Forex Signals Brief August 16: Eurozone GDP and FOMC Minutes in Focus
Yesterday’s Market Wrap
Yesterday was loaded with economic events, which increased the volatility in financial markets. The Asian session commenced with robust Japanese economic growth data for Q2 with the GDP exceeding expectations significantly, registering a strong annualized growth rate of 6%. Meanwhile, the People’s Bank of China implemented its second interest rate cut in three months. The Medium-term Lending Facility (MLF) rate was reduced from 2.65% to 2.5%, and the reverse repo rate was lowered from 1.9% to 1.8%.
These rate cuts were swiftly accompanied by Chinese economic activity data for July, which turned out to be major disappointments, particularly for industrial output and retail sales figures. Consequently, the AUD/USD currency pair experienced a decline, driven by the minutes of the most recent Reserve Bank of Australia (RBA) meeting. The RBA’s communicated stance was less hawkish than initially anticipated. Australia’s wages numbers for Q2 also fell below the projected levels which could lead the RBA to interpret it as a reduction in the inflationary pressures currently at play.
Later in the day, we had the inflation report from Canada, which showed a 3.3% YoY versus 3.0% expected, up from 2.8% expected. Although core CPI YoY remained unchanged. But the highlight f the day was the retail sales report from the US which showed a decent jump, with headline sales YoY increasing by 2.3% while MoM sales increased by 0.7%. Nonetheless, the USD ended up lower after that while risk assets improved despite prospects of a more hawkish FED in September’s meeting, which was a strange reaction.
Today’s Market Expectations
Today there are some important forex events as well and the economic calendar started with the Reserve Bank of New Zealand meeting. The RBNZ left interest rates unchanged again as inflation slows, following the RBA, so the chances are that both central banks are over with rate hikes.
The UK CPI (consumer price index) report was released a while ago, with the headline consumer inflation falling below 7% for the first time since March last year. The Eurozone Q2 flash GDP will be released shortly and is expected to remain unchanged. The US building permits and housing starts will be released later in the US session, befoe the day ends with the FOMC minutes from the last meeting, which will be interesting for USD traders to see.
Forex Signals Update
The price action was decent yesterday as the volatility returned, so we opened many trading signals, although four of them closed while several others continued to remain open into today. We were mostly long on the USD, so all our closed signals hit the take profit targets before or right after the strong retail sales. Then we opened some more after the retreat but the volatility eventually slowed.
For more detailed updates, please refer to the section below.
GOLD Can’t Sustain Any Gains
Sellers continue to remain in charge in Gold as they keep pushing the highs lower. All attempts from buyers to reverse the price higher are met by sellers higher up, usually at moving averages, which continue to act as resistance on the H1 chart, indicating strong selling pressure. We keep selling Gold at MAs during retaces higher and almost all our Gold signals have closed in profit.
XAU/USD – 60 minute chart
Considering the current market conditions, we are providing a trading signal as follows:
- Gold Sell Signal
- Entry Price: $1,915-20
- Stop Loss: $1,931
- Take Profit: $1,902
AUD/USD Trading Below 0.65
Just like Gold, AUD/USD continues to remain with a heavy sentiment, weighing it down, as the Reserve Bank of Australia holds back and is shifting to an accommodative stance. Moving averages are also acting as resistance on the H1 chart here and we are bearish on this pair too. So, we conntinue to sell AUD/USD against moving averages, which has been a good strategy.
AUD/USD – 240 minute chart
- AUD/USD Sell Signal
- Entry Price: 0.6480
- Stop Loss: 0.6550
- Take Profit: 0.6400
Cryptocurrency Update
The 200 SMA Turns Into Resistance Again for BITCOIN
The pressure has been to the downside for Bitcoin, following the bearish reversal and the decline below $30,000. The value of Bitcoin experienced a decline beneath $28,000, though there have been recent indications of buyers coming back. This was highlighted by a couple of upward movements above $30,000, leading to a breach of moving averages on the H4 (4-hour) chart. It’s worth noting that these attempts at an upward movement eventually lost momentum, resulting in a reversal below the $30,000 mark for BTC/USD. Yesterday we saw another attempt from buyers, but the 200 SM A(purple) held as support n the H4 chart and the price ca,e back down. We continue to remain long on BTC though.
BTC/USD – H4 chart
We opened another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD below $30,000:
- BTC Buy Signal
- Entry Price: $29,421.68
- Stop Loss: $27,400
- Take Profit: $32,400
ETHEREUM Trading Between MAs
Earlier this month, Ethereum showed a decent rebound, sending it above the $2,000 threshold as buying activity remained dominant. Despite the prevailing bearish trend that has persisted since the beginning of 2023, characterized by a series of progressively lower lows, Ethereum has exhibited a greater degree of resilience compared to Bitcoin.
In light of this observation, a number of long-term “buy” signals for Ethereum have been generated. Despite the prevailing downward pressure, Ethereum has demonstrated a noteworthy ability to withstand these challenges. In response to a recent pullback, a decision was made to initiate a “buy” signal for Ethereum on Monday. This strategic move is based on the expectation that various moving averages will serve as supportive levels, potentially arresting the retreat. Notably, the 100-period Simple Moving Average (SMA), depicted in green, appears to be fulfilling this supportive role.
ETH/USD – Daily chart
- Entry Price: $1,860
- Stop Loss: $1,740
- Take Profit: $2,020
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