
Forex Signals Brief for July 21: ECB to Deliver the 1st Rate Hike in 11 Years
Yesterday’s Market Wrap
The sentiment in financial markets has been positive since last Friday, but yesterday the risk optimism faded a little and markets were mostly mixed. The USD consolidated against most major currencies after retreating for several days, as the odds of the FED delivering a 100 bps (basis points) rate hike have diminished. The RBA Gov. Lowe says he sees a further ‘step up” for the CPI to increase in Q2 and later this year, so now markets expect a 50 bps hike from the RBA in the next meeting.
The CPI (consumer price index) inflation numbers from Canada and UK also showed further increase, reaching the highest level in 40 years in both countries. So, central banks will keep hiking rates in the near future, which will help soften the global economy further. US crude Oil went through another small crash early yesterday, falling below $100 again.
Speaking of rate hikes, today the European Central Bank (ECB) is expected to deliver the first rate hike since 2011, as the global economy was getting out of the financial crisis of 2008, which was followed by a global recession. The rate hike is set at 0.25%, so the interest will be on the press conference from the ECB and whether they will plan another 25 bps rate hike in the next meeting or a 50 bps hike. The Bank of Japan held interest rates unchanged as well last night.
Forex Signals Update
Yesterday was a mixed environment, with volatility on both sides as the sentiment differed in different markets. We opened several signals once again, and we too had a mixed day, after two straight weeks of positive results. Once again we traded forex, commodities and cryptocurrencies.
GOLD – Sell Signal
Gold has been bearish since March and continues to decline, while we continue to trade it, the vast majority of times on the downside, going with the trend. On Tuesday we opened a long term sell signal below the 50 SMA (yellow) which we closed yesterday as sellers pushed the price lower.
XAU/USD – 240 minute chart
AUD/USD – Buy Signal
AUD/USD has been bullish since Friday and the pace of the uptrend was quite strong, as the sentiment improved after a not very strong US retail sales report. Risk currencies benefited, making some decent gains and we decided to open a buy signal which hist the SL target as the price retreated to the 50 SMA (yellow).
EUR/GBP – Daily chart
Cryptocurrency Update
Cryptocurrencies remained bullish once again yesterday, as they continued to push higher. Bitcoin buyers pushed the price above $24,000, while Ethereum reached $1,620 before retreading down. Although the retreat ended pretty quickly and they are showing bullish signs again, so it seems like cryptocurrencies might in the beginning of a trend reversal if they keep this up.
The 20 SMA Pushing BITCOIN Up
Now it is clearer that Bitcoin has broken the resistance zone that it had formed around $22,500, after making higher lows for a month, which was a bullish sign. BTC/USD pushed above the resistance on Tuesday and pulled back down below it, so we decided to open a sell forex signal, which closed in a loss as the price reversed higher and pushed above $24,000, thinking that it was just a fakeout.
BTC/USD – 240 minute chart
Is ETHEREUM Bullish Now?
Ethereum has been showing some bullish signs after consolidating in a range for a month. Smaller moving averages such as the 20 SMA (gray) and the 50 SMA (yellow) have been acting as resistance at the top, but yesterday the price pushed above the 50 SMA which could be the beginning of a larger bullish reversal, although we have to see how fundamentals/politics evolve in the crypto market.
ETH/USD – Daily chart