Forex Signals Brief June 21: Waiting for Powell’s Testimony

Yesterday traders leaned on the USD and the JPY as they position their assets ahead of today's testimony at the US congress by Jerome Powell

Skerdian Meta•Wednesday, June 21, 2023•3 min read

Yesterday’s Market Wrap

On Monday markets were relatively calm as the economic calendar had limited events, and besides that, it was a bank holiday in the United States. However, yesterday we witnessed some notable volatility, which was predominantly one-sided. The USD and JPY were gaining momentum as safe-haven currencies, while Gold tumbled down below $1,930 after falling from $1,950.

The US stock market was facing a challenging day, with the potential for further significant selling in the coming days due to rebalancing flows at the end of the quarter. This rebalancing activity may also be driving demand for bonds on the other hand. S&P 500 index was only 8% away from reaching a new all-time high, but it has retreated around 80 points lower since then. Asset managers and pension funds often sell equities at the end of the quarter to rebalance their portfolios towards bonds so that might have played some role.

Today’s Market Expectations

The main event for the day will be Powell’s testimony in the US Congress, which starts in the evening and continues for two days. Markets will be eagerly awaiting guidance from Powell regarding the future trajectory of interest rates. This anticipation arises due to the persistent inflation, which remains significantly higher than the Federal Reserve’s target of 2% annually, and the tightness of the labor market, which is still notable when compared to historical standards. Powell’s remarks will be particularly significant in a week dominated by housing market data. Earlier today we had the UK consumer inflation report CPI which showed another slowdown, while later the retail sales from Canada will be released.

Forex Signals Update

Yesterday the price action picked up as the volatility increased, with the USD gaining momentum. We were caught on the wrong side and had four losing signals, but then adjusted the trading strategy accordingly and had three winning forex signals to close the day.

GOLD Closes Below the 100 SMA

Gold has been bouncing up and down for over a month, primarily moving between two moving averages. However, there was a break below the 100-day Simple Moving Average (green) on Thursday morning after the Federal Open Market Committee (FOMC) meeting held on the previous Wednesday. Nonetheless, the breakout turned out to be false, as the price quickly returned back above the bottom moving average. Yesterday though, sellers finally managed to close the day below this moving average so the break is offiial.

XAU/USD – Daily chart

Booking Profit on [[EUR/USD]]

EUR/USD turned bullish earlier this month and buyers have been in total control since then, with the USD retreating. The 20 SMA (gray) has been keeping the trend bullish although we saw a retreat below this moving average yesterday during the retreat, which we used to open a sell forex signal, closing it in profit

AUD/USD – Daily chart

Cryptocurrency Update

BITCOIN Pushes Above Moving Averages

Bitcoin continued its downward movement last week falling below $25,000 briefly.But this week we have seen a bullish reversal and Bitcoin headed for the 50-day Simple Moving Average (SMA), represented by the yellow line on the chart encountered. Yesterday buyers piushed the price above thie 50 SMA and the 100 daily SMA (gren) so the bullish trend is back on.

BTC/USD – Daily chart

ETHEREUM Hesitating to Move Higher

ETHEREUM made a break of the resistance and support area above $1,700 as the price fell below $1,630s, but the 200 SMA (purple) was waiting there, which stopped the decline. This moving average acted as support on the daily chart, and the price formed a doji candlestick above it, which is a bullish reversing signal, followed by a nice bullish candlestick on Friday. We decided to open a buy Ethereum signal but the price has been trading in a tight range in the last several days.

ETH/USD – Daily chart

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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.