FED's Christopher Waller comments on more hikes sent the USD higher on Friday

Forex Signals Brief for April 17: Will Markets Continue Last Friday’s Reversal?

Posted Monday, April 17, 2023 by
Skerdian Meta • 3 min read

This Week’s Market Wrap

Last week was quite volatile, having started on Monday with the USD on a positive momentum following a positive Non-Farm Payroll (NFP) employment report from the previous Friday. However, the USD started to decline again on Tuesday and suffered significant losses on Wednesday after soft CPI consumer inflation and on Thursday after negative PPI producer inflation figures. As a result, the EUR/USD rose to 1.1076, and Gold prices increased towards $2,049, as the likelihood of the FED continuing to raise interest rates decreased.

However, everything changed on Friday after comments from FED members and economic data releases. Headline retail sales figures showed a decline of 1.0% in March, following a 0.4% decrease in February. So, retail sales data released recently were below expectations, but it was the comments made by FED’s Waller that surprised the markets even more. Waller stated that the FED has not made much progress in terms of inflation despite recent data, and he also mentioned that more interest rate hikes are needed. This came as a surprise to the markets, as they had only anticipated one more hike from the FED, not multiple hikes.

Later, the preliminary University of Michigan Consumer Sentiment report was released, and although consumer sentiment remained high at 63.5 compared to 62.0 last month, it was the inflation reading that caught most of the market’s attention. The inflation expectations for the next year saw a sharp rise to 4.6% from 3.6% which sent the USD higher and risk assets back down.

Last Week’s Market Expectations

Today we have the US Empire State Manufacturing Index, with the Chinese GDP following tomorrow, which will be important for commodity dollars and crude Oil. Further down the week the Canadian and UK CPI reports are expected to show a decline in consumer inflation, confirming the slowing trend in global inflation, although in New Zealand the CPI is expected to have ticked higher in Q1.  On Friday services and manufacturing data close the week.

Forex Signals Update

Last week was difficult as the volatility was high and we saw a few reversals which changed the situation completely. We were breaking even in the first part of the week, but improved in the second part and closed the week with 20 winning signals out of 31 forex signals in total, giving us a 65/35% win/loss ratio.

GOLD Returns to $2,000 after Failing to Reach $2,050

Gold showed strength during most of last week, after weaker economic data from the US which indicated that inflation is slowing down and the job market is softening. As a result, XAU/USD rose to new highs for the year, of $2049. However, following the events on Friday, Gold prices experienced a reversal, dropping below $2000 and closing the week around this major level.

XAU/USD – 240 minute chart 

Keeping A Bulliush Bias for EUR/JPY 

EUR/JPY continues to remain bullish and we continue to keep a bullish bias for this pair, buying the retreats lower at moving averages. We opened a few buy EUR/JPY signals last week which closed in profit, as the Euro was benefiting from positive risk sentiment while the JPY remains soft as the new BOJ governor Ueda is keeping Kuroday’s policy unchanged.

EUR/JPY – 60 minute chart

Cryptocurrency Update

BITCOIN Continues to Make Higher Highs

The bullish momentum in cryptocurrencies picked up again last week, as Bitcoin pushed above the next major milestone at $30,000. The uncertainty in the banking sector and in the global economy is helping cryptocurrencies, which remain biased toward the upside. Out BTC signal hit the take profit target last week and we decided to open another buy signal here.

BTC/USD – 60 minute chart

ETHEREUM Trading Above $2,100

Ethereum saw a significant surge last week and pushed above the $2,000 level after experiencing strong buying momentum. This follows a period of consolidation in the previous week and our buy ETH/USD signal hit the take profit target as it pushed above $2,000.

ETH/USD – 240 minute chart
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