Yesterday’s Market WrapYesterday we saw an improvement in market sentiment, with risk currencies making some gains while the USD was retreating. This
Yesterday’s Market Wrap
Yesterday we saw an improvement in market sentiment, with risk currencies making some gains while the USD was retreating. This movement coincides with a recovery in the Chinese yuan, which gained strength after reports suggested that Beijing is urging state banks to take measures to support the currency. As a result, the USD/CNH pair slipped lower, leading to an initial turnaround in the Australian dollar (AUD) which had been trading lower due to a disappointing jobs report from Australia which showed a 2 points increase in the unemployment rate, while the participation rate also fell.
The US dollar was marginally lower for most of the day, until the US session started, when the USD started resuming the bullish trend. Other major currencies also made slight gains against the dollar. Notably, the USD/JPY pair declined from 146.30 earlier in the session to its current level of 145.60, despite the day’s higher yields.
The equities market so some slight gains in the European session, but then reversd and gave them back in the US session. As of now, the bond market appears to be the driving force behind the market movements, but it’s important not to overlook the potential influence of headlines related to China and the possibility of Japan intervening in the yen.
Today’s Market Expectations
Today the economic calendar is light, having started with the GfK Consumer Confidence from the UK remaining deeply negative, while the National Core CPI also slowing down. The UK Retail Sales are expected to have turned negative in July.
The final Eurozone inflation figures for July are expected to remain unchanged at 5.3% YoY for the headline number, while core CPI is expected at 5.5%, unchanged from the first reading. The EU economic forecasts are expected to be released throughout the day, while in the US session, there are almost no economic events scheduled. Although we’ll be following markets for movements coming from comments and cash flows before the weekend.
Yesterday the volatility was lower compared to previous days, with the price action going against the USD. We were long on the USD since the main trend has been bullish for a month, so we got caught on the wrong side with two signals, but made a comeback after having three winning signals, as the USD buyers returned. Eo we continue to remain long on the US Dollar, which has proved to be a good strategy for several weeks.
For more detailed updates, please refer to the section below.
MAs Continue to Keep GOLD Down
Gold’s weakness continues to persist, with sellers continuing to dominate the market, and yesterday’s price action showed that clearly, as the retrace higher on a weaker USD stopped at the 20 SMA (gray) on the H4 chart. Highs keep getting lower and moving averages are proving to be decent resistance indicators. The decline is even picking up pace, as smaller MAs such as the 20 SMA have taken over now.
XAU/USD – 240 minute chart
Buying GBP/USD Against the 200 SMA
GBP/UD has been under pressure since it reversed at around 1.3150 by the middle of July, falling to 1.26 lows, which means losing more than 500 pips. Although sellers found solid support at the 100 SMA on the daily chart and the price formed a doji candlestick above it, which is a bearish reversing signal. The price showed some bullish signs yesterday and today looks like it will close bullish, with the price trading t 1.2750. Yesterday this pair was up by around helped by the UK consumer inflation numbers which were released in the morning. We decided to open a buy GBP/USD signal against the 200 SMA which turned into support on the H1 chart.
Cryptocurrency Update
BITCOIN Reaks Below the 100 Daily SMA
BTC/USD – Daily chart
We opened another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD below $30,000:
- BTC Buy Signal
- Entry Price: $29,421.68
- Stop Loss: $27,400
- Take Profit: $32,400
ETHEREUM Breaks the 200 Daily SMA
Earlier this month, Ethereum showed a decent rebound, sending it above the $2,000 threshold as buying activity remained dominant. Despite the prevailing bearish trend that has persisted since the beginning of 2023, characterized by a series of progressively lower lows, Ethereum has exhibited a greater degree of resilience compared to Bitcoin.
In light of this observation, a number of long-term “buy” signals for Ethereum have been generated. Despite the prevailing downward pressure, Ethereum has demonstrated a noteworthy ability to withstand these challenges. In response to a recent pullback, a decision was made to initiate a “buy” signal for Ethereum on Monday. This strategic move is based on the expectation that various moving averages will serve as supportive levels, potentially arresting the retreat. Notably, the 100-period Simple Moving Average (SMA), depicted in green, appears to be fulfilling this supportive role.
ETH/USD – Daily chart
- Entry Price: $1,860
- Stop Loss: $1,740
- Take Profit: $2,020
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