Forex Signals Brief for July 25: Markets to Shift to the FED 75 bps Rate Hike This Week

Last week the attention of the markets was on the ECB which delivered a 50 bps rate hike, this week it's FED's turn to raise rates again

Skerdian Meta•Monday, July 25, 2022•3 min read

Last Week’s Market Wrap

Last week the attention was on the European Central Bank (ECB), as they had planned to raise interest rates, with the market consensus being at 0.25%. the ECB delivered a 50 bps rate hike instead, surprising markets. They raised the deposit facility rate to 0.00% vs -0.25% expected, from -0.50% previously, the main refinancing rate to 0.50% vs 0.25% expected, from 0.00% previously and the marginal lending facility to 0.75% from 0.25% prior.

ECB president Christine Lagarde said that they would front-load rate hikes, which makes for a bullish scenario for the Euro. Although the Euro stopped climbing in the last few days and many analysts are pointing below parity for EUR/USD in the coming weeks.

At the beginning of the week, we had the CPI (consumer price index) inflation reports from New Zealand, UK and Canada, which reached 40-year highs, thus indicating that inflation hasn’t plateaued yet. On Friday we saw manufacturing and services reports for June, which showed that these sectors are falling into contraction in the US and the Eurozone, supporting the global recession scenario.

The Data Agenda This Week

This week, the attention will be mostly on the FED, which is expected to deliver another 75 bps rate hike, after doing so in June. At some point, there were doubts about a possible 1.00% rate hike this time, but the odds of that diminished after retail sales for June weren’t strong enough, while the fall in contraction in the service sector put the last nail in the coffin last Friday. Besides that, we have the US Q2 GDP report to be released on Thursday, as well as the Eurozone CPI GDP and inflation reports on Friday, so it will be a week full of trading opportunities.

Forex Signals Update

After two weeks of incredible results with our trading signals during the first two weeks of this month, as the USD marched higher, while risk assets retreated lower. This week we saw a reversal, as the US retreated after odds of a 100 bps rate hike from the FED declined. The ECB 50 bps rate decision offered further volatility, so we had a mixed week afterall

WTI Oil Sell Signals

Crude Oil has formed a support area around 94.50 which has been holding since last week, but the highs keep getting lower, while moving averages have turned into resistance. So, the pressure remains bearish and we decided to open two sell Oil signals last Friday, both of which closed in profit.

Crude Oil – 240 minute chart

GOLD – Buy/Sell Signals

Gold has been bearish for several months, making lower highs and lower lows, while we have kept selling. In the previous several weeks we have had great results with our God signals, but last week we had a mixed performance here as the price jumped higher on Thursday.

XAU/USD – 240 minute chart

Cryptocurrency Update

Cryptocurrencies are trying to make a bullish breakout after trading in a range for several weeks. They pushed above the resistance by the middle of last week, with Ethereum leading the way, but didn’t continue higher in the last couple of days. But they are showing bullish momentum again this week, so perhaps this will turn into a proper uptrend.

BITCOIN Starting to Look Bullish

Bitcoin has been making higher lows in the last several weeks and it is now making higher highs as buyers push the price above the resistance zone and the moving averages on the H4 chart. We opened two sell BTC signals last week, trying short this cryptocurrency at the top of the range, but both signals closed in loss as buyers remained in control.

BTC/USD – 240 minute chart

Can ETHEREUM Push Above the Major Resistance at $1,700

Ethereum has been showing some bullish signs after consolidating in a range for a month. Smaller moving averages such as the 20 SMA (gray) and the 50 SMA (yellow) have been acting as resistance at the top, but yesterday the price pushed above the 50 SMA which could be the beginning of a larger bullish reversal, although we have to see how fundamentals/politics evolve in the crypto market.

ETH/USD – Daily 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.