Range in BITCOIN
Bitcoin has broken the $20,000 level, which has lost importance now, but the zone surrounding it still remains and the price seems to be stuck in this zone. We have been trying to sell BTC near the top and buy it near the bottom which proved to be successful last week. Although the lows have been getting slightly higher, so let’s see if there will be a breakout this week.
BTC/USD – 240 minute chart
ETHEREUM Faces the 50 Daily SMA
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 (gray) has been acting as resistance at the top but last week this cryptocurrency pushed above this moving average, although now buyers are facing the 50 daily SMA (yellow).
ETH/USD – Daily chart