FXNEWS24 |Forex Signals Brief August 27: Markets Consolidate in Tight Range

The economic calendar is light until later this week, which has left most financial assets trading in a tight range as they consolidate. The market r

The economic calendar is light until later this week, which has left most financial assets trading in a tight range as they consolidate. The market reversed some of Friday’s Powell gains in a controlled pullback that appeared more like normal price action than a response to any new fundamental changes. Fed’s Mary Daly echoed Powell’s sentiments, stressing that the FOMC aims to avoid further weakening in the labor market, hinting at a possible Fed put. However, she did not suggest any immediate easing measures, leaving the possibility of a 50 basis point rate cut open.

We had the US Durable Goods Orders report, but while the headline number, the underlying details were less encouraging, creating a balanced outlook. In other market movements, oil was the major driver, with prices rising due to the shutdown in Libya. This oil price surge supported the Canadian dollar, pushing it to the top of the currency performance list for the day. Equity markets showed gains in pre-market trading but ended the day mixed, largely due to growing concerns about Nvidia’s upcoming earnings release, which weighed on investor sentiment, especially in the tech sector.

Today’s Market Expectations

Consumer confidence in the United States is expected to reach 100.1, a slight decrease from the previous reading of 100.3. Recent data indicated that the present situation index, which often serves as a leading indicator of the jobless rate, fell to a three-year low. According to the Conference Board, confidence increased in July, but not significantly enough to break out of the narrow range that has persisted over the past two years. While consumers were less pessimistic about the future compared to the previous month, this optimism remains cautious. Expectations for future income rose marginally, suggesting a slight improvement in outlook, but consumers continue to hold generally pessimistic views about business and employment prospects. Additionally, consumers showed slightly less optimism about current labor and business conditions. The perception of the current labor market has dropped to its lowest level since March 2021, potentially due to the slowdown in monthly job gains. This mixed sentiment reflects ongoing uncertainty about the economic outlook and the labor market’s stability.

There are currently no forecasts for July Chinese Industrial Profits, but the data will be closely watched for signs of the health of China’s industrial sector. In June, profits for Chinese industrial enterprises increased by 3.6% year-on-year, up from a 0.7% rise in May. Although this marks a recovery from last year’s weaker performance, profits remain below 2022 levels and are far from the record highs seen in 2021, as noted by Bloomberg. The National Bureau of Statistics (NBS) previously pointed out that the recovery was being slowed by weak domestic demand and challenging international conditions. Analysts at ING have observed that while the data has recently returned to low single-digit growth, it could face headwinds again, especially given recent indications of a manufacturing slowdown. This could put further pressure on industrial profits and suggest ongoing challenges for China’s industrial sector.

Yesterday he price action was slow, but there were a few reversal in financial markets, particularly in Gold, which caught us on the wrong sides in several trades. Nonetheless, we closed the day at breakeven, with 4 winning forex signals and 4 losing ones, as markets consolidate in a range ahead of economic important economic data later in the week.

Gold Looking at New Record Highs Again

Gold hit a new high of $2,531 early in the week but then experienced a sharp decline, dropping to $2,470 after a $60 dip on Thursday. This decrease followed positive US economic data, including a rebound in home sales that reversed the previous month’s downward trend, and a Services PMI that surged above 55 points, signaling robust growth in the services sector. Despite these favorable indicators, Fed Chairman Jerome Powell took a dovish stance, downplaying the strong data, which sent gold back above $2,500. Buyers maintained control on Wednesday, pushing gold (XAU) up to $2,526. Chart XAUUSD, D1, 2024.08.26 19:53 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

XAU/USD – Daily chart

MAs Keeping EUR/USD Bullish

This month, the EUR/USD pair has shown strong buying momentum, rising above 1.10 and breaking out of its year-long trading range. However, buyers still face a key resistance level at 1.1275. Since April of last year, the pair has consistently faced resistance at the 100-week SMA (red). Two weeks ago, despite significant USD weakness, buyers managed to push EUR/USD above this moving average, indicating a strong bullish trend. Although there was a retreat below 1.12 yesterday, the bullish trend remains intact, with the 20 SMA (gray) acting as support for this pair. Chart EURUSD, H4, 2024.08.26 19:55 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

EUR/USD – Daily Chart

Cryptocurrency Update

Bitcoin Buyers Face MAs Above

Bitcoin has rebounded from its early August slump, with buyers gradually pushing the price above $62,000 and more recently around $65,000. However, BTC buyers are currently encountering resistance from two significant moving averages: the 100-day and 200-day SMAs. These moving averages are the final hurdles before Bitcoin can potentially reach the $70,000 mark.

BTC/USD – Daily chart

Ethereum Remains Subdued by the 20 Daily SMA

Ethereum has been in a downtrend since March, characterized by lower highs that suggest further declines may occur in August. In June, Ethereum briefly rose above the 50-day SMA after dropping from $3,830 to below $3,000, but continued selling pressure led to another negative reversal. The price fell through the 200-day SMA before climbing back above $2,600. Currently, buyers are testing the 20-day SMA (gray), which may lead to a battle between bulls and bears as they vie for control over the market direction.

ETH/USD – Daily chart

Forex Signals Brief August 27: Markets Consolidate in Tight Range