Forex Signals Brief October 9: RBNZ Rate Cut and FOMC Minutes

Yesterday the economic data was light again, so markets traded the sentiment mostly, which turned positive on news of a possible truce between Israel, Lebanon and Iran. Stock markets rebounded after the decline on Monday, with the S&P 500 closing the day near record highs once again, while commodity dollars continued to retrace higher.Monetary easing by central banks picking up pace

IN such market conditions, safe havens loose their appeal and that’s what happened to Gold yesterday, which broke out of the consolidative triangle and lost around $50 during the European session. But, claimed back some of the losses toward the end of the US session. Crude Oil also tumbled lower as the risk premium from the Middle Eastern tensions gets reduced, with WTI falling around $5.

Today’s Market Expectations

Today’s main event was the RBNZ meeting which delivered another interest rate cut, at 50 bps which is larger than the previous one, as the New Zealand economy has slowed. The RBNZ’s decision to cut the cash rate by 50 basis points reflects a cautious response to New Zealand’s economic environment, which is marked by weak domestic activity, subdued growth prospects, and easing inflation pressures. With the economy showing signs of excess capacity and both business investment and consumer spending weakening, the RBNZ aims to sustain low and stable inflation by easing monetary policy. The bank is committed to maintaining a restrictive stance while remaining flexible to further adjustments based on economic developments. This approach provides scope to support growth and maintain stability as global uncertainties and local economic challenges persist.

Later in the evening, we have the FOMC minutes from the meeting where they cut interest rates by 50 bps. The FED recently lowered the federal funds rate by 50 basis points to a target range of 4.75–5.00%. This move aligned more closely with market expectations than with analysts’ consensus, which anticipated a 25 basis point cut. The sole dissenting vote came from Governor Bowman, who favored a more conservative reduction of 25 basis points.

The committee’s projections also adjusted the 2024 rate forecast, lowering it to 4.4% from a previous 5.1%. This signals an expected additional softening of around 50 basis points from current levels. According to the FOMC’s projections, nineteen policymakers anticipate the policy rate will stay above the median forecast for 2024, nine align with the median, and one sees it below. While the statement included some minor adjustments, the minutes from this meeting aren’t expected to significantly impact the USD today.

Yesterday volatility was low again as most markets were quiet apart from Oil and Gold which endured some massive losses. The USD continued retreating slightly in the Euro session, but resumed the upside momentum in the US session. There weren’t any major moves, so we had five closed trading signals but all of them were winning forex signals.

Gold Remains Supported by the 100 SMA

Gold has been consolidating within a triangle pattern since late September, with rising lows and falling highs. However, today’s drop broke below the triangle’s lower boundary established on September 20, pushing gold prices towards $2,600. This appears to reflect a broader bullish trend in the USD, as it strengthens against both safe-haven and risk assets. Strong U.S. employment data has also dampened expectations for aggressive rate cuts by the Federal Reserve. Additionally, calls for a ceasefire in the Middle East are now weighing on gold and silver prices.Chart XAUUSD, H4, 2024.10.08 19:52 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

XAU/USD – 4 chart

EUR/USD Sticks to the 100 Weekly SMA

Earlier this week, EUR/USD seemed to be bouncing back, approaching the 1.10 level, but buyers failed to sustain the rally above this key resistance. After a sharp decline last week, which saw the pair fall below 1.10 and lose more than two cents, EUR/USD now faces a significant resistance area. On the weekly chart, the price is rebounding off the 100 SMA at 1.0970. If this level is breached, it could indicate a reversal from the bullish trend, with a possible downside target of 1.08.Chart EURUSD, W1, 2024.10.08 19:49 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

EUR/USD – Weekly Chart

Cryptocurrency Update

Bitcoin Bounces Off $60,000 

Bitcoin’s price has been on a steady decline since April, when it hovered around $70,000. By August, it had dipped below $50,000, largely due to a global sell-off spurred by concerns about the U.S. economy. This confirmed a bearish trend, marked by lower highs and lows, with the 200-day SMA reinforcing the downtrend. Efforts by buyers to stabilize the price near $65,000 have so far been unsuccessful, leaving Bitcoin unable to overcome this resistance level. Recently, Bitcoin briefly dipped to $60,000 before recovering over the weekend.

BTC/USD – Daily chart

Ethereum Remains Subdued by MAs

Ethereum has similarly been under pressure since March. By June, its value had dropped from $3,830 to below $3,000, and selling pressure pushed ETH/USD near $2,200 before a slight recovery above the 50-day SMA. Currently, Ethereum faces resistance at the 50-week SMA, while the 100-week SMA provides solid support around $2,500.

ETH/USD – Weekly 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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