German CPI inflation holds while CPI falls in Spain

Forex Signals Brief September 25: Attention Shifts to Inflation This Week

Posted Monday, September 25, 2023 by
Skerdian Meta • 3 min read

German CPI inflation holds while CPI falls in Spain

Last Week’s Market Wrap

The Euro and British Pound were under pressure this week as a result of dovish ECB and BOE language and the weak numbers such as softer UK CPI inflation or the September PMI data on Friday. The Eurozone and German manufacturing and services PMI readings confirmed that Europe’s largest economy contracted during the quarter, but the latter was stronger than predicted on a monthly basis. The euro fell and rose as a result, with EUR/USD falling to 1.06 lows.

The GBP took little solace from the Bank of England’s decision to leave interest rates on hold and from Friday’s weak PMI numbers which also confirmed a recession in both sectors. GBP/USD was already marginally lower last week, and it fell further this week to 1.2235.

The dollar maintained its stable position and extended gains against most major currencies after a hawkish hold by the FED on Wednesday, confirming the “higher-for’longer” scenario. However, it is more mixed on the week, since it lost versus commodity currencies.

The JPY was also in the spotlight as BOJ governor Ueda reversed his words on a “quiet exit” from two weekends ago, putting extra pressure on the currency on Friday. The USD/JPY pair is up 0.5% to 148.40s, as rising rates continue to put pressure on the Yen.

The bond market experienced further upside pressure with US 10s reaching a peak at 4.50 but came to a little halt on Friday as a result of the PMI data, although nothing too major. Stock markets retreated during most of the week, indicating mixed sentiment in financial markets.

This Week’s Market Expectations

This week the attention shifts from central banks with three major ones holding meetings last week but producing no rate hikes, to inflation once again, with CPI reports to be released from several countries. However, the first two days of the economic calendar are light, with the German Ifo Business Climate and CB Consumer Confidence from the US, both of which are expected to slow.

On Wednesday we have the CPI (consumer price index) report from Australia which is expected to show an increase to 5.2% YoY in August from 5.95 annualized previously. On Thursday we have the Spanish and German consumer inflation numbers ahead of Friday’s Eurozone CPI which is expected to show a slowdown for both the headline and core figures. The Final GDP for Q2 from the US is expected to show some improvement from 2.1% to 2.3% which would lend further support to the USD.

Forex Signals Update

This week started quiet but then markets turned volatile again. The USD initially retreated lower but then resumed the bullish momentum from the previous week after the hawkish hold by the FED. We remained long on the USD most of the time and opened 25 forex signals, with 11 losing ones earlier in the week as the USD declined, but then made up in the second half of the week with many winning trading signals.

The 200 SMA Keeps Holding for GOLD

Gold has been finding firm support around the 200 SMA on the daily chart, which has been consistently rejecting the price, and we have previously witnessed two bounces off this moving average. Despite the fact that gold continues its pattern of lower highs, it failed at the 100 SMA (green) again on Wednesday following the FOMC meeting. On Thursday Gold returned to the 200 SMA, but we saw yet another bounce on Friday.

XAU/USD – Daily chart

Gold Sell Signal
Entry Price: $1,928.68
Stop Loss: $1,942.68
Take Profit: $1,920.68

Remaining Short on GBP/USD

Many were expecting a rate hike of 25 basis points from the Bank of England (BOE) in yesterday’s meeting, although the odds were declining as the economic data from the UK kept getting worse, with yesterday’s consumer inflation numbers showing another slowdown in August, against an increase expected. But, the BOE kept rates as they were at 5.25%. That was a bit of a surprise and the GBP slipped lower on the initial reaction, with GBP/USD dropping from around 1.2295 to 1.2240 lows.

GBP/USD – H4 chart

GBP/USD Sell Signal
Entry Price: 1.2279
Stop Loss: 1.2319
Take Profit: 1.2249

Cryptocurrency Update

BITCOIN Rejected by the 200 Daily SMA

The cryptocurrency market has been shifting in mood during the last two weeks, with Bitocin going through a bullish rebound off $25,000 early last week following a period of decline previously. We saw a strong recovery above $27,000 but buyers failed to break above the 200 SMA and after a doji on Wednesday which is ai bearish reversing signal we saw a bearish candlestick yesterday.

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 Returning Below $1,600

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 this week buyers had another go at this moving average and pushed the price above it for some time, but it has retreated back below $1,600 now.