Forex Signals Brief September 18: FED, SNB and BOJ Meetings on Schedule This Week

Posted Monday, September 18, 2023 by
Skerdian Meta • 4 min read

Last Week’s Market Wrap

Most of the attention last week was on the CPI (consumer price index) report from the US, which was expected to show another increase in headline consumer inflation in August, following the increase in July. This would confirm the short term trend, which is a good enough reason for the FED to keep one more rate hike on the table.

Inflation did increase instead, while the unemployment claims came below expectations, as the headline number keeps trending down in the right direction, indicating that the jobs market is in decent shape, which will keep the consumer demand up.

So, this was another round of positive economic data from the US, which means that the economy will likely not end up in a recession. Risk assets went hgiher on such news, which is something new in the last few months, as good news has been bad news for risk assets such as stock markets and commodity dollars, with the idea that the FED would keep raising interest rates and send the US economy into recession. But that might be changing now, which is one thing to keep in mind.

Besides that, the European Central Bank (ECB) raised interest rates by 25 basis points, taking the refinancing rate to 4.50% on Thursday. Although, the Euro ended up going down, as President Lagarde let markets know that this might have been the last rate hike.

This Week’s Market Expectations

This week we have events from a number of central banks, starting with the minutes from the Reserve Bank of Australia on Tuesday morning, which can only send the AUD lower since they seem to have stopped rate hikes as well. Canadian inflation is expected to be released later that day, which is expected to show another slowdown.

The UK CPI is expected to be released on Wednesday morning, with the headline number expected to increase while core CPI is expected to slow down. In the evening we have the FOMC meeting, which is expected to produce nothing in terms of interest rate changes, but markets will be eager to hear Powell’s press conference for hints on further hikes in November, which has been keeping the USD bullish and would support it further.

The New Zealand GDP report will be released early on Thursday, which is expected to show a return to growth of 0.4% in Q2 after a recession in the previous two quarters. The Swiss National Bank is expected to raise interest rates later that day to 2.00% from 1.75% previously. But if they deliver a dovish hike then that would send the NZD lower. The Bank of Japan will close the week together with the manufacturing and services reports on Friday.

Forex Signals Update

Last week markets were quiet until the release of the inflation report from the US, which supported the USD further, helping it with the larger bullish trend. We remained largely long on the USD, which proved to be a profitable strategy once again.

Bullish Signal in GOLD After Bouncing Off $1,900

Gold has been declining for several months, making loser highs, with the 100-day Simple Moving Average (SMA) shown by the green line on the daily chart turning into resistance. Early this month we saw a rejection at this moving average, after the price bounced off the 200 daily SMA (purple). Gold returned to this moving average last week, but we saw another bounce from the 200 SMA, indicating that buyers might be getting control again, as the price makes higher lows, although we’ll have to see how Gold behaves this week.

XAU/USD – Daily chart

Gold Sell Signal
Entry Price: $1,906.34
Stop Loss: $1,920.34
Take Profit: $1,898.34

Remaining Short on EUR/USD

We remain bearish on this pair as the fundamentals and technicals keep pointing further down. Despite the ECB raising interest rates by 25 basis points on Thursday last week, EUR/USD fell below 1,07 in the wake of the central bank’s announcement. Christine Lagarde implied that this should be the cycle’s last rate rise. This assertion is supported by deteriorating economic forecasts for the next year.

EUR/USD slipped to 1.0656, below this month’s lows, as US data also drove this pair to decline with the USD climbing as a consequence of some optimistic economic sentiment. We closed several EUR/USD signals last week and left one open in profit to open the new week.

EUR/USD – 60 minute chart

EUR/USD Sell Signal
Entry Price: 1.0672
Stop Loss: 1.0712
Take Profit: 1.0642

Cryptocurrency Update

BITCOIN Hesitating to Push Higher

Bitcoin is showing signs of weakness again after the bounce early last week. Last week, cryptocurrency prices had a sharp downturn, falling under the $25,000 support level which is a big support and resistance level. We were waiting to see whether it would hold since it is a significant psychological threshold or if the decline would continue and result in further losses. BTC, however, abruptly reversed course last week, rising more over $1,500 to reach $26,700 following four days of bullishness and pushing, but it has been failing to make more gains since then.

BTC/USD – Daily chart

We are looking to open another buy Bitcoin signal yesterday after the pullback, going in long just above the 20 SMA on the daily chart above.

ETHEREUM Faling at the 20 Daily SMA

The price of Ethereum jumped higher last month indicating that there was a level of buying interest and demand for Ethereum at the sone around $1,600. Buyers have stepped in on several occasions at the area above this level but the 20 SMA (gray) has been acting as resistance on the daily chart. It has been pushing the highs lower which was a strong bearish signal, and yesterday sellers finally pushed ETH/USD below the support zone.