Yesterday’s Market Wrap

Yesterday we saw the USD selloff pick up again in the European session, as the sentiment from last week carried on, following the slowdown in US inflation. The JPY  was leading the pack with USD/JPY falling around 100 pips. But, USD buyers returned again and we saw a reversal, so most major assets ended the day little changed.

The US was on a bank holiday week, so the liquidity was low during the US session and markets died out after Europe closed. Gold also rallied in the morning, reaching $1,929, but returned back down. Stock markets showed buying pressure as they resumed the bullish trend from last week, with European stock making some decent gains. Regarding the data, the economic calendar was light but the German Wholesale Price Index (WPI) report showed a 1.6% decline in December, which will help lower consumer inflation in the coming months.

Today’s Market Expectations

Today started with the Chinese GDP report for Q4 of 2020. The numbers showed a considerable slowdown, but the pace of expansion remains satisfactory. Although, retail sales posted another major decline of 9.5% last month. The Average Earnings Index 3m/y in the UK showed another increase, while the German ZEW Economic Sentiment index is expected to show an improvement in a while but remain negative. Canadian consumer inflation CPI is expected to show a 0.6% MoM in December followed by the US Empire State Manufacturing Index.

Forex Signals Update

Yesterday the JPY resumed the bullish momentum, sending USD/JPY 100 pips lower in the early hours of Asian trading and we decided to open several sell signals. But the reversal caught up on the wrong side during the 150 pip surge higher, so we closed the day with three losing and two winning forex signals.

We Continue to Buy the Dips in GOLD 

Gold continues to remain bullish since the strong reversal in early November when the USD decline picked up pace. Buyers pushed above all moving averages which have turned into support on the H1 chart. The 10 SMA (green) and the 50 SMA (yellow) have been doing a good job in holding the price during the dips and we continue to buy Gold against these moving averages.

XAU/USD – 60 minute chart 

Booking Profit on USD/CHF 

USD/CHF continues to remain bearish since it reversed lower in recent months and the highs are still getting lower. We decided to open a sell forex signal here after the jump last week, which ended at moving averages. That trade closed in profit yesterday.

USD/CHF – H4 chart

Cryptocurrency Update

Cryptocurrencies made some decent gains last week as the sentiment improved and the USD turned bearish again. BTC finds itself above $21,000 for the second time, while Ethereum pushed above $1,600 yesterday as buyers returned.

Buyers Seem Relentless in BITCOIN

this is the first bullish attempt in Bitcoin since it resumed the decline in November last year and made some new lows, falling below $16,000. We saw a reversal in the first week of this year and last week the bullish momentum accelerated as buyers pushed the price above the 200 SMA, sending BTC/USD above $20,000. We booked profit on our BTC buy signal last week and yesterday traders had another go at the high.

BTC/USD – H4 chart

ETHEREUM Peaking Above $1,600

Ethereum has also been showing some decent buying pressure in the last two weeks, as the sentiment improves while the USD resumed the decline. The 20 SMA (gray) has been doing a great job as support on the H4 chart and yesterday we saw another bounce off this moving average, which sent the price briefly above $1,600.

ETH/USD – H4 chart