Forex Signals Brief September 21: More Rate Hikes from the SNB and BOE

Posted Thursday, September 21, 2023 by
Skerdian Meta • 3 min read

Yesterday’s Market Wrap

The main event for the week was yesterday’s FOMC which was held in the evening, with markets trading slowly ahead of the meeting. There was slight selling pressure for the USD, while risk assets were climbing higher, with Gold making a $20 rally to $1,94750.

Although, before that, we had the consumer inflation report form the UK. Headline CPI inflation was expected to grow to 7.0% YoY in August but ticked lower to 6.7% from 6.8% in July. Monthly CPI moved up by just 0.3% vs 0.7% estimated and the lower figures weighed on the GBP as well as UK bond yields upon release.

Then attention shifted to the FED, which decided to keep interest rates unchanged, maintaining a target range of 5.25% to 5.5%. Although the dot plot showed that despite the decision to keep rates unchanged for now, the majority of voting members still anticipate at least one more interest rate hike by the end of the year.

They also revised its projection for the end-of-year FED Funds rate significantly. The FED increased this projection by 50 basis points (0.5%) from 4.6% to 5.1%. This implies that they now expect interest rates to rise more than previously anticipated by the end of the year, which is another hawkish signal, thus sending the USD higher.

Today’s Market Expectations

Today started with the GDP report from New Zealand for Q2, with expectations for a 0.4% expansion after two negative quarters which means recession. Although we saw a bigger growth, with the Q2 figure at 0.9% while the annualized number coming at 1.8% against 1.2% expected.

The central bank bonanza continues today with the Swiss national Bank expected to raise interest rates to 2.00% from 1.75% previously. Although they’re expected to follow the ECB, in delivering a dovish hike and signaling a pause, which should continue to push USD/CHF higher above 0.90.

The Bank of England  will follow later and many were expecting a 25 bps hike today. But, after the lower than expected UK CPI figures yesterday, the odds of Bank of England policy decision today are now close to 50/50. Although they might adopt the same approach as the ECB, to raise and then pause, which would be equally bearish for the GBP.

Forex Signals Update

Yesterday the price action was slow at first, but the markets were going against the USD, while we were long, expecting a hawkish hike which the FED delivered. But, several of our signals SL targets were triggered before the FOMC meeting, although we had several more hitting the TP targets when the markets reversed after the FED.

GOLD Fails at the 100 SMA Again

It seems like Gold continues the pattern of lower highs, after the failure at the 100 SMA (green) yesterday. XAU/USD continues to find support at the 200 SMA (purple) while facing resistance at the 100 SMA above on the daily chart. The failure to push above the 100 SMA and the reversal following the outcome of the FOMC meeting shows that sellers remain in control in the long term, although we already closed our signal during the $20 surge higher.

XAU/USD – Daily chart 
  • Gold Sell Signal
  • Entry Price: $1,936.34
  • Stop Loss: $1,966.34
  • Take Profit: $1,906.34

Is the Retreat in USD/CAD Over?

Commodity dollars have been under pressure for almost two months. USD/CAD was pushing higher for two months, with the price almost touching 1.37 but last week we saw a reversal as Oil kept surging higher. This week we had the inflation report from Canada which showed a bounce in August. Headline CPI inflation jumped 7 points higher to 4.0% last month from 3.3% in July, which might be a reason for the BOC to keep the rhetoric strong, although the odds for further rate hikes are low. USD/CAD has dived to 1.3380 after the report, although the trend might be reversing if buyers push the price above MAs.

USD/CAD – H4 chart

Cryptocurrency Update

 BITCOIN Testing MAs From Below Now

The price action of the last two weeks is indicating a shift in sentiment for Bitcoin, with the cryptocurrency experiencing a bullish reversal after a period of bearishness. The breach of the $25,000 support level and the subsequent rally above $27,000 are notable price movements that have attracted market attention. Although BTC is now facing the 50 and 200 SMAs on the daily chart as resistance indicators.

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 Retesting 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. However yesterday buyers had another go at this moving average and pushed the price above it for some time.

ETH/USD – Daily chart
  • ETH Buy Signal
  • Entry Price: $1,671.79
  • Stop Loss: $1,371
  • Take Profit: $1,971
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