Forex Signals Brief January 23: Attention on the BOJ and New Zealand CPI

The new week has started slowly yesterday, with a light bullish tilt on the USD despite Treasury yields being slightly bearish. Markets seemed to be in a calm phase ahead of the FED meeting next week, which will hint at the next interest rate cut which is to come in March. The economic calendar was very light, with the only release being the Conference Board Leading Index, which beat expectations of -0.3%, although remained negative again at -0.1%.

The range in most forex pairs was narrow, apart from NZD/USD and USD/CAD which moved more than 70 pips. The decline in the CAD wasn’t clear since crude Oil was bullish all day, gaining around $2. But, that didn’t help much the CAD or the NZD, after the People’s Bank of China left the LPR unchanged early in the morning. We saw a dip to $2,016 in Gold, but it returned back above $2,020 pretty quickly, so there wasn’t much going on in the markets overall as we await the central bank meetings this week.

Today’s Market Expectations

Today the main event is the Bank of Japan (BoJ) meeting, which is unlikely to provide anything interesting. They were expected to keep rates negative at -0.10%, with the 10-year JGB yield target set at 0% and 1% as a reference cap. The latest inflation report from Japanese CPI dropped significantly and Average Cash Earnings were a major disappointment. So, the BOJ will likely remain put and repeat that it is focused on wage growth and waiting for the spring wage negotiations.

The Eurozone Consumer Confidence comes next, which is expected to remain negative at -14 points. The New Zealand CPI report will be the other highlight and it will be released at the end of the day. Consumer inflation YoY is predicted to slow down to 4.7% from 5.6% in the previous reading, while the Q4 CPI is expected to fall to 0.5% from 1.8% in Q3. Today’s reading will not have much impact on the RBNZ rate decision in next month’s meeting, but it will undoubtedly influence market pricing with the first rate reduction which is expected for May.

BTC/USD – Daily Chart 

Looking to Buy Ethereum at the 50 SMA

ETHEREUM also reversed lower from above $2,700 after the BTC ETFs approval, however, the trend remains positive overall. The price moved below the 20 daily SMA (gray) yesterday but it remains above the 50 SMA (yellow) which remains the ultimate support indicator on deeper pullbacks such as this one. We are looking to open another long term buy ETH signal at the 50 SMA, although we’ll observe how the price action is down there.

Ethereum – Daily Chart

• ETH Buy Signal
• Entry Price: $2,290
• Stop Loss: $2,590
• Take Profit: $1,750