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Forex Signals Brief October 26: In Anticipation of the ECB Meeting and US Q3 GDP

Yesterday’s Market Wrap

Yesterday The wider indexes in the United States closed considerably lower on the day, headed by the Nasdaq, which had its second-worst trading day of the year, falling -2.51% on February 21. Today, the US Treasury auctioned off $52 billion in five-year notes, with a significant tail of 1.9 basis points compared to the WI level. Over the past six auctions, the average tail was -0.4 basis points. The bid to cover data was also much lower than the 6-month average, at 2.36X against 2.91X.

In terms of currency, the USD has followed yields higher and is now the strongest of the major currencies. The AUD finished as the weakest of the major currencies, having erased its earlier gains amid stronger CPI data in the Asian session, as the sentiment turned quite sour later on during the day.

The Bank of Canada’s interest rate remains constant at 5.0%. Governor Macklem and Deputy Rogers of the Bank of Canada spoke about the economy and monetary policy. They admitted that inflation has been greater than predicted, with elevated inflation concerns, and that demand pressures have eased faster than expected.

Today’s Market Wrap

Today started with a speech from the Reserve Bank of Australia Governor Bullock, but after yesterday’s CPI inflation report most traders knew this wasn’t going to have much impact on the AUD. later in the European session, the ECB will hold its meeting. Given several dovish comments from ECB members, the Eurozone CPI miss, and the line in the September Monetary Policy Statement that “the GC judges that rates have reached levels that, if maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to target,” the ECB is expected to keep the deposit rate unchanged at 4.0%.

The GDP report and unemployment claims will be released a little later. Last week, initial claims in the United States exceeded expectations once more, but continuing claims fell short for the second week in a row, indicating that workers are finding it more difficult to find another job after being laid off.

Initial Claims are predicted to be 209K this week, up from 198K the previous week, while Continuing Claims are expected to be 1720K, up from 1734K the previous week. The US GDP is expected to show a 4.5% increase in Q3, up from 2.1% in Q2, while unemployment claims are expected to move above 200K this week.

Forex Signals Update

Yesterday markets calmed with nothing to get them going and the volatility remained low, although there was enough motion to pull several trading signals. We had three forex signals closed yesterday, to Gold trades and one NZD/USD signal, all of which closed in profit, so we returned to profit after two losing signals on Tuesday.

GOLD Returns Toward $2,000

Gold prices have benefited significantly from the turmoil in the Middle East, reaching their highest level since late July on Friday night, at $1,997. Short-term demand for gold is rising as global concern about the Middle East war grows. The XAU/USD pair dipped below $1,810 in late September as the USD gained major traction, but then reversed when geopolitics took hold. Gold is back over $2,000 after rising around $180 in the previous two weeks.

XAU/USD – 60 minute chart 
  • Gold Buy Signal
  • Entry Price: $1,977.08
  • Stop Loss: $1,963.08
  • Take Profit: $1,985.08

USD/CHF Tests the 50 SMA

Since reversing from lows around 0.8550s in July, the USD/CHF has been bullish, lasting until early this month, when the price reversed down at approximately 09250. Despite the fact that there has been a reversal in the previous week as Middle East concerns have kept safe havens such as US Treasuries in demand, rates have declined to some level. Buyers drove the price above 0.92, but uncertainty such as the Middle East conflict impacted mood negatively, and risk assets fell while safe havens rose, resulting in a pullback in this currency pair to the zone surrounding the significant level at 0.90 first, and then to 0.89.

Moving averages were functioning as support indicators on the H4 chart such as the 50 SMA (yellow) and the 100 SMA (green) above, keeping USD/CHF sustained during pullbacks. Moving averages, however, have been resistance since the bearish reversal a few weeks ago. In the last two days, we have seen some bullish momentum in this pair, which has sent it 70 pips higher after bouncing off the 100 SMA on the daily chart at around 0.89 earlier this week.

USD/CHF – 240 minute chart

Cryptocurrency Update

 BITCOIN Stands close to $35,000

Last week, the bitcoin market experienced two surges although the biggest one came this week. The first came when Coin Telegraph announced that the SEC had approved a spot ETF, causing Bitcoin to rise to $30,000. However, the price fell below $28,000 and remained there for a few days before resuming its upward trend later in the week. Bitcoin finished the week near $30,000 after continuing to rise. Following some good news, Bitcoin surpassed $35,000 yesterday as the SEC restored approval for the Bitcoin ETF in response to a recent court decision.

BTC/USD – Daily chart
  • BTC Buy Signal
  • Entry Price: $26,248.2
  • Stop Loss: $24,500
  • Take Profit: $28,000

ETHEREUM Finally Overcomes the 200 Daily SMA

ETH/USD rose yesterday as well, albeit the rise was less. Late last month, the price of Ethereum began to rise above its support level, indicating that there was some buying interest and demand for Ethereum at around $1,600. Buyers have entered the zone above this level on a regular basis, but the daily chart’s 100 SMA (green) has functioned as resistance. Following the recent advance, the price surged above the 200 daily SMA (purple), but the rice has since returned and is now finishing the day at this moving average.

ETH/USD – Daily chart
  • ETH Buy Signal
  • Entry Price: $1,671.79
  • Stop Loss: $1,371
  • Take Profit: $1,971
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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