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US bonds yields waiting for the treasury auction later today

Forex Signals Brief for October 18: Market Sentiment Improves, As Bond Yields Stabilize

Posted Tuesday, October 18, 2022 by
Skerdian Meta • 2 min read

Last Week’s Market Wrap

Last week we saw some volatility induced by the US consumer inflation CPI (consumer price index), which sent the USD higher initially and then lower, while the risk sentiment improved. On Friday risk sentiment softened, but yesterday it improved again, benefiting risk assets such as stock markets and commodity dollars.

The major indices ended the day with decent gains which erased the sharp declines from Friday. The weak USD was a factor, but the stabilization in the bond markets helped as well, with the UK 10-year gilts yields falling below 4%. This improved the sentiment, so yesterday was a positive day for risk assets. The economic calendar was light, with the Empire State manufacturing index showing further contraction in the activity.

Today’s Market Expectations

Today the economic calendar is light again, with the main releases already out. The New Zealand Q3 CPI inflation report was released late last night, while the Reserve Bank of Australia released the minutes from the last meetings, which show a desire to pause or slow with rate hikes. The Eurozone ZEW economic sentiment and the industrial production from the US will be the main releases later on, although the bond market will likely drive the sentiment around today.

Forex Signals Update

Yesterday the volatility was low, so the number of trading signals was low as well, just three, all of them in forex. Two of them closed in profit as the sentiment improved by midday and risk assets started to make some decent gains, while the other closed in loss, being long on the USD.

Hanging on USD/JPY Longs    

USD/JPY continues to remain extremely bullish, as the Bank of Japan keeps interest rates on hold with inflation being under control there, which is keeping the JPY weak. yesterday buyers pushed to a new high above 149, which should bring the BOJ back with another intervention, at least verbally. So, we decided to open a buy signal which closed in profit.  TradingView Chart

USD/JPY – 60 minute chart

Buying AUD/USD 

AUD/USD was bearish on Friday as the sentiment turned negative but yesterday we saw an improvement in risk sentiment, which benefited commodity dollars. AUD/USD turned higher, with moving average acting as support and we decided to open a buy signal, which also closed in profit eventually.

TradingView Chart

AUD/USD – 15 minute chart

Cryptocurrency Update

After the decline last week following the US CPI report, cryptocurrencies turned bullish as the sentiment improved. Although the surge stopped below $20,000 for Bitcoin and over the weekend digital coins traded sideways. Yesterday buyers came back again and gave another push, so they are bullish at the moment.

Holding On to Our BITCOIN Signal

After the release of the US consumer inflation report, BTC crashed quickly to $18,200 lows, which is a strong support zone, since it has been holding for more than a month. We decided to open a buy signal down there and now we are well in profit after the jump higher. Although buyers are having some difficulties pushing above $20,000 where our take profit target is, so we might close this trade manually

BTC/USD – H4 chart

 ETHEREUM Testing the 100 SMA

Ethereum has been trading sideways in a range for a month, since the decline in September, although last week we saw sellers take a stand and give this crypto a push lower. But, the decline stopped at $1,160 and buyers returned again. They have been trying to push above the 100 SMA, but haven’t done so yet.

TradingView Chart

ETH/USD – H4 chart
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