Forex Signals Brief March 14: Slow Markets Ahead of US Data

Yesterday, BOJ Governor Ueda provided no hints of an upcoming policy move next week, causing the yen to weaken further against the dollar, with USD/JPY rising to 148.06. UK January GDP data was released, but it held no surprises, resulting in minimal movement for the GBP throughout the day.

Aside from movements in the yen, major currencies saw little activity. The dollar stabilized as traders settled down following the previous day’s volatile reaction to the CPI data release. In the US, there were no significant economic releases, with the Fed currently observing a blackout period ahead of its upcoming rate decision next Wednesday.

Oil inventory data was released, revealing an unexpected drawdown of -1.536 million barrels against an anticipated increase of 1.338 million barrels. This news helped keep oil prices stable close to $80, with WTI crude oil reaching a peak of $79.90, just shy of the $80.00 mark and closing the day there.

Today the economic calendar is light during the Asian and the US sessions once again, but in the US session we have the US Producer Price Index (PPI) is anticipated to show a year-on-year (Y/Y) increase of 1.2%, up from 0.9% in the previous year, with the month-on-month (M/M) measure expected to remain unchanged at 0.3%. However, the Core PPI, which excludes volatile food and energy prices, is projected to maintain a Y/Y rate of 2.0%, while the M/M number is expected to decrease from 0.5% to 0.2%. Given the softer data from the employment market and ISM PMIs, there may be anticipation in the market for a potential beat in the PPI report.

On the other hand, the US Retail Sales report is forecasted to show a positive improvement, with the M/M measure expected to be 0.7%, up from -0.8% in the previous quarter. Excluding auto sales, the M/M measure is anticipated to be 0.4%, contrasting with the -0.6% figure from the previous quarter. The most recent report revealed downside surprises across various sectors, attributed in part to adverse weather conditions. Another disappointing report would likely reinforce dovish expectations regarding monetary policy.

The US Jobless Claims report holds significant importance as it offers a timely glimpse into the labor market’s health. Initial Claims, which reflect the number of individuals filing for unemployment benefits for the first time, have been fluctuating around cycle lows. Continuing Claims, which represent the number of individuals continuing to receive unemployment benefits, have remained elevated near cycle highs. For the upcoming week, the consensus forecast for Initial Claims is 218K, a slight increase from the previous week’s figure of 217K. As for Continuing Claims, there is currently no consensus available, although the prior week saw a rise to 1906K from 1889K.

Yesterday the volatility was slower, with the economic data being quite light apart from the UK GDP numbers which came as expected. Gold and Silver saw the demand return again and we booked profit on our long-term Gold signal. We closed the day with two signals, both reaching the take profit target.

Gold (XAU) experienced a remarkable surge last week, witnessing a $150 increase and reaching record high levels. However, today, we are observing a retreat in gold prices, which was anticipated following the rapid ascent. The recent improvement in February’s Consumer Price Index (CPI) inflation readings in the United States is also exerting downward pressure on gold prices, as the US dollar strengthens. Yesterday, gold encountered selling pressure as its price fell below the narrow range observed over the previous three days, which was between $2,170 and $2,195. Consequently, the price of gold dropped to $2,150s but yesterday buyers returned and sent the price to $2,180.

Precious metals are performing exceptionally well today, with gold up by more than $20 and silver approaching the $25 mark. Despite the brief retreat observed yesterday, the buying pressure today is notably stronger. This suggests that the market continues to heavily favor safe-haven assets, particularly gold (XAU) and silver (XAG). Buyers are eagerly entering the market with each lower retracement, viewing it as an opportunity to participate in the bullish trend and they must be satisfied now that the price is above $25.

XAU/USD – 240 minute chart

BTC (Bitcoin) experienced a volatile day yesterday, following its recent attainment of a new all-time high. The cryptocurrency found support near the 50-period Simple Moving Average (SMA), suggesting a potential reversal in the short term. The decision to initiate a buy signal at this support level seems to have been well-timed, as evidenced by the subsequent price recovery. However, the inability to surpass the $70,000 threshold indicates significant market resistance. Consequently, BTC briefly dipped below $68,500, but found support at the 50 SMA (yellow) and later rebounded above $70,000.

BTC/USD – 240 minute chart

ETH (Ethereum) displayed continued upward momentum last week, despite experiencing a bearish reversal after surpassing the $4,000 level. Despite this reversal, ETH found support above the 50-period Simple Moving Average (SMA) on the H4 chart, which is considered a significant technical indicator. This support level likely attracted buyers, leading to a price rebound. Subsequently, ETH reached a new yearly high of $3,900, indicating sustained optimism in the market sentiment. Traders are expected to closely monitor ETH’s price movement to assess whether it can maintain its upward trajectory and potentially breach the $4,000 mark in the near future. Some traders speculate that if ETH successfully surpasses $4,000, it may set its sights on reaching $5,000.

ETH/USD – 240 minute chart