Forex Signals Brief for August 31: Eurozone Inflation to Tick Up to 9.0%
Yesterday’s Market Wrap
Yesterday the USD was on a retreat for the second day after the strong rally on Jerome Powell’s comments last Friday. Although that lasted until the US session, as the sentiment turned negative again, sending risk assets such as stock markets lower, while the USD turned bullish, apart from EUR/USD. The Euro held better than most risk assets after comments from ECB member Knot about a possible 75 bps rate hike from the ECB.
German and Spanish CPI (consumer price index) inflation slowed down in August as yesterday’s reports showed, while in the US the CB consumer confidence improved considerably. This is another factor that leans in favor of another strong rate hike by the FED, hence the reversal in the risk sentiment yesterday, which sent crude Oil $7 lower.
Today the economic calendar is packed, having started with Chinese manufacturing and services. Manufacturing activity remains in contraction, which is a negative factor for risk sentiment. In the European session, we have the French GDP and CPI inflation report, just before the Eurozone inflation report which is expected to tick higher from 8.9% to 9.0%. In the US session, the Canadian GDP report for June is out of date, so not much impact is expected.
Forex Signals Update
Yesterday we started on the right path with a winning Gold signal, following in the footsteps of the last two weeks. Although we got caught with our sell trades in commodity dollars overnight, we made up with three more winning signals in commodities and forex.
Remaining Bearish on GOLD
Gold has been mostly bearish in the last several months despite the sentiment in financial markets being negative. It has lost the safe haven status and continues to slide lower, while we keep selling retraces higher. Yesterday we opened two sell Gold signals, both of which closed in profit as the USD moved higher, while risk assets lower.
XAG/USD – 240 minute chart
Another USD/JPY Buy Signal
USD/JPY traded sideways most of last week, although it resumed the uptrend in the last few sessions. So, we continue to keep a bullish bias for this pair, and yesterday we decided to open another USD/JPY buy signal after the retreat to the 20 SMA (gray) on the H1 chart. The price bounced off that moving average which shows that the buying pressure remains strong and we booked profit on the signal.
USD/JPY – 60 minute chart
Cryptocurrency Update
Cryptocurrencies continue to display weakness after two bearish moves in the last two weekends. On Monday we saw a bullish move, but that looked pretty weak and the decline resumed again yesterday, sending Bitcoin below $20,000 once again. So, they’re finding it hard to turn bullish again and make decent gains as they used to do, but they’re still hanging on and will turn bullish eventually.
THORChain RUNE Stays Near the Lows
THORChain went through a decent crash earlier this year, but in March we saw a decent bounce as well. Although the bearish momentum resumed and RUNE coin fell to $2.40. We decided to open a buy signal in RUNE/USD as the buying pressure returned, but it has been quite weak and the last two weekends this cryptocurrency has fallen below $2.
RUNE/USD – Daily chart
BITCOIN Returns Below $20,000 Again
Bitcoin formed an ascending range as buyers remained in control for two months, following the last crash in June. We kept buying BTC at the bottom of the range, but buyers gave up when the price reached the 100 SMA (green) on the daily chart and BTC broke the range to the downside.
We were looking to buy close to $20,000, but the buying pressure remains really weak so we stayed on the sidelines after the break below $20,000. Now, after many weak stops were flushed below that major level, BTC is back above it.
BTC/USD – Daily minute chart