Forex Signals Brief July 18: Markets Awaiting More Data From the US Today
Yesterday's most assets traded in a tight range as markets still digest the US inflation data from last week, but we have the retail sales
Yesterday’s Market Wrap
During most of last week, the United States Dollar (USD) experienced a significant decline in value. This decline was triggered by the release of inflation figures, which showed yet another decrease in June, heading toward normal levels, with headline CPI falling from 4% to 3%. In the weeks leading up to this, there had already been softer price indexes, contributing to the overall downward trend in the USD.
Additionally, the producer inflation PPI also followed the declining trend by experiencing another decrease suggesting less pressure on prices in the coming months. Lower inflation can have implications for monetary policy and the September FED hike is out of the question now.
The USD continued declining for most of last week, although the selling pressure stopped on Friday and yesterday we saw attempts from buyers trying to reverse the decline. This was more visible in USD/JPY , which climbed more than 200 pips off the bottom, moving above 139. Gold also fell around $15 but claimed it back.
The economic data was light overall apart from China reports, so there although no reason for traders to take large positions, especially with economic data from the US coming up. The New York Empire State manufacturing index showed that the activity expanded last month, against expectations of a contraction.
In China, the signals were mixed. After the grand reopening from 3 years of coronavirus lockdowns, the economy still seems unstable. The Q1 GDP showed a bigger-than-expected expansion, but the annualized number missed expectations. The industrial output rose more than expected too, although retail sales cooled off considerably, which left commodity dollars uncertain.
Today’s Market Expectations
Today it starts with the monetary policy from the Reserve Bank of Australia from the meeting when they decided to keep rates on hold. We don’t expect much tightening from them from now on and the minutes are a bit outdated too. The EU Economic Forecasts will be released anytime now, which are expected to be dovish, although markest have already priced that in, to some degree.
In the US session, we have the important data being released, starting with consumer inflation numbers from Canada. All annualized inflation indicators are expected to slow down by 0.2%, while the monthly CPI (consumer price index) is expected to come at 0.3% from 0.4% previously. At the same time, the US retail sales will be released, which are expected to show 0.4% and 0.5% increase respectively in June.
Forex Signals Update
Last week we saw a lot of volatility, mainly going against the USD, as the buck crashed lower on soft CPI and PPI inflation numbers from the US. We made the most of those market conditions, selling the USD on every retrace higher, but the situation has calmed since Friday. Nonetheless, we continued the winning streak from last week as two of our trading signals closed in profit, despite the slow price action.
For more detailed updates, please refer to the section below.
GOLD Testing the 50 Daily SMA
Gold made a strong bullish move last week, although it has been retreating since Friday, making lower lows on smaller time-frame, such as the H1 chart. As a result, we decided to open two sell Gold signals yesterday, one long term and one short term signal. The long term signal closed in profit after the rejection at the 50 SMA (yellow) and the $15 decline to $1,945.
XAU/USD – Da60 minuteily chart
XAU/USD – Da60 minuteily chart Booking Profit on GBP/USD
Yesterday we acted with GBP/USD similar to Gold, selling this pair since it was retreating from a massive surge last week, which sent this pair more than 550 pips higher. We opened a short term sell GBP/USD signal, which eventually closed in profit as the price retreated lower. Although, this retreat has opened up a good opportunity to go long on GBP/USD at the 20 SMA (gray) on the H4 chart, so we are presenting a trading opportunity below.
GBP/USD – H4 chart
Considering the current market conditions, we are providing a trading signal as follows:
- Buy Entry Price: Above 1.3065
- Stop Loss: 1.2965
- Take Profit: 1.3140
Cryptocurrency Update
Will the 200 SMA Hold for BITCOIN?
In the first two weeks of June we saw a strong bullish move in the crypto market, which took BTC/USD above $31,000. Although the price of Bitcoin has stabilized in the last three weeks, and it has been trading in a range between $30,000 and $31,500 roughly speaking, while seeing a jump to $31,750 late last week. But sellers came back and have pushed the price of BTC to the bottom of the range, dipping slightly below $30,000. But the 200 SMA held as support in the first attempt, so let’s see if we will see a reversal higher from here, since we are already long on BTC.
BTC/USD – 240 minute chart
We decided to open another buy Bitcoin signal yesterday, playing the range again, buying BTC/USD just above $30,000:
- Entry Price: $30,293.2
- Stop Loss: $29.490
- Take Profit: $31,493.21
Looking to Buy ETHEREUM at the 50 SMA
Ethereum has been making higher lows in the larger charts, so the overall trend has been bullish since the beginning of this year, with the highs getting higher as well. Moving averages have been acting as support for this cryptocurrency, particularly the 50 SMA (yellow) on the daily chart, where we decided to open the last long term signal which closed in profit after the bounce. Although the price is returning to this moving average again as cryptos retreat, so we are looking to open another buy signal at the 50 SMA, as indicated below’
Considering these developments, the current situation prompts whether it is an opportune time to consider buying Ethereum.
ETH/USD – Daily chart
- Entry Price: $1,860
- Stop Loss: $1,740
- Take Profit: $2,020
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