Forex Signals Brief July 15: ECB and Retail Sales Week!

In the first half of last week, the attention was on FED chairman Jerome Powell initially, who didn’t really offer much. Markets were expecting some dovish remarks, but he sounded balanced and that left markets unmoved. On Wednesday morning, the RBNZ left interest rates unchanged at 5.50%, but they also tilted toward dovish, which sent the NZD 70 pips lower.

Then the attention shifted to the US CPI (consumer price index) figures, which showed another slowdown in June, after a similar report on the previous month. This confirmed that the higher CPI inflation during Q1 was just a bump and the downtrend has resumed again. That turned the USD bearish and sent EUR/USD above 1.09 by Friday, but the stronger June PPI (producer price index) figures on Friday might make it increasingly difficult for EUR/USD buyers to push toward 1.10 this week.

This Week’s Market Expectations

This week we have the ECB meeting, although they’re expected to keep rates on hold at 4.25% this time after cutting in June by 25 bps, so the attention will continue to remain on inflation, with several CPI reports from UK, Canada New Zealand etc. However, retail sales will take over, with many releases for the month such as the US retail sales which are expected to remain soft, Canada and the UK.

Upcoming Economic and Forex Events

Monday:

• New Zealand: Services PMI
• China: PBoC MLF, Industrial Production, Retail Sales
• Eurozone: Industrial Production
• Canada: BoC Business Outlook Survey
• United States: Fed Chair Powell’s speech

Tuesday:

• Eurozone: ZEW Economic Sentiment
• Canada: CPI
• United States: Retail Sales, NAHB Housing Market Index

Wednesday:

• New Zealand: Q2 CPI
• United Kingdom: CPI
• United States: Housing Starts, Building Permits, Industrial Production, Capacity Utilization, Fed’s Waller speech, Fed Beige Book

Thursday:

• Australia: Labour Market Report
• United Kingdom: Labour Market Report
• Eurozone: ECB Policy Decision
• United States: Jobless Claims

Friday:

• Japan: CPI
• United Kingdom: Retail Sales
• Canada: Retail Sales

Last week was quiet art first but volatility kicked in during the second half after the soft US inflation figures. The price action was mixed initially, with risk assets being quiet early but reversing higher in the second half and sending stock markets higher, as the USD turned bearish and risk sentiment improved. We opened 34 trading signals last week, ending it with 26 winning forex signals and 8losing ones.

Gold Buyers Testing the 50 Daily SMA

After the disappointing US economic report, gold prices climbed on Wednesday. XAU surpassed the 50-day moving average this month, which had previously acted as resistance and offered robust selling opportunities. In early June, the USD declined after weaker-than-anticipated employment data and significantly poorer ISM non-manufacturing figures. This caused gold to rise $25 above $2,350 in the first week of June, with that level becoming a support zone bolstered by the 50 SMA (yellow). Subsequently, the soft US CPI report propelled gold above $2,400 last week, where it closed out the week.

XAU/USD – Daily chart

The 50 SMAs Hold Again for USD/JPY

USD/JPY has climbed above the crucial 160.00 level, helped by minimal intervention from Japanese authorities, which has bolstered market confidence in reaching new highs. Last week, the pair dipped below 160.00 but quickly rebounded as buyers entered at 160.20, solidifying this level as a strong support zone. On the 4-hour chart, a minor trendline has emerged, with the 20 SMA (gray) indicating significant buying pressure. However, the 20 SMA was breached last week following weak US CPI inflation data for June, causing a sharp 400-pip drop that pushed the pair below 158, where it closed for the week. Despite this, the decline found support at the 50 daily SMA (yellow) once again, making this an attractive level to consider buying USD/JPY.

USD/JPY – Daily Chart

Cryptocurrency Update

Bitcoin Remains Below $60K

Bitcoin had previously found solid support near the $60,000 mark, but it has recently taken a sharp downturn. This week has seen a dramatic decline in cryptocurrency prices, with Bitcoin falling below $60,000 yesterday and continuing to drop today, nearing the next critical threshold from early May. There was a brief dip below $57,000, increasing the likelihood of a more significant break on the charts. The 200-day moving average (purple line), which had held steady at $57,000 before being breached in May, is now once again under threat. However, support at $58,000 held firm on the first attempt. A sustained drop below this level, the first significant breach since October of last year, would suggest a shift towards bearish momentum for Bitcoin. Nonetheless, buyers still have some hope, with the May 1 low around $56,500 offering potential support. The breach of the 200-day moving average is likely to embolden sellers, leading to a more aggressive downward move. As a result, this critical support may not hold for long.

BTC/USD – Daily chart

Ethereum Hold Above $3,000

Ethereum (ETH) has had tremendous volatility since the launch of its ETF, with a high of $3,832.50. This spike was spurred by improved market confidence following the SEC’s favorable decision on spot Ethereum ETFs. ETH is up 25% from its previous high, indicating strong investor interest and market demand. However, Ethereum has lately dropped below $3,500. Last week, the 20-week Simple Moving Average (SMA) (gray line) provided critical support, and this week we’re witnessing a comeback from it. This suggests that Ethereum may stabilize and resume its upward pace in the short term. However, in order to build a long-term rising trend, ETH buyers must overcome the 20 SMA (gray line).

ETH/USD – Daily chart