Yesterday’s Market Wrap
The USD has been bearish for quite some time and last week the decline resumed again, with the buck taking another strong dive against everything, as consumer and producer inflation (CPI and PPI) reports for June showed another decent slowdown. As a result the odds for a further hike by the FED after this mon’s rate hike diminished, sending risk assets higher and the USD lower.
The softer retail sales and housing starts figures this week weighed further on the USD, although buyers were giving signs of a comeback in recent sessions, until we saw a decent bullish move yesterday. Traders got the thinking that lower unemployment claims from the US point to a labour market tightening, which means that higher wages and higher demand will follow in the coming months. That sent the USD higher while risk sentiment turned negative, sending US stock markets lower.
Besides that, the market mood was negatively affected by escalating tensions between China and the United States over restrictions on China’s chip sector. Early in the morning the Australian employment report also showed an improvement, so traders are feeling positive at the moment regarding employment.
Today’s Market Expectations
Today started with the UK GfK Consumer Confidence which remains deep in negative territory, which shows that the consumer is not feeling good with inflation remaining the highest in the UK. Although we saw a decent slowdown in the UK CPI for June, so let’s see if that will translate into better consumer sentiment. The National Core CPI YoY from Japan remained little changed, so no policy change from the Bank of Japan, which should be bearish for the JPY.
The UK retail sales MoM were expected to show a slight slowdown to 0.2%, while we have the EU Economic Forecasts for the Eurozone to be released at any time, since they weren’t released yesterday. The heavy data comes later from Canada, with retail sales expected to show a slowdown in May, although they’re coming from a very strong month in April.
Yesterday was sort of difficult to trade as markets made quite a few reversals, as the sentiment kept shifting around. Initially, risk assets and commodity dollars rallied higher and the USD declined after the positive jobs data from Australia, then the US came back and risk assets retreated lower after the positive jobs report from the US. We opened more than 10 signals, with mixed results.
For more detailed updates, please refer to the section below.
Buying the Retreat in GOLD?
After some decent gains earlier in the week, Gold prices (XAU/USD) reversed lower yesterday, declining by approximately 0.6% to $1,965. The surge in U.S. bond yields and the strength of the U.S. dollar were driven by better-than-expected economic data in the United States which sent Gold lower.
Unemployment claims fell to 228,000 from the previous 237,000, beating the expected figure of 242,000. This marked the lowest level of unemployment claims since mid-May, indicating that mass layoffs are not currently a prevalent issue. XAU retreated to the 20 SMA (gray) on the h4 chart, which held as support. We opened several Gold signals yesterday, most of which closed in profit. But the 20 SMA seems to be holding so we are reversing to long from here.
XAU/USD – 240 minute chart
Considering the current market conditions, we are providing a trading signal as follows:
- Gold Buy Signal
- Entry Price: Above $1,965
- Stop Loss: $1,958
- Take Profit: $1,975
EUR/USD Falling Below MAs
EUR/USD saw an early climb above the 1.1200 level following positive employment numbers from Australia, causing the USD to weaken. However, buyers were unable to sustain the gains above that level, and the pair reached a peak just below 1.1230 before retracing. It is currently trading around 1.1150.
On the H4 chart, there is a significant likelihood of a bearish extension for the EUR/USD pair. After attempting to move above its 20 Simple Moving Average (gray) earlier in the day, which is currently acting as dynamic resistance around the 1.1220 level, the pair faced a decline. Technical traders often observe moving averages like the 20 SMA to identify potential support and resistance levels. In this case, the 20 SMA acted as resistance, leading to the retracement and potential bearish outlook for the pair.
Cryptocurrency Update
BITCOIN Sticking to the Bottom of the Range
BTC/USD – 240 minute chart
We decided to open another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD just above $30,000:
- Entry Price: $30,293.2
- Stop Loss: $29.490
- Take Profit: $31,493.21
The 200 SMA Holding for ETHEREUM
Ethereum has been trading on a bullish trend since the beginning of 2023, with higher lows and higher highs in the larger charts. Moving averages, particularly the 200 Simple Moving Average (purple) on the H4 chart, have been acting as support levels for this cryptocurrency.
In the last long-term signal, which was opened right at the 200 SMA, the price of Ethereum bounced above $2,000, resulting in a profitable trade. Now, as the cryptocurrency market experiences a retreat, the price of Ethereum is returning to the 50 SMA once again. Based on this information, you are considering opening another buy signal at the 200 SMA, anticipating a potential bounce from this support level.
Considering these developments, the current situation prompts whether it is an opportune time to consider buying Ethereum.
ETH/USD – Daily chart
- Entry Price: $1,860
- Stop Loss: $1,740
- Take Profit: $2,020
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