Yesterday’s Market Wrap

Traders were waiting for the US inflation report for January, which was expected to show another slowdown on the annualized number but the monthly number was expected to show a 0.5% jump. The headline monthly number came as expected at 0.5% but the year-on-year number came at 6.4%, above expectations of 6.2%, showing that inflation is not cooling off as fast as expected. The core CPI (consumer price index) also came above expectations at 5.7%.

It didn’t take long before FED members popped up, beating the hawkish drum once again, with Williams saying that the recent data supports the case for more rate rises. Timiraos who is the FED mouthpiece at the Wall Street Journal said that the CPI numbers keep the Fed on track to continue rate hikes. The market remained confused after that, as the odds of the terminal FED top rate increased above 5% again, but traders still want more proof of that.

Today’s Market Expectations

So, after yesterday’s inflation numbers which were stronger than expected, today traders are awaiting the US retail sales for more proof that the US economy can support further rate hikes. So, we will see some sideway trading until then and if the retail sales numbers are strong in particular, then we might see the USD resume the bullish momentum. Earlier today, we had the UK inflation numbers which showed a slowdown in December but still remain pretty high.

Forex Signals Update

Yesterday the sentiment was positive in the European session with the USD on a retreat as we headed into the CPI release. We saw some spikes across all markets after the release as traders digested the report. We opened six trading signals, four of which hit take profit while two closed in loss.

Remaining Short on GOLD 

Gold has resumed the decline after the retrace higher last week although the bearish momentum has lost pace as traders wait for more data. Moving averages have turned into resistance on the H1 chart, and the Gold signal which we opened at the 100 SMA (green) closed in profit as the decline resumed.

XAU/USD – H4 chart 

The 20 SMA Rejecting EUR/USD?

We’re seeing increasing signals that EUR/USD is turning bearish, as moving averages are turning into resistance now. The price pierced above the 200 SMA (purple) on the H4 chart for the third time yesterday, but sellers returned, so it seems like the zone around 1.08 has turned into resistance.

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.

Buyers Testing the 200 SMA in 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