Forex Signals Brief August 23: Manufacturing and Services to Slow Further
Yesterday’s Market Wrap
Yesterday the USD started the day in retreat, while risk assets were gaining some momentum and claiming back some of the lost ground as market sentiment improved during the European and the Asian sessions. That made no sense since the Chinese yuan was weaker, but the US treasury yields were on a retreat which was pulling the USD lower.
Although as we have seen in recent times, US treasury yields tend to take a life of their own during the US session which repeated yesterday. The US dollar reversed its direction and made a comeback in tandem with the increase in Treasury yields. This pattern has been observed a few times during the initial trading hours in the United States, particularly when market liquidity is at its highest.
Although yields reversed back down again and ended up marginally lower overall for the day, the longer-term. US 10-year Treasury yields have climbed from a recent low of 4.306% to the current level of 4.367% only to turn back down later. This uptick in yields has had a spill-over effect, leading to a widespread demand for the US dollar. Consequently, the Euro has hit a new low at 1.0864 in response to the strengthening US dollar.
Today’s Market Expectations
Today started with the Retail Sales report from New Zealand which showed another decline in Q2, albeit smaller. But, the declining trend which has been going on in the last two years continues. The manufacturing and services PMI numbers have already started to be released, showing a further slowdown in both sectors, with manufacturing activity being deeply in recession. So, this also confirms the negative trend in both sectors.
The US flash services and manufacturing are also expected to slow, although manufacturing activity is better than in Europe despite falling into contraction earlier. The New Home Sales are expected to show an improvement for July, which seems contradictory with the slowing trend in the existing Home Sales that we saw yesterday.
Forex Signals Update
Yesterday the volatility picked up and we opened seven trading signals in total. with five of the reaching the targets. We remained long on the USD and were caught up on the wrong side during the retreat in the European session, but made up and had four winning forex signals later n as USD buyers returned.
For more detailed updates, please refer to the section below.
MAs Continue to Kill All GOLD Attempts
The bearish trend in Gold persists but yesterday we saw a couple of bullish attempts as highlighted by the chart below. Moving averages have been acting as resistance, pushing the highs lower, but the pace of the decline has slowed and now the bigger moving averages have come into play. Gold has established a support zone at approximately $1,984 and we have seen the price bounce off that area. But the200 SMA (purple) stopped the climb yesterday and XAU reversed back below $1,900 after failing to hold the gains above it.
XAU/USD – 60 minute chart
- XAU/USD Sell Signal
- Entry Price: $1,895.47
- Stop Loss: $1,909.47
- Take Profit: $1,887.47
Buying GBP/USD at the 200 SMA Again
The British Pound has been holding better than other major currencies against the USD. GBP/USD has been trading sideways during most of August, but has recently tilted to the upside, as lows get higher. Moving averages have turned into support on the H1 chart, and we have been buying this pair against the 200 SMA (purple) recently. Yesterday we opened another buy GBP/USD signal just above the 200 SMA.
GBP/USD – 60 minute chart
- GBP/USD Buy Signal
- Entry Price: 1.2728
- Stop Loss: 1.2688
- Take Profit: 1.2758
Cryptocurrency Update
BITCOIN Looking Bearish As MAs Turn Into Resistance
Bitcoin has been facing selling pressure ever since it achieved its new yearly highs and eventually reversed below $30,000. The descent gained momentum last week as the cryptocurrency market experienced another drop, fueled by speculations that SpaceX had sold off all their Bitcoin holdings. The BTC/USD pair breached the 100-day Simple Moving Average (SMA) last week, and on Thursday, a significant crash occurred, briefly pushing BTC/USD below the $25,000 mark. While the decline temporarily halted at that point and there was a minor retracement upwards, the price is hanging around $26,000, where it has remained trading for the past few days.
BTC/USD – H1 chart
We’re looking to open another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD around $26,000
ETHEREUM Breaks the 200 Daily SMA
Ethereum also crashed lower last week, following the SpaceX rumours and the Evergrande bankruptcy. It failed to hold the gains after climbing above $2,000. 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. Although ETH wasn’t spared during this crypto crash and ETH/USD fell below $1,600, but the 200 SMA (purple) held as support on the weekly chart. So, we are thinking about going long on Ethereum again.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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