Forex Signals Brief for May 3: The Final FED Hike Is Here

Yesterday’s Market Wrap

Yesterday we had the first major central bank meeting, with the Reserve Bank of Australia delivering a 25 basis points rate hike, surprising markets after they paused in the previous meeting in March. AUD/USD surged nearly 100 pips higher, pulling the NZD up with it but it started reversing lower in the US session as risk sentiment turned negative in the financial market.

Regional bank fears resurfaced once again with shares of some banks down more than 30%. There was no catalyst for that, but that might be enough for a bank run which means a quick withdrawal of deposits. Stock markets tumbled lower, particularly US indices, led by bank shares, while Gold surged higher. Crude Oil also tumbled, with WTI crude heading for $70, so the sentiment remains negative as we head into the FED rate decision later today.

Today’s Market Expectations

Early in the morning, we had the New Zealand employment report, with the unemployment rate ticking higher. The RBNZ Gov Orr held a speech after that, followed by Australian retail sales which remained stable last month. Later in the US session, we have the ADP Non-Farm employment change numbers, to be followed by the ISM services which are expected to show a slight improvement. Then comForex Signals Brief for May 3: The Final FED Hike Is Here es the FED meeting, with odds of a 25 bps hike at 82%, although the press conference will be more important, since it will shed some light on the future path post rate hikes.

Forex Signals Update

Yesterday the volatility was low during the European session, with a slight bullish momentum for the USD. But, the volatility picked up in the US session as the banking vows returned and safe havens such as Gold and the JPY surged higher. We opened five signals, two of which closed in profit while two closed in loss after the sudden decline in the USD.

GOLD Bounces Off the 200 SMA

Gold jumped to $2,020 yesterday, breaking above the 100 SMA (green) which was acting as support. Gold was trading between this moving average at the top and the 200 SMA (purple) at the bottom on the H4 chart, for two weeks, but yesterday the breakout happened and if the FED hike is dovish today, we might see new record highs in Gold. We are following the price action and are looking for a retrace lower where we can open a buy Gold signal.

XAU/USD – 240 minute chart

Booking Profit in NZD/USD

NZD/USD was bearish as the RBNZ stopped rate hikes and was giving dovish signals. Moving averages were acting as resistance on the H1 chart, with the 200 SMA (purple) being the ultimate resistance indicator. But, it seems like the trend might have changed. The 50 SMA turned into support yesterday and our buy NZD/USD signals closed in profit.

NZD/USD – 60 minute chart

Cryptocurrency Update

BITCOIN Continues to Bounce Up and Down

Bitcoin climbed above $30,000 last month, as the uncertainty in traditional banking sent cash flows toward the crypto market, although we saw a retreat in the last week of April. Buyers returned as moving averages turned into support on the larger timeframe charts and BTC peaked above $30,000 again twice in the previous two weeks. But, on Monday we saw another retreat lower. Although, the banking fears turned the attention to cryptocurrencies yesterday, so BTC found bids again.

BTC/USD – 240 minute chart

ETHEREUM Remains Suported

Last week, the price of Ethereum dropped below $1,900, but it found support at the 50-day SMA at $1,800. As a result, we opened a buy signal for Ethereum, which looked promising as the 50 SMA provided support during the retreat. Yesterday, Ethereum saw an increase in value towards $2,000, but the climb was halted by the 20 SMA (gray), causing ETH to reverse back down to the 50 SMA.