Forex Signals Brief May 8: BOE Hike and US Inflation This Week

Last week we had three major central banks raising interest rates by 25 bps, while this week the BOE is expected to continue the tightening

BOE Monetary Policy Report for November

Last Week’s Market Wrap

Last week central banks continued the rate hike path, with the Reserve Bank of Australia starting the hikes on Tuesday morning, with a surprise 25 basis points raise which gave the AUD and the NZD a boost, before the bank problems resurfaced again, which hurt the risk sentiment, sending safe havens such as the JPY and Gold higher. Although the risk aversion abated eventually as JP Morgan took over First Republic Bank customers.

The FOMC (Federal Open Market Committee) meeting took place on Wednesday evening, with the FED delivering the last 25 bps rate hike, which sent the USD around 50 pips higher across the board. The European Central Bank (ECB) held its meeting on Thursday, raising rates by 25 bps and president Lagarde made some hawkish comments for further rate hikes, although the Euroe turned bearish after the meeting.

This Week’s Market Expectations

This week starts slow in the first two days, with only the Eurozone Sentix Investor Confidence scheduled to be released later today, which is expected to show a slight improvement. On Wednesday the US core CPI inflation report will be released, and it is expected to have remained steady in April at 5.0%. The Bank of England is expected to hike rates by 25 bps as well on Thursday, to 4.50%, which will be followed by the US PPI producer inflation. On Friday the UK Consumer inflation report will be released as well to close the week.

Forex Signals Update

Last week the volatility picked up again as the banking problems returned, which sent safe havens higher. The FED and the ECB added further to the volatility, and we saw quite a few jumps, followed by reversals lower. We opened 20 trading signals in total, with 8 losing ones and the rest closing in profit.

GOLD Remains Supported

Gold turned bullish last week and pushed toward the all-time high after consolidating in a range since the middle of April. The 200 SMA (Simple Moving Average purple) acted as support, pushing the price up to $2,070 on Thursday before the reversal lower below $2,000.

XAU/USD – 240 minute chart 

Is the Trend Changing for EUR/JPY?

JPY/UD has been bullish since the middle of January, as the risk sentiment improved after institutions intervened to stop the banking crisis. Although buyers have been finding it hard to push the price above the 200 SMA (purple) on the daily chart, which rejected the price last week as well, but it seems like the 50 SMA held as support.

USD/JPY – Daily chart

Cryptocurrency Update

The Trend Remains Bullish for BITCOIN

Bitcoin has been forming higher lows since the middle of April, showing that buyers remain in control, although last week they failed to push the price above $30,000. The 50 SMA (yellow) has caught up with the price and is acting as support at the bottom though, pushing the lows higher.

BTC/USD – Daily chart

ETHEREUM Remains Supported

Last week, the price of Ethereum dropped below $1,900, but it found support at the 50-day Simple Moving Average (SMA) at $1,800. This level acted as a support level, so we opened a buy signal for Ethereum as it looked promising. The 50 SMA provided support during the price retreat. Yesterday, Ethereum saw an increase in value, rising towards $2,000. However, the climb was halted by the 20 SMA (gray), which acted as a resistance level. This caused Ethereum’s price to reverse back down to the 50 SMA, which is still acting as a support level. It’s worth noting that technical analysis, such as the use of moving averages, can provide insights into potential support and resistance levels for a security. However, investors should always conduct their own research and consider multiple factors before making any investment decisions.

ETH/USD – Daily chart
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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