Yesterday’s Market Wrap

The big day finally arrived yesterday, with traders eagerly awaiting the FED rate decision, but more importantly the comments from Jerome Powell on the future path. We saw consumer inflation CPI slow down to 7.1% early this week, although it still remains very elevated and Powell confirmed just that. he added that the FOMC holds a strong view that they need to stay with rates high until inflation falls. The services inflation will not move down quickly so we’ll have to raise rates higher

This means that there will be a plateau after they are done with interest rate hikes. That is a hawkish comment but we sort of knew that. The USD jumped around 50 pips higher on those comments, but in the end he made it clear that the FED will slow and stall not too long from now, which then weighed on the USD and sent risk assets such as stock markets higher.

Today’s Market Expectations

Today the central bank continues in what is a packed week full of economic events. Today started with the employment report in Australia and industrial production in China, both of which showed a further slowdown. The Swiss National Bank raised rates by 50 bps earlier today, bringing them to 1.00%. Although, traders are awaiting the meetings from the European Central Bank and the Bank of England which are also expected to deliver 50 bps rate hikes as well, so we’ll see where markets end up after all this. After all that, we have the US retail sales and the Philly Fed manufacturing index.

Forex Signals Update

Yesterday the volatility was low in the first part of the day again and we tried to keep it low, with only three trading signals open in total, although all of them closed in profit. We went short on the USD after the slight retrace higher after the decline following the soft CPI inflation report which proved to be a good strategy after the dive following Powell’s conference yesterday.

EUR/USD Approaching 1.07

EUR/USD surged from 1.0530s to 1.0670s as traders got excited after the soft US CPI inflation report. Although the surge stalled there and yesterday we saw some consolidation ahead of the FED rate decision later in the evening so we decided to open a buy forex signal at the 20 SMA (gray). EUR/USD jumped close to 1.07 after the rate hike and reached our take profit target

EUR/USD – 60 minute chart

Booking Profit on WTI Oil 

US WTI Oil climbed above moving averages which have turned into support on the 15 minute chart after the bullish reversal late last week. yesterday, we saw a dip after the huge buildup in the EIA crude inventories which are shown below, but buyers came in pretty fast and the price reversed back up, ending up above $78. This shows decent buying pressure ahead of today’s FED hike, so we opened a buy signal in crude Oil which closed in profit after the rate hike by the FED.

US Oil – 15 minute chart 

Cryptocurrency Update

Cryptocurrencies were displaying bullish pressure after reversing late last month, following the FTX drama in the crypto market. The sentiment has improved in financial markets as central banks start to slow down and the bullish momentum continued this week, especially after the slowdown in US inflation, but yesterday we saw a strong bearish reversal after the FED rate hike.

Swift Reversal in BITCOIN

Bitcoin continued to display bullish momentum, breaking above the resistance zone around $17,200-300, which was stopping buyers for several weeks. We were long on BTC/USD and booked profit after the surge post CPI and yesterday the bullish momentum continued as BTC moved above $18,300.

BTC/USD – 60 minute chart

Will the Previous Resistance at $1,300 Turn Into Support for ETHEREUM? 

Ethereum has been trading sideways since early November with a resistance zone forming around $1,300. Although buyers pushed above that resistance area and moving averages have turned into support on the H4 chart although let’s see if the area around $1,300 will now turn into support as well.

ETH/USD – 240 minute chart