Forex Signals Brief June 7: Will the BOC Surprise With a Hike Too Today?

Yesterday’s Market Wrap

Yesterday started with the Average Cash Earnings from Japan which showed a slowdown in May. Although the highlight of the day was the meeting by the Reserve bank of Australia. The Australian central bank surprised the markets by implementing another 25 basis points (bps) rate hike. This decision marks two consecutive meetings in which the central bank has defied expectations and increased the cash rate, bringing it to 4.10%.

The forward guidance passage remained unchanged from May, indicating that more rate hikes may be on the horizon. As a result of this news, the Australian dollar (AUD) experienced a significant boost, with the AUD/USD currency pair climbing from 0.6615 to a high of 0.6685. Th rest of the day was quiet, with only a jump in crude Oil in the US session.

Today’s Market Expectations

Early in the Asian session we had RBA Governor Lowe and Deputy Gov Bullock hold speeches, followed by the Q1 GDP which showed a slowdown in Australia. Italian Retail Sales will be released shortly and are expected to show a 0.3% growth in May after falling flat at 0.0% in April. But once again the highlight of the day will be the meeting of another major central bank with the Bank of Canada expected to keep rates on hold at 4.50%. But we might get another surprise hike today such as the one we saw yesterday from Australia.

Forex Signals Update

Yesterday started slow with the USD on a slight uptrend, as the sentiment was softly negative, apart from crude Oil which saw a surge higher in early Asian trading. Although later we saw a reversal and the USD fell lower as ISM services headed toward construction.

GOLD Stagnating Today

Gold was bullish since October but turned bearish at the beginning of May, after failing to surpass its previous all-time high of $2,075. During this decline, the 100-day Simple Moving Average (SMA) has acted as a support level, preventing further downward movement. The price of XAU/USD (gold) rebounded from the 100 SMA and was testing the 50-day SMA (yellow) towards the end of last week. However, a bearish reversal occurred on Friday as USD buyers returned, but the 100 SMA held as support again and on Monday we saw a bounce, which didn’t continue yesterday.

XAU/USD – Daily chart H4

EUR/USD Can’t Hold the Gains

In May, EUR/USD transitioned into a bearish trend as USD buyers started to emerge. As a result, the pair reached its lowest point around 1.06 yesterday. On the price chart, the 20-period Simple Moving Average (gray) and the 50 SMA (yellow) have been acting as resistance levels. Traders have been taking advantage of price retracements to sell at these levels. However, last Thursday, a bullish reversal occurred, pushing the pair above the 50 SMA. Unfortunately, the climb was halted by the 100 SMA (green), and the downtrend resumed once again.

EUR/USD – 240 minute chart

Cryptocurrency Update

BITCOIN Returns Above the 100 SMA

Bitcoin has been bearish since April, making lower lows after being bullish during Q1, although the main trend is still bullish. BTC slipped to the 100-period SMA once again which held as support for several times, but finally broke on Monday after SEC filed charges against Binance. Yesterday though we saw a reversal higher and a return above the 100 SMA so our “buy” signal for Bitcoin at the 100-period SMA still remains open though.

BTC/USD – Daily chart

ETHEREUM Returns Above the 50 SMA

In recent weeks, the buying pressure for Ethereum has slowed down, and we have witnessed a retreat in its price over the last few days. However, the correction appears complete as the 100 SMA (green) held as support for ETH/USD and buyers pushed the price above the 50 SMA as well. Now it seems that this moving average has turned into support.