Forex Signals Brief September 9: Awaiting the ECB Rate Cut and US CPI!

Last week markets were waiting for the NFP report which didn’t disappoint on Friday, providing a lot of volatility for forex traders. The USD started the week on the upside, but kept retreating lower until Friday, as other US employment reports such as JOLTS Job Openings and the ADP came pretty soft, indicating that the US labour market is having difficulty.

However, the Non-Farm Payrolls report came in pretty balanced, showing that the Unemployment Rate ticked lower in August from 4.3% to 4.2%, while earnings increased. That gave a boost to the US Dollar, however, the Japanese yen still ended up higher, closing near August’s lows, which suggests that we will see further losses this week.

In other news, the Bank of Canada delivered another rate cut, making this the third 25 bps rate cut in a row, bringing the overnight rate to 4.2% from 4.50% previo9usly. That kept the CAD on the back foot for most of the week, with USD/CAD making a bullish break on Friday after the NFP data.

This Week’s Market Expectations

This week the main event will be the US CPI consumer inflation report for August on Wednesday and the European Central Bank meeting on Thursday, which will likely offer decent volatility to trade. However, there ware other events to follow as well, as shown below:

Upcoming Forex Events for the Week:

• Monday:
  • China CPI: Key inflation data from China, expected to impact global market sentiment.
• Tuesday:
  • UK Labour Market Report: Focus on employment and wage growth, likely to influence Bank of England policy.
  • US NFIB Business Optimism Index: A snapshot of sentiment among small business owners in the US, an important indicator for economic conditions.
• Wednesday:
  • UK GDP: Monthly growth figures, crucial for assessing the UK’s economic health.
  • US CPI: Core inflation data, a major market mover that could shape the Federal Reserve’s upcoming policy decisions.
• Thursday:
  • Japan PPI: Producer Price Index data, important for gauging inflationary pressures within Japan.
  • ECB Policy Decision: The European Central Bank’s interest rate decision, highly anticipated given current economic challenges in the Eurozone.
  • US PPI: Producer inflation numbers, another key piece in understanding broader inflation trends.
  • US Jobless Claims: Weekly unemployment claims data, providing insight into the US labor market’s strength.
• Friday:
  • New Zealand Manufacturing PMI: A gauge of New Zealand’s manufacturing sector, reflecting broader economic activity.
  • US University of Michigan Consumer Sentiment: A widely-watched indicator of consumer confidence and spending outlook.

Last week we ended up in profit despite starting on the wrong foot, with several losing signals as the trend changed in the USD after the previous week. We made of during the week, as the moves became more predictable. We opened 25 trading signals in total, ending the week with 16 winning forex signals and 9 losing trades.

Gold Retreats Below $2,500 Again After Failing at the ATH

A month ago, gold reached a new record high of $1,531.60, but buyers have not been able to surpass it despite several attempts. Last week, there was another push to break this level, but it failed again following the release of the US Non-Farm Payrolls (NFP) data. XAU/USD hit a daily high of $2,529.15 during the NFP volatility but quickly reversed, forming a “bearish engulfing” candlestick pattern, signaling potential further losses. Even though US Treasury yields dropped, gold prices also fell. The 20-day SMA continues to act as a strong support level, with gold closing $10 higher from Friday’s lows. While the long-term trend remains bullish, short-term weakness is evident.

XAU/USD – Daily chart

EUR/USD Making A Lower High?

The EUR/USD pair dropped 2 cents in the last week of August, but found solid support slightly above 1.10, aided by the 20-day SMA. Buyers stepped in to drive the pair higher, attempting to restart the bullish trend. However, the rally faded after a 1-cent gain, and the price dipped again post-NFP data, creating a lower high, which could signal the beginning of a bearish trend. Sellers will need to push the price below the 20-day moving average and the key 1.10 level to confirm this.

EUR/USD – Daily Chart

Cryptocurrency Update

Buying Bitcoin Near $50K Again 

BTC/USD – Daily chart

Ethereum Slipping Closer to $2,000

Since March, Ethereum has been in a downtrend, characterized by a series of lower highs that hint at further declines. After dropping sharply from $3,830 to below $3,000, Ethereum briefly recovered in June, surpassing the 50-day SMA. However, sustained selling pressure triggered another drop, pushing the price below the 200-day SMA. It has since recovered to around $2,600, but sellers remain in control, with the 20-day SMA acting as a key resistance on the daily chart. Further downside is possible if sellers maintain momentum.

ETH/USD – Daily chart