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Today we get to see the meeting minutes from the RBA, the BOE and the FED

Forex Signals Brief for December 12: Four Central Banks Raising Rates This Week

Posted Monday, December 12, 2022 by
Skerdian Meta • 3 min read

Last Week’s Market Wrap

Last week started with positive sentiment in financial markets after the negative ISM manufacturing report which showed that this sector fell into a contraction in November, so bad news is still good news for markets, since it means a slower pace of rate hikes from the FED, which Powell also signaled. But, the ISM services number posted a decent jump, indicating a good pace of expansion and the risk started turning negative again.

Last week the central bank bonanza began again, starting with the Reserve Bank of Australia which raised interest rates by 0.25% to 3.10%, followed by the Bank of Canada which raised rates by 0.50, bringing them to 4.25%. The University of Michigan consumer sentiment posted a decent jump as well on Friday, while the US producer inflation PPI came above expectations, which left the sentiment mixed in financial markets, helped by unclear signals from China about a full reopening. So, most markets closed close to the opening price at the end of the week.

This Week’s Market Expectations

We’re starting this week without a clear direction and I expect markets to remain so until Tuesday when the US CPI inflation report is released, which will be the last and the most important economic data before the FED rate decision on Wednesday. Although before that we have the UK GDP and earnings index being released, as well as the UK CPI consumer inflation. The FED is set for a 50 bps hike, so the press conference will be more important which will indicate the pace of the next hikes, if there will be more. On Thursday the SNB, the BOE and the ECB are all expected to increase rates by 0.50%, to close it off with the service reports from Europe and the UK on Friday.

Forex Signals Update

This week we had a great week despite the continuous reversals. We did start it on the wrong foot with three losing signals on Monday as the US ISM manufacturing report sent the USD surging after a weak week, but then we got comfortable to this kind of market and all our other forex signals closed in profit. We had 15 trading signals in total, with only three losing ones, giving us an 80/20% win/loss ratio.

Buying EUR/JPY

EUR/JPY is still bullish as it continues to make higher highs. Last month we saw a retreat lower, but moving averages held and the uptrend has resumed again. On the H4 chart below, this pair fell below the moving averages last month but has reversed back up and now moving averages have turned into support. The 50 SMA (yellow) held the retreat earlier today and we saw a bounce that sent the price above 144, but missed the take profit target of our buy EUR/JPY signal which is looking good.

EUR/JPY – 240 minute chart

Remaining Bullish on GOLD  

Gold has turned bullish after forming a support zone below $1,620 and has been making some strong gains since early November, increasing around $200. Moving averages have turned into support and we are trying to pick pullbacks lower.

XAU/CAD – H4 chart 

Cryptocurrency Update

Cryptocurrencies turned bullish in the first week of December as FED’s Powell hinted at slowing down with rate hikes, which improved the sentiment in financial markets. Last week, the sentiment flipped and most risk assets traded in a range including cryptocurrencies, so nothing particularly interesting took place.

BITCOIN Making Higher Lows

Bitcoin formed a support zone around $15,600 in November although in the last few months we have seen this cryptocurrency crawl higher as the sentiment improved in the financial markets. The 200 SMA (purple)turned into support once but it has been broken now. Although, last week markets traded mostly sideways as the sentiment remained neutral.

BTC/USD – 240 minute chart

The 50 SMA Still Keeping ETHEREUM Under Control 

Ethereum continues to be on a downtrend overall, as it keeps making lower highs on the daily chart and buyers still look weak. The last attempt to turn bullish ended at the 200 SMA (purple) and now buyers are testing the 50 SMA (yellow) which is keeping them in check. Although the price has been stuck too long to this moving average, so it will probably break soon, since there hasn’t been any strong rejection.

ETH/USD – Daily chart
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