Forex Signals Brief September 5: Central Banks Are Back with RBA Meeting Today
Yesterday’s Market Wrap
Yesterday markets were quiet as the US and Canada were on a bank holiday weekend, while the economic data from the rest of the world was light. The price action continued Friday’s pattern of risk currencies moving higher in the first half of the day, only to turn back down later in the US session, while the USD resumed the uptrend.
There were a few economic releases during the European session, starting with the GDP report from Switzerland, which showed that the economy fell flat in the second quarter. That’s a bit outdated to have a major impact on the CHF, but it shows that the economy is suffering and is heading toward recession, following the Eurozone economy.
There is a rather pessimistic outlook for the current quarter, raising concerns about the possibility of a recession by the end of the year. There are indications that the Swiss National Bank (SNB) might consider implementing one last interest rate hike later this month in response to these economic challenges. The Eurozone Sentix investor confidence also dipped further into negative territory, which eventually weighed on the Euro.
Today’s Market Expectations
This week brings the focus on central bank policy again, with two major central banks taking center stage: the Reserve Bank of Australia (RBA) meeting which already took place earlier today and it maintained its policy rate at the current level of 4.10% as widely expected, while later in the week we have the Bank of Canada (BOC). The RBA announced the policy announcement, and it was notable because it was Philip Lowe’s final policy meeting as governor before he hands over the post to Michele Bullock in September.
Similarly, the Bank of Canada is scheduled to announce its policy decision on Wednesday. The consensus among analysts is that the BOC will also keep its policy rate unchanged, holding it at 5.00%. In both cases, it appears that the central banks are expected to maintain their current interest rate levels without any immediate changes.
Forex Signals Update
Yesterday the price action was slow, although it followed the pattern that we saw most of last month, with the US dollar dipping lower during the morning, then reversing higher again. which in the end tried to close the week on the right foot after the reversal on Friday afternoon. We opened several trading signals, although they remained open until today as the trading range was pretty small.
GOLD Heading to the 200 SMA Again
Gold was quite bullish during most of August, but over the past two weeks, there has been a notable reversal in its direction. Initially, gold briefly dipped below the $1,900 mark. This shift in momentum can be attributed to several factors, with one key influence being the weakening labor market conditions in the United States.
This change in market sentiment prompted a more optimistic outlook for gold, as buyers re-entered the market, resulting in a price increase to $1,953 by Friday afternoon. Nevertheless, as the price approached the 100-day Simple Moving Average (SMA) represented by the green line, it encountered significant resistance. Currently, on the H4 chart, Gold appears to be heading lower after being overbought earlier but the 200 SMA (purple) has been acting as support, so let’s see if this MA will hold the price again.
XAU/USD – Daily chart
- Buy Gold Signal
- Entry Price: $1,944.16
- Stop Loss: $1,930.16
- Take Profit: $1,952.16
Remaining Long on USD/CHF
The recent disputes between the US and China may lead to increased demand for the Swiss Franc as investors seek refuge from the uncertainty surrounding the US-China trade relationship, which could in turn put pressure on the USD/CHF exchange rate. Today we have seen a slight pullback in this pair which seems to have ended. Although the GDP numbers from Switzerland showed a stagnation in Q2, which is another negative factor for the CHF. So, we should see this pair resume the uptrend soon and decided to open a buy USD/CHF signal in the afternoon.
USD/CHF – 240 minute chart
- Buy USD/CHF Signal
- Entry Price: 0.8847
- Stop Loss: 0.8807
- Take Profit: 0.8877
Cryptocurrency Update
BITCOIN Falling Below $26,000
The crypto market has been in a retreat since the middle of July, although after the Grayscale news, which recently won a lawsuit against the U.S. Securities and Exchange Commission (SEC) we saw a decent jump last week. The D.C. court ruled that the SEC improperly rejected the Bitcoin Spot Exchange-Traded Fund (ETF) proposed by Grayscale. As a result, the court ordered that the petition for review be granted, and the commission’s order be vacated.
This news had a notable impact on BTC’s price as it rallied $2,000 higher in response to the court’s decision. However, the rally was met with resistance at the 200-day SMA, which appears to be a critical level for the cryptocurrency. The price reversed there and it eventually fell below $26,000, giving back all the gains.
BTC/USD – Daily chart
We decided to open another buy Bitcoin signal yesterday after the pullback, going in long just above the 100 MS Aon the H4 chart above.
- BTC Buy Signal
- Entry Price: $27,157.1
- Stop Loss: $25,113
- Take Profit: $29,113
ETHEREUM Fails at the 20 SMA
Ethereum has demonstrated a higher level of resilience when compared to Bitcoin. Although it was not unaffected by the recent crypto market crash and the ETH/USD pair dropped below $1,600, there’s a significant observation on the weekly chart. The 200-day Simple Moving Average (SMA), represented by the purple line, functioned as a support level during this tumultuous period.
Taking into account this observed support and Ethereum’s historical behavior, we have now taken a long position on Ethereum once again. It’s important to acknowledge that the cryptocurrency market can be exceptionally volatile. Conducting thorough research and prioritizing risk management are essential factors prior to making any trading decisions.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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