Forex Signals Brief for January 11: Powell Leaves USD Dry Ahead of CPI

Yesterday’s Market Wrap

On Monday we saw a continuation of Friday’s price action, as the USD resumed the decline while risk assets moved higher. But that continued until the US session and then markets stalled, with traders waiting for Powell’s speech in Stockholm yesterday. He didn’t touch on inflation and monetary policy at all, which removed one of the risk events for traders this week and the USD resumed the decline again.

Gold pushed to a new high as it approached $1,900 before retreating, with the main risk event in the markets which is the CPI inflation report, still remaining. Besides that, in the early hours of the morning, the consumer inflation report from Japan was released and it showed yet another increase, with the Tokyo core CPI jumping to 4.0%. This should add more pressure on the Bank of Japan to shift the policy, but in the meantime, inflation is cooling off elsewhere, so Japanese inflation won’t reach levels seen in other countries I reckon.

Today’s Market Expectations

Today we had the CPI (consumer price index) inflation report from Australia in the morning, which was expected to show a slight increase while cooling off in the rest of the world. Retail sales turned positive in December after declining in November. The economic calendar is pretty light throughout the day after that, besides crude the EIA Oil inventories which are expected to show a 2 million barrel drawdown.

Forex Signals Update

Yesterday the volatility declined somewhat, despite the decline in the USD after Jerome Powell didn’t touch much on the economy and monetary policy. We remained short on the USD which proved to be a good strategy once again. We opened three trading signals, two gold signals and a forex signal, all of which closed in profit.

Buying the Dips in GOLD Again

We have seen many retraces lower in Gold but the lows keep getting higher, which means that buyers continue to remain in charge, as they continue to push higher. Yesterday we saw another retreat but the 50 SMA (yellow) acted as support on the H1 chart and Gold bounced higher, so we had two winning buy Gold signals yesterday.

XAU/USD – 60 minute chart 

Buying USD/JPY During the Retrace Higher  

The JPY has been bearish until the Japanese institutions intervened, as the JPY remained unchanged in Japan. But inflation has started to pick up, as yesterday’s report showed and the JPYis showing signs of weakness. We have been short on USD/JPY but yesterday we opened a buy USD/JPY signal which closed in profit.

USD/JPY – 60 minute chart

Cryptocurrency Update

Cryptocurrencies have been showing buying pressure since the very last days of last year and they have been crawling higher. This week we have seen some decent buying pressure as risk sentiment turns positive on bad US data, while the USD is declining.

Upside Momentum Picking Up Pace for BITCOIN

Bitcoin was showing weakness in the second half of December, falling to $16,440, but it reversed higher and moved above moving averages earlier this week. Now those moving averages have turned into support on the H1 chart and the buying momentum has picked up, so our buy BTC signal is heading toward the take profit target.

BTC/USD – 240 minute chart

 ETHEREUM Moving Above $1,300

Ethereum crashed lower by the middle of December as the sentiment turned positive after the last central bank rate hikes back then, but has been bullish for more than a week. Moving averages are providing support during retraces lower with the 20 SMA (gray) holding on the H4 chart. Now Ethereum is above $1,300.

ETH/USD – 240 minute chart