Last Week’s Market Wrap

Last week had everything; major rate hikes from central banks, intervention in the forex market, inflation reports, manufacturing and services numbers etc. It started with the consumer inflation (CPI) report in Canada which showed a cool-off in August. On Wednesday the Federal Reserve raised interest rates by 0.75%, taking them to 3.25%, and let markets know that they will continue hiking rates. That kept the USD bullish until the end of the week and will likely keep it so in the coming weeks.

The Bank of Japan kept the policy unchanged at -0.10% on Thursday morning, but decided to make an intervention in the forex market, buying the Yen, which sent the JPY higher. But, only one intervention won’t be enough to scare JPY sellers, so the price eventually reversed, with USD/JPY ending up higher. The Swiss National Bank raised rates by 75 bps bringing them into positive territory, while the Bank of England delivered a 50 bps hike later that day. Services and manufacturing continued to weaken in Europe this month as the reports released on Friday showed, while in the US we saw an improvement.

Today’s Market Expectations

Yesterday was election day in Italy, with the right-wing coalition expected to win according to polls. That would be another negative factor for the Euro given the conflict with the EU. We have speeches from central bankers such as Jerome Powell and Christine Lagarde during the week, although the calendar is light.  The GDP report from Canada is the highlight of the week, although it is a lagging indicator since it shows the economic situation in July.

Forex Signals Update

The volatility was quite high last week, as the central banks acted and we saw some major moves, followed by strong reversals, such as in USD pairs and JPY pairs. The performance was good during the beginning of the week, then declined as the volatility in the middle of the week, but we came back strong toward the end of it as the sentiment started to settle in one direction. We opened 26 trading signals, with 16 winning signals and 10 losing ones, giving us a 63-38% win/loss ratio.

Selling GOLD Last Week

Gold traded sideways during most of last week in a tight range, and we kept selling it at the top of the range, booking profit at the bottom of it. On Friday the decline picked up pace and we continued to open sell Gold signals, so we closed a very profitable week with this asset.

XAU/USD – Daily chart

Remaining Short on EUR/USD

EUR/USD has also been bearish for several months now, despite the ECB starting to raise interest rates. Moving averages have been keeping this pair down on the daily chart, especially the 50 SMA (yellow) recently, which shows that the pace of the decline is strong. We have been short on this pair and will continue to remain so this week.

EUR/USD – Daily chart

Cryptocurrency Update

Cryptocurrencies continued to keep a bearish bias last week, as central banks kept raising interest rates, hurting the risk sentiment in financial markets. The selling pressure eased compared to the previous week and we even saw attempts to reverse higher, but they failed, so sellers are still in control.

MA’s Keeping ETHEREUM Down

After the launch of the Ethereum Merge, this cryptocurrency turned bearish as the sentiment turned negative in the financial markets, instead of moving higher. The 20 SMA (gray) was acting as resistance during most of the week, showing strong selling pressure, then the 50 SMA (yellow) came into play, so for now ETH/USD remains bearish.

ETH/USD – H4 chart

The 200 Daily SMA Turns Into Support for Ripple

XRP/USD has been one of the most bearish cryptocurrencies since the legal battle with the SEC (Securities and Exchange Commission) started nearly two years ago and the zone around $0.40 turned into resistance since June. In the last three days, we have seen a reversal as both Ripple Labs and SEC are pushing for a quick ruling over the case, which traders thought might go in favour of Ripple, hence the bullish momentum. Eventually, buyers pushed the price above the 200 SMA which has turned into support.

XRP/USD – Daily chart