Forex Signals Brief July 12: Weak US Dollar, Positive Stock Market, and Rising Commodity Prices

Posted Wednesday, July 12, 2023 by
Arslan Butt • 3 min read

Inflation on the spotlight again

Yesterday’s Market Wrap

The US Dollar exhibited weakness, driven by market anticipation of key US data releases and an overall increase in risk appetite. The Dow Jones recorded a 0.93% gain in the stock market, while the Nasdaq saw a 0.55% rise. Gold prices climbed to $1,940, while Silver remained unchanged at around $23.10. Crude oil prices experienced a notable increase of over 2%.

The decline in the US Dollar can be attributed to the improved risk sentiment prevailing in the market. The DXY, which measures the performance of the Greenback against a basket of currencies, dropped for the fourth consecutive day, closing at 101.65, which marked its lowest level in two months.

Price movement remained relatively limited as market participants eagerly awaited the release of crucial US data. The upcoming release of the US Consumer Price Index (CPI) for June is deemed a significant event.

Analysts expect the index to indicate a 0.3% monthly increase, a decline in the annual rate from 4% to 3.1%, and the core annual rate from 5.3% to 5%. This data release is expected to generate volatility across various financial markets and will be closely scrutinized as it carries implications for the Federal Reserve’s expectations leading up to the July 25-26 FOMC meeting.

Today’s Market Expectations

At 8:00 AM GMT, the focus will be on the United Kingdom as Bank of England Governor Andrew Bailey is scheduled to deliver a speech. Traders and investors will be keen to gather insights into the BOE’s perspective on the current economic landscape and any potential policy changes.

The highlight of the day will be the release of US Consumer Price Index (CPI) data at 12:30 PM GMT. The market anticipates a monthly increase of 0.3% for CPI, while the annual rate is expected to decline from 4.0% to 3.1%. Additionally, the Core CPI, which excludes volatile food and energy prices, is projected to increase by 0.3% every month.

These figures will be closely watched as they provide crucial insights into inflation trends and have the potential to impact Federal Reserve policy decisions.

Moving to Canada, the Bank of Canada (BOC) will release its Monetary Policy Report and Rate Statement at 12:30 PM GMT. Traders will pay close attention to any changes in the BOC’s outlook for the Canadian economy and potential shifts in monetary policy.

Additionally, the Overnight Rate will be announced, with expectations of an increase to 5.00% from the previous 4.75%. The subsequent BOC Press Conference at 3:00 PM GMT will provide further context and clarification on the bank’s decisions.

Later in the day, the United States will hold a 10-year Bond Auction at 5:01 PM GMT. This auction will gauge investor demand for US government debt and may impact bond yields, which could affect broader financial markets.

Forex Signals Update

Yesterday’s market exhibited a combination of subdued price action and intermittent bouts of heightened volatility, particularly during the release of key US economic data.

Here’s a summary of the latest signal outcomes:

The AUD/USD sell trade hit the profit target, and the Gold (long-term) trade also reached the take profit level. Meanwhile, our open positions for EUR/USD (Buy at 1.1015), ETH/USD (Buy at 1847.61), and BTC/USD (Buy at 30728.45) are still active.

For more detailed updates, please refer to the section below.

GOLD Breaks Above $1,935

Goldhas recently broken through the resistance level around $1,935, suggesting a potential upward movement for the precious metal. In line with our signal, we recommend a buy position for Gold with an entry price set at $1,936.54.To effectively manage risk, we suggest the following parameters:

Entry Price: $1,936.54
Stop Loss: $1,922.54
Take Profit: $1,944.54

Please note that these levels are designed to help mitigate risk and optimize potential returns. As always, it is important to monitor market conditions and adjust your trading strategy accordingly.

XAU/USD – 240 minute chart

AUD/USD Double Top Resistance Near 0.6699

The AUD/USD currency pair has recently surpassed the resistance level created by a double top formation around 0.67024. This breakthrough suggests a potential bullish momentum for the pair. However, it is important to note that a downward trendline near the $0.67501 level may act as a barrier to further upside movement.

AUD/USD – 240 minute chart

Considering the current market conditions, we are providing a trading signal as follows:

Entry Price: 0.6705
Stop Loss: 0.6665
Take Profit: 0.6735

Cryptocurrency Update

BITCOIN Remains Range-bound

Bitcoin has entered a phase of consolidation, remaining within a price range of approximately $31,000 to $31,500. This follows a period of optimistic market sentiment that drove a significant surge in June.

While BTC/USD briefly surpassed the $31,500 level to achieve a new annual high, it encountered challenges in sustaining those gains and experienced a reversal.

BTC/USD – 240 minute chart

However, Bitcoin has successfully maintained its position within the established price range. To manage risk effectively, we present the following trade parameters:

Entry Price: $30,728.45
Stop Loss: $29,728.45
Take Profit: $31,728.45

ETHEREUM Surpasses 50-EMA, Is It a Good Buy?

The technical outlook for Ethereum has remained consistent since it witnessed a significant surge in the cryptocurrency market, specifically for the ETH/USD pair, surpassing the $1,900 level. However, the price failed to reach our predetermined take-profit target and began retracing its previous gains.

After a period of consolidation, the price started to decline, eventually breaking below the 50-day Exponential Moving Average (EMA), which initially served as a support level.

Considering these developments, the current situation prompts whether it is an opportune time to consider buying Ethereum.