Forex Signals Brief for February 14: Markets Expecting A Mild Inflation Number
Yesterday risk sentiment turned negative in financial markets, which indicates that expectations are for a soft CPI reading today
Yesterday’s Market Wrap
For more than a week we have seen USD buyers come back again, as the sentiment turned negative following the impressive ISM services for January and the jump in employment last month. Odds for a higher FED terminal top rate increased which hurt risk sentiment in financial markets, keeping stock markets down. But yesterday, risk assets climbed higher, while the USD retreated lower.
This shows that markets are not fearing a strong inflation number, which would give the FED another reason to keep raising rates further. The US-China meeting headline helping also helped the sentiment further, after the skirmishes following the hot air balloons which look more like a show leading to something else, so keep an eye on what’s coming up next during this global reshuffle. Crude Oil ended up higher and it looks like the stars are beginning to align again for Oil, as the global economy improves.
Today’s Market Expectations
Today started with the Q4 prelim GDP from Japan which showed a return to expansion after the contraction in Q3, which is a factor for the Bank of Japan to keep monetary policy unchanged. The employment report from the UK was released a while ago this morning, showing a cool off in earnings while the unemployment rate remained unchanged. The second reading for the Q4 Eurozone GDP is expected to remain unchanged at 0.1%, but the main event comes later, with the releaee of the uS CPI consumer inflation report. Headline CPI is expected to slow to 6.2% YoY, but CPI MoM is expected to increase by 0.5%.
Forex Signals Update
Yesterday the sentiment turned positive and the USD declined while commodity currencies moved higher, although the price action was slow. We opened several trading signals, with four of them reaching the targets, three of which closed in profit while the first Euro trade closed in a loss.
Booking Profit on Short GOLD Trades
Gold has lost the bullish momentum and has turned bearish after being in an uptrend for three months. It broke below all moving averages on the H4 chart, which have now turned into resistance. The 200 SMA (purple) turned into resistance on the H4 chart, while now it seems like the 20 SMA (gray) is turning into resistance.
XAU/USD – H4 chart
Is the 20 SMA Turning Into Resistance for EUR/USD?
It seems like EUR/USD is turning bearish after breaking below all moving averages on the H4 chart. But yesterday we saw a retrace higher with the risk sentiment looking positive, which is also a sign that the US CPI (consumer price index) might not continue the decline in January, when the numbers get released on Wednesday. So, we decided to open a sell EUR/USD signal at the 20 SMA (gray).
EUR/USD – H4 chart
Cryptocurrency Update
Cryptocurrencies have been in a retreating mode since last week, as risk sentiment started to turn sour. They made a strong bullish run in January, which came after a prolonged bearish period in the crypto market, so it was a strong signal that the bearish period might be over. But, now the uptrend is in question.
The 200 SMA Turning Into Resistance for BITCOIN
Bitcoin turned bullish in January pushing above $24,000 and was finding support at moving averages. But it retreated off the highs last week and sellers pushed the price below MAs on the H4 chart. Now the 200 SMA (purple) has turned into resistance, but BTC is still holding above $20,000.
BTC/USD – 240 minute chart
The 20 SMA Pushing ETHEREUM Down
Ethereum was also showing buying pressure for most of January as the lows kept getting higher. But last week buyers gave up and sellers took over, pushing the price below $1,500 and now the 20 SMA (gray) has turned into resistance for Ethereum on the H4 chart.
ETH/USD – H4 chart
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