Forex Signals Brief June 24: Core PCE to Highlight the Week

Last week we had three more central bank meetings, starting on Tuesday with the Reserve Bank of Australia which left interest rates unchanged at 4.35% and with with a hawkish bias, which kept the AUD supported. The Swiss National Bank delivered another rate cut of 25 bps, which was the second rate cut in two meetings.

US PCE inflation will be the most important release of the week

The Bank of England also kept interest rates unchanged at 5.25%, but they gave a few dovish signals, which weighed on the GBP. In New Zealand, the Q1 GDP report showed a return to growth after the recession we saw in the previous two quarters, which supported the Kiwi somewhat.

In the US, the retail sales for May missed expectations and came pretty weak, while April’s numbers were revised lower into negative territory. However, the Manufacturing and Services PMI on Friday showed a decent expansion level in the US for June, while in Europe and Asia the PMI reports came in pretty weak. That left the USD bullish at the end of the week.

This Week’s Market Expectations

This week the economic calendar is lighter and the events are less important, so markets will mostly follow the risk sentiment, however there are some important releases toward the end of the week, such as the Canada GDP report and the US PCE inflation report, which is the FED’s favourite inflation measure. Here’s a detailed explanation of what each event means and its potential impact:

  • Monday: BoJ Summary of Opinions, German IFO
    • BoJ Summary of Opinions: This document contains insights from the Bank of Japan’s latest policy meeting, providing a glimpse into the economic outlook and potential future monetary policy decisions. It can influence the JPY and investor sentiment.
    • German IFO Business Climate Index: A survey of German businesses that assesses the current business environment and expectations for the next six months. It’s a leading indicator of economic health in Germany and can impact the EUR.
  • Tuesday: Canada CPI, US Consumer Confidence
    • Canada CPI (Consumer Price Index): Measures the change in prices for a basket of goods and services, indicating inflation. Higher inflation can lead to higher interest rates, impacting the CAD.
    • US Consumer Confidence Index: Assesses the confidence of consumers in economic activity. Higher confidence suggests stronger consumer spending, which is crucial for economic growth and can influence the USD.
  • Wednesday: Australia Monthly CPI
    • Australia Monthly CPI: Provides information on inflation by measuring the price changes for consumer goods and services. It can impact the AUD, especially if the data influences the Reserve Bank of Australia’s monetary policy decisions.
  • Thursday: Japan Retail Sales, US Durable Goods Orders, US Final Q1 GDP, US Jobless Claims
    • Japan Retail Sales: Measures the change in total value of sales at the retail level, reflecting consumer spending and economic health in Japan, impacting the JPY.
    • US Durable Goods Orders: Indicates the health of manufacturing and overall economic activity by measuring new orders placed with manufacturers for durable goods. It can affect the USD.
    • US Final Q1 GDP: The final estimate of the economic growth rate for the first quarter. Strong GDP growth can boost the USD.
    • US Jobless Claims: Weekly data on the number of individuals filing for unemployment benefits for the first time. It’s a leading indicator of the labor market’s health, influencing the USD.
  • Friday: Tokyo CPI, UK Retail Sales
    • Tokyo CPI: Measures inflation in Tokyo, which is a leading indicator for national inflation in Japan. It can affect expectations about BoJ policy and the JPY.
    • UK Retail Sales: Measures the change in the total value of inflation-adjusted sales at the retail level in the UK, indicating consumer spending trends and impacting the GBP.

Last week the USD buyers returned and despite a small wobble after the soft US retail sales by the middle of the week. Stock markets finished the week in gains, but there were pullbacks as well. We opened 25 trading signals in total, ending it with 24 winning forex signals and 11 losing ones, which mostly cam from stock indices.

Gold Returns Above MAs

Gold started Friday on a positive note, building on a more than 1% increase from Thursday that pushed prices to a two-week high. This rise was driven by recent weak economic data from the United States, which boosted investor optimism about the Federal Reserve potentially lowering interest rates later this year. By early Friday, market speculators were factoring in a 66% chance of a rate cut in September. However, the price trajectory reversed, ending up around $50 lower than its peak. Despite an early attempt by gold buyers to surpass this month’s high, they were unsuccessful. Later in the day, gold sellers regained control, driving the price down by $50 to $2,316.

XAU/USD – Daily chart

EUR/USD Faces the 100 Daily SMA After the Decline

During April and May, EUR/USD exhibited a bullish trend after rebounding from the 100 simple moving average (SMA) in green. However, buyers struggled to break above the 50 SMA in yellow. After failing to surpass this level and staying below it for several weeks, sellers regained control. Currently, the pair is challenging the 100 SMA once again. Given the deteriorating fundamentals in the Eurozone, this pressure may lead to a significant break for EUR/USD.

NZD/USD – Daily Chart

Cryptocurrency Update

Bitcoin Slips Below $65,o00

Bitcoin fell below $65,000 this week, dropping over $5,000 from its peak of more than $70,000. This decline was triggered by substantial institutional withdrawals and heightened activity from major whale investors. During this descent, critical technical indicators like the 20-day Simple Moving Average (SMA) were breached, leading us to close our sell Bitcoin signal with a $6,000 profit. As moving averages have been breached and turned into resistance, we are now waiting to buy BTC at a lower level, closer to $60K.

BTC/USD – Daily chart

Ethereum Breaks the 50 Daily SMA

Since the launch of its ETF, Ethereum (ETH) has experienced volatility, reaching a high of $3,832.50. This surge was driven by growing market confidence after the SEC’s favorable stance on spot Ether ETFs. Ethereum’s price has risen by 25% from its previous highs, reflecting strong investor interest and market demand. Despite this upward trend, Ethereum recently dipped below $3,500.The 50-day Simple Moving Average (yellow) held as support a couple of times, but it gave up over the weekend.

ETH/USD – Daily chart

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Skerdian Meta
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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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