Forex Signals Brief October 14: ECB Rate Cut and US Retail Sales This Week

This week we have a number of CPI inflation report, but the US Retail Sales and the ECB rate cut will be the highlight.

Skerdian Meta•Monday, October 14, 2024•3 min read

Last week started with the USD continuing the bullish momentum form the previous week, with the FOMC meeting minutes supporting the upside momentum further on Wednesday evening. A number of FED members also supported the USD with less dovish comments, rejecting a 50 bps November rate cut scenario. However, the USD started to retreat toward the end of the week, despite the sticky CPI and PPI inflation figures.

Will the ECB surprise markets with a 50 bps rate cut on Thursday?

The reserve Bank of Australia held its meeting last week, where they delivered a 50 bps interest rate cut, which weighed on the Aussie. Gold retreated lower early in the week, falling to $2.605, but rebounded in the second half. Stock markets continued their march higher, with the S&P 500 and Dow Jones index printing new highs last week, despite mixed risk sentiment.

This Week’s Market Expectations

This week started with the CPI consumer and PPI producer inflation report from China, which showed yet another slowdown. During the week we have several CPI consumer inflation report from the UK, Canada, New Zealand etc, but the US retail sales and the ECB meeting will be the highlight and set the tone for the markets.

Upcoming Economic Events

Monday:
- US and Canada Holiday (US stock market open; bond market closed)
- Fed’s Waller speaks
Tuesday:
- UK Labour Market Report
- German ZEW Economic Sentiment Report
- Canada CPI Inflation
- New Zealand Q3 CPI Inflation
Wednesday:
- UK CPI Inflation Release
Thursday:
- Australia Labour Market Report
- European Central Bank (ECB) Policy Decision
- US Retail Sales
- US Jobless Claims
- US Industrial Production and Capacity Utilization
- US NAHB Housing Market Index
Friday:
- Japan CPI Inflation
- China Industrial Production and Retail Sales
- UK Retail Sales
- US Housing Starts and Building Permits

Last week we remained long on stock markets, as the sentiment remained positive for major indices which kept making new record highs, while playing both sides on the USD, which reversed course by the middle of the week. We opened 20 trading signals in total, ending the week with 15 closed trades, 12 of which were winning forex signals and only three losing trades.

Gold Respects the Top of the Triangle

After reaching record highs in late September, gold prices have been trending downward. However, yesterday’s rally might signal a potential shift. The price recently fell to $2,600 but found support at the 20-day Simple Moving Average (SMA), which helped halt the decline. With a $25 increase yesterday, gold reached over $2,630. Technical indicators like the stochastic oscillator suggest gold is moving into oversold territory, hinting at a possible reversal. The 20-day SMA has provided a reliable support indicator and we saw a bounce off this MA last week, but the jump stopped at the top of the triangle. Chart XAUUSD, D1, 2024.10.13 20:07 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

XAU/USD – Daily Chart

The 200 Weekly SMA Keeping GBP/USD Supported for Now at 1.30

The NZD/USD exchange rate has risen by over five cents over the last two months, driven by the USD’s decline and increased expectations for a significant rate-cutting path from the Federal Reserve. However, the Reserve Bank of New Zealand’s (RBNZ) recent rate cuts have heightened volatility and accelerated the NZD’s decline against the USD. Following a prior 25 basis point reduction, the RBNZ executed another 50 basis point cut this week as part of its strategy to ease inflationary pressures. This move has strengthened expectations for a more accommodative monetary policy stance from the RBNZ. Consequently, the NZD/USD fell by over two cents last week before finding support and closing above 0.61. Chart NZDUSD, W1, 2024.10.13 19:28 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

NZD/USD – Daily Chart

Cryptocurrency Update

Bitcoin Remains in a Tight Range

Bitcoin has seen a steady decline since April, falling from nearly $70,000 to below $50,000 by August, driven largely by concerns about the global economy. This downward trend has been reinforced by a series of lower highs and lows. Earlier today, Bitcoin briefly broke the $60,000 mark for the first time since a 50 basis point rate cut by the Federal Reserve on September 18, but it failed to maintain momentum and resumed its decline.

BTC/USD – Daily chart

Ethereum Remains Subdued by MAs

Ethereum has experienced similar selling pressure since March. By June, ETH/USD had recovered slightly at the 50-day SMA but remained around the $2,200 level. While the 100-week SMA has offered strong support above $2,500, the 50-week SMA now acts as resistance. This suggests that Ethereum might continue trading within a range, as broader economic concerns prevent it from breaking above the 50 SMA.

ETH/USD – Weekly chart

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ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

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.