Today we get to see the meeting minutes from the RBA, the BOE and the FED

Forex Signals Brief July 31: Two More Rate Hikes Planned This Week

Posted Monday, July 31, 2023 by
Skerdian Meta • 4 min read

Today we get to see the meeting minutes from the RBA, the BOE and the FED

Last Week’s Market Wrap

Last week we had three major central banks holding meetings, attracting all the attention and helping keep the volatility pretty high until the end. The FED took center stage first, delivering a 25 basis points (bps) rate hike, with many expecting this to be the last one. Although chairman Jerome Powell brought back the “data dependency” phrase, suggesting that we may see another hike in the coming meetings, probably in September if the economic data supports it.

Right the next day, we saw a round of really strong data from the US, with q2 GDP showing a 2.4% expansion against 1.8% expected, retail sales jumped while unemployment claims were low, suggesting that the labour market is tightening further. That sent the USD surging higher across the board, although it retraced some of the gains the next day as the ECB and the BJ went live.

The European Central Bank also raised interest rates to 4.25%, but that was a dovish hike, since the sentiment in the press conference shifted from hawkish to dovish, which was later confirmed by ECB president Christine Lagarde, which will likely keep the Euro bearish in the coming weeks.

We also saw plenty of volatility in Yen pairs, after news about the Bank of Japan tweaking its yield curve, but in the end not much changed and the JPY resumed the decline. USD/JPY returned from 138 lows and gained more than 300 pips on Friday alone.

This Week’s Market Expectations

This week we have two more major central banks which have planned to raise interest rates, but today starts with the Eurozone CPI consumer inflation, with the headline expected to fall to 5.3% in July from 5.5% in June, while core CPI is only expected to tick lower to 5.4% from 5.5%.

On Tuesday the Reserve Bank of Australia will hold its meeting and they are expected to bring rates up to 4.35% from 4.10% currently. But markets are pricing this in, so the forward guidance will be more important. JOLTS Job Openings are expected to fall further tomorrow, so a positive surprise would give the USD another lift before the ADP Non-Farm Employment Change report gets released on Wednesday, which comes from a massive jump in June.

The Caixin Services PMI is expected to show another slowdown in China on Thursday which will weigh on commodity dollars, which will be followed by the Bank of England meeting. They are expected to raise rates by 25 bps, bringing them to 5.25%, but once again, this is priced in, so the statement and the press conference will carry all the importance.

Forex Signals Update

Last week the volatility continued, as two major central banks raised interest rates, while rumours from the Bank of Japan also helped increase the volatility further. As a result, we opened 32 trading signals in commodities and forex, closing the week with 20 winning signals and 12 losing ones, and the majority of the long term signals closing in profit too.

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

GOLD Trading Between 2 MAs

Gold crashed lower on Thursday last week as the USD surged higher on strong economic data from the US. The price dived around $40 lower, breaking below most moving averages on the H4 chart, but the 200 SM (purple) held as support and on Friday we saw a bounce, as Gold retraced more than half the gains, climbing above $1,960. But the 50 SMA (yellow) stopped the climb and now Gold is stuck between these 2 MAs.

XAU/USD – 240 minute chart

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

Gold Sell Signal
Entry Price: $1,954.14
Stop Loss: $1,968.14
Take Profit: $1,946.14

EUR/USD Closes Above 1.10 After the Bearish Reversal

EUR/USD had been bullish since the beginning of June, but on Thurday last week it lost almost 200 pips due to negative risk sentiment and a bullish turn in the USD. The ECB sentiment shifted to dovish, after the had previously maintained a hawkish bias, as economic indicators pointed towards a recession in the Eurozone. ECB president Christine Lagarde revised the statement to adopt a less hawkish approach, later confirming it in the press conference, which made the decline worse in thispair although we saw a retrace on Friday and the piece closed above 1.10. Although we are looking to sell retracements higherand opened a EUR/USD signal last Friday.

EUR/USD – H4 chart

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

EUR/USD Sell Signal
Entry Price: 1.1031
Stop Loss: 1.1071
Take Profit: 1.1001

Cryptocurrency Update

Little Action in BITCOIN

Bitcoin’s price has been trading in a range above $30,000 after experiencing a significant rise from $25,000. This sideways movement continued for over a month, with the $30,000 level acting as a strong support. However, during this week, selling pressure returned, causing BTC to break below the $30,000 support zone and fall to $29,000. At this new level, $29,000 has become a new support zone that is currently holding. Additionally, the 50-period Simple Moving Average (SMA), represented by a yellow line, is acting as support, and the price of Bitcoin is hovering above this moving average.

BTC/USD – Daily chart

We decided to open another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD just above $30,000:

Entry Price: $28,000 or $28,500
Stop Loss: $26.500
Take Profit: $31,300

ETHEREUM Sticks to the 50 Daily SMA

Ethereum made a strong bounce and moved above $2,000 earlier this month as buyers remained in charge. We have had quite a few long term buy Ethereum signals since the trend has been bearish since the beginning of 2023, with the lows getting lower. Although since then the pressure has been to the downside, but Ethereum has still shown more resilience than Bitcoin. So, we decided to open a buy ETH signal on Monday after the retreat, so we’re betting on moving averages to act as support and hold the retreat and the 100 SMA (green) seems to be holding.