Core PCE remained unchanged at 2.6% in July

Forex Signals Brief May 10: Will Inflation Continue the Slowdown in the US?

Posted Wednesday, May 10, 2023 by
Skerdian Meta • 2 min read

Core PCE remained unchanged at 2.6% in July

Yesterday’s Market Wrap

Yesterday the calendar was light, with only the Japanese Average Cash Earnings which remained unchanged and Household Spending which declined. The IBD/TIPP Economic Optimism index also fells to 41.6 points this month from 47.4 last month, showing that the confidence is weak among investors.

There were several European Central Bank members who made comments and almost all leaned on the hawkish side, hinting at further interest rate hikes. But, the Euro was the weakest currency yesterday as markets are reading more into the economic data from the Eurozone which is weakening. Oil was slipping lower, until a sudden jump which sent WTI crude around $2.5 higher after Russia’s comments that their production cut quotas went according to plan.

Today’s Market Expectations

Today we had the German Final CPI consumer inflation for April, which remained unchanged at 0.4%. Although, traders are focused on the US CPI (consumer price index) numbers which will be released later on. The headline CPI inflation is expected to remain unchanged at 5.0% year-on-year, but CPI month-on-month is expected to jump to 0.4% this month. Core CPI MoM is expected to tick lower though, to 0.3% from 0.4% in the previous month.

Forex Signals Update

Yesterday the volatility was low again although it was enough to trigger our targets in several signals. We closed four trading signals yesterday, with three wining signals in Gold, crude Oil and USD/JPY, all of which were long term signals.

Buyers Remain in Control in GOLD

Gold experienced a significant increase last week after the crash below $2,000, as it rebounded from the 200-day moving average (represented by the purple line). This rise was triggered by the resurfacing of the banking crisis, which led Gold to approach its all-time high after consolidating within a range since mid-April. Gold pushed higher yesterday, reaching the take-profit target indicated by our buy Gold signal.

XAU/USD – 240 minute chart

The 200 SMA Keeping USD/JPY Down

Crude Oil continued the reversal from late last week after the positive US employment report last Friday. But, the bullish momentum has faded now after buyers reached the 50 SMA (yellow) on the H4 chart, and we decided to open a sell Oil signal, since the stochastic indicator looks overbought now, so it is time for a retreat lower.

USD/JPY – 60 minute chart

Cryptocurrency Update

Is BITCOIN Heading for a Deeper Pullback?

Bitcoin has exhibited bullish momentum since the start of this year, with each high surpassing the previous one. In the previous month, buyers managed to drive the price above the $30,000 mark. On the daily chart, the 50-day simple moving average (represented by the yellow line) had been serving as a support level during downward retracements. However, that moving average was breached yesterday, indicating a shift in market sentiment and potentially paving the way for a decline towards $25,000.

BTC/USD – Daily chart

Buying the Retreat in ETHEREUM

The buying pressure has slowed in recent weeks and we have seen a retreat in Ethereum in the last several days. But, the correction looks almost complete as the 50 SMA (yellow) holds as support while the stochastic indicator is oversold already. So, we decided to open a buy ETH signal a while ago.