Forex Signals Brief for July 28: Will US Q2 GDP Shift Market After the FED Hike?

Posted Thursday, July 28, 2022 by
Skerdian Meta • 3 min read

Yesterday’s Market Wrap

Yesterday the FED decided to increase interest rates by 0.75% for the second time as expected, but there was always a potential for a subtle Federal Reserve downgrade on growth and future rate hikes, which would be positive for risk and negative for the USD.

Even a soft or hint shift from Powell was all that markets needed to sell the US dollar and buy risk assets and that’s what happened. He repeated that “inflation is much too high” and “the labor market is much too tight.” But markets changed when he said that “Another unusually large increase could be appropriate but it’s dependent on data between now and then”. He gave the impression that another 75 bps is unlikely. It was subtle but it was that shift that markets were looking for, which sent risk assets higher and the USD down.

The Data Agenda Today

Today markets will likely trade the aftermath of the FED decision during the early European session, while in the US session we have the first reading for the US Q2 GDP which is expected to show a 0.4% expansion for the previous quarter, after a 1.6% contraction we saw in Q1. Powell left the ball on the economic data, so this will be the first decent report and we will see how markets will react to it. besides that we have the German CPI inflation numbers being released as well today, which will give an indication about the upcoming Eurozone inflation report.

Forex Signals Update

Yesterday we odidn’t press too much on forex signals despite with the volatility being quite low, as markets were approaching the FED rate decision. We saw a sudden move after the rate hike, which closed one of our trade signals in profit and the other in a loss. That was after having two similar signals in Gold earlier yesterday, so we had a mixed day.

GOLD Oil Sell/Buy Signals

Crude turned higher last week, pushing above moving averages and the 200 SMA (purple) has turned into support now on the H1 chart. yesterday the Gold retreated lower and my colleague Arslan opened a sell signal which closed in profit. I decided to open another signal, this time to the upside but it closed in loss as Gold continued to retreat until the 200 SMA before jumping post the FED rate hike.

XAU – 60 minute chart

[[GBP/USD] – Buy Signal

GBP/USD has been bearish as well, but made a bullish reversal two weeks ago, as the USD declined and has been bullish since then, with moving averages acting as support. Yesterday I decided to open a buy forex signal as the price was retreating to the 100 SMA (green) on the H1 chart and we booked profit as this pair bounced after the FED rate hike.

GBP/USD – H1 chart

Cryptocurrency Update

It’s pretty obvious that cryptocurrencies are following the risk sentiment in financial markets now as they retreat when the sentiment is negative and move higher when it turns positive, as we saw yesterday after the FED rate hike. Jerome Powell hinted at a slower pace of rate hikes, which sent the crypto market jumping higher.

ETHEREUM Being Rejected at the 100 SMA

Ethereum was leading the crypto market higher last week, as the Merge to the Power-of-Stake which is expected to happen on July 31, is approaching. But, buyers failed to push the price above the resistance at $1,700 and eventually, the price reversed down. We opened a buy signal yesterday as the trend was still on the uptrend, but the reversal took place and we lost that trade.

ETH/USD – Daily chart

BITCOIN Falling Below the 50 SMA

Bitcoin has been making higher lows in the last several weeks and it is now making higher highs as buyers push the price above the resistance zone and the moving averages on the H4 chart. We opened two sell BTC signals last week, trying short this cryptocurrency at the top of the range, but both signals closed in loss as buyers remained in control.