Last Week’s Market Wrap

Last week started with a positive tone in markets, as risk assets continued higher from the previous weeks, while the USD was on a bearish momentum after the cool-off in the US CPI inflation to 6.5% in the previous week. But, the uncertainty increased as the economic data started coming out. Inflation showed another pick-up in Japan, Australia and New Zealand, which shows that prices continue to increase.

The services and manufacturing data showed a slight improvement in Europe and the US this month, although activity still remains in contraction. Bank of Canada raised interest rates by 0.25% to 4.50% but markets were not convinced after some soft rhetoric in the press conference. The US Q4 GDP report came better than expected, as did home sales for December, which indicate that the US consumer is feeling better, while inflation remains high as the PCE report showed on Friday, leaving markets confused ahead of this week’s central bank meetings.

This Week’s Market Expectations

This week will start with Chinese services and manufacturing PMI reports which are expected to show both sectors coming out of contraction this month, which would be positive for the sentiment. Later we have the Canadian GDP and the US ADP and JOLTS jobs reports, ahead of the FOMC meeting, which is expected to produce a 25 basis points (bps) hike, although the forward guidance will be most important for markets and the USD. The Bank of England and the ECB are expected to deliver a 50 bps rate hike on Thursday but again, the press conference will be more important.

Forex Signals Update

On Monday last week, we had some technical difficulties with our signals feed, but took care of the problem and started well on Tuesday with several winning signals on Tuesday. We continued the positive performance, opening 14 trading signals and only having two loading ones, giving us an 86/14% win/loss ratio.

Is GOLD Due for Another Bounce Off the 50 SMA?

Gold continues to remain quite bullish, almost reaching $1,950 last week as the uncertainty remained high. Moving averages such as the 20 SMA (gray) and the 50 SMA (yellow) are acting as support on the H4 chart and we’re likely to see a bounce off the 50 SMA this week, especially if the FED remains dovish.

XAU/USD – 240 minute chart 

Remaining Short on USD/JPY 

USD/JPY remains bearish on the other hand, as the USD retreats while the JPY gains. The Bank of Japan didn’t follow through with a hawkish shift in the policy which sent the JPY 400 pips lower, but the buying momentum continued for this currency, and USD/JPY continues to find resistance at moving averages.

USD/JPY – 240 minute chart

Cryptocurrency Update

Cryptocurrencies seem like they finally might have left the bearish period behind us. They continue to display buying pressure and we have seen jumps higher throughout last week, which have been more evident in Bitcoin, while Solana is around 300% off the lows at the end of December. So, digital currencies continue to push to new highs and we remain bullish on major crypto coins.

BITCOIN Remains Supported

Bitcoin has been going up in waves and it was mostly consolidating last week. Although we saw a spike to $23,800 in BTC/USD right after we opened a buy BTC signal, which shows that buyers are in charge. The price retreated off the highs but the 20 SMA (gray) is acting as support, helped by the 50 SMA as well.

BTC/USD – 240 minute chart

 ETHEREUM Stuck Between 2 MAs

Ethereum has also been showing buying pressure since the beginning of January and we have seen some decent buying momentum which sent the price above $1,600. Moving averages were doing a great job acting as support on the H4 chart and the latest bounce came at the 100 SMA (green) after the retreat. But the 50 SMA (yellow) has turned into resistance so ETH/USD is stuck between these two moving averages.

ETH/USD – H4 chart