Markets are growing convinced inflation is getting under control

Forex Signals Brief September 29: US and Eurozone Inflation Coming Up

Posted Friday, September 29, 2023 by
Skerdian Meta • 3 min read

Markets are growing convinced inflation is getting under control

Yesterday’s Market Wrap

Yesterday markets remained slow as the economic data was pretty light during the first two trading sessions, although even after the release of the US durable goods orders which posted a positive surprise for August, markets failed to gain momentum. However, the demand for the USD remained stable and the dollar progressed higher across the board, with the Euro and the GBP being the weakest among major currencies.

Crude Oil continued the surge after Tuesday’s reversal and it rose $3.34, or 3.7%, to $93.80. The high price of $94.17 would put it beyond the 50% midpoint of the move down from the high of June 2022 at $93.78, before spinning downward into the close. Spot Gold tumbled around $25.24 lower to $1875.19. That is the lowest level since March 2023.

Durable Goods Orders in the United States turned positive this time, increasing by 0.2%, or $0.5 billion, to $284.7 billion in August, according to the US Census Bureau on Wednesday. This data follows a 5.6% drop (updated from 5.2%) in July and was better than the market’s projection of a 0.5% drop, while non-defense capital orders posted a decent 0.9% jump last month. That helped the USD further, together with FED’s Kashkari’s comments, saying that the data will tell the Fed if more hikes are needed and he expects FED to hold rates steady next year.

Today’s Market Expectations

Today is an inflation day, having started with the Tokyo core CPI (consumer price index) which was expected to slow by two points from 2.8% previously to 2.6% this month. The German Retail Sales posted a positive number after declining previously, while the Final Q2 GDP from the UK is expected to remain unchanged at 0.2%.

The Eurozone consumer inflation report will be released in a while and CPI YoY is predicted to slow by 7 points to 4.5% this month, down from 5.2% in August, while the Core CPI YoY is predicted to slow by 5 points to 4.8%, down from 5.3% last month. Unless we witness outlier results, this report is unlikely to sway the ECB, which is obviously leaning toward keeping rates at current levels after having delivered the last hike, according to markets.

The US PCE YoY will be released later on and is one indicator that the FED looks at closely. It is predicted to climb to 3.5% from 3.3% previously, while the MoM figure is expected to be 0.5% from 0.2% before. Although the core PCE YoY is forecast to be 3.9% vs. 4.2% previously, while the MoM number is predicted to be 0.2% vs. 0.2% before.

Forex Signals Update

Yesterday we saw a retreat in the USD after being bullish for more than two months. The revised GDP report showed mixed numbers, which gave the market a shake-off but at the end of the day, the USD ended up lower. We continue to remain long on the USD as long as the sentiment changes, although yesterday we got caught on the wrong side with two trading signals during the retreat.

GOLD Continues to Crash Despite the USD Retreat

Gold has made a bearish breakout as the image below shows. On the daily chart, XAU/USD was finding support around the 200 SMA (purple), which rejected the price twice in about a month, and we have already seen two bounces off of it, but the price kept returning to it, so the 200 SMA has been broken now. Yesterday the decline continued and the price fell below $1,960.

XAU/USD – Daily chart

Gold Sell Signal
Entry Price: $1,900
Stop Loss: $1,915
Take Profit: $1,980

Buying USD/JPY at the 20 SMA

Buyers continue to remain in charge in USD/JPY, as they push the price toward the 150 level which is a big round number and a psychological level. Moving averages have been acting as support on the H4 chart, pushing the price higher and yesterday we saw another pullback to the 20 SMA (gray) which held. We decided to open a buy signal above this moving average.

USD/JPY – 240 minute chart

EUR/GBP Buy Signal
Entry Price: 0.866
Stop Loss: 0.862
Take Profit: 0.869

Cryptocurrency Update

BITCOIN Pushes Above the 50 Daily SMA

Yesterday we saw another bounce in digital currencies as the crypto market has been flipping in mood over the last few weeks, with Bitocin seeing a positive comeback after falling to $25,000 earlier this month. We witnessed a significant recovery above $27,000, but buyers failed to break above the 200 SMA, and we saw a bearish candlestick yesterday after a doji last, which is a bearish reversal indicator. The price was slipping lower for a week but yesterday we saw a $900 bounce which sent the price above $27,000 and above the 50 SMA (yellow) on the daily chart.

BTC/USD – Daily chart

BTC Buy Signal
Entry Price: $26,248.2
Stop Loss: $24,500
Take Profit: $28,000

ETHEREUM Facing the 50 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 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.