Forex Signals Brief October 2: ADP Employment to Jump Above 120K

On Tuesday, market movements were primarily influenced by escalating tensions in the Middle East, particularly the conflict between Iran and Israel. This situation prompted an increase in demand for safe-haven assets, driving up the value of the US dollar (USD) and crude oil prices, which in turn supported the Canadian dollar (CAD).

During the European session, the Eurozone Flash CPI report was released, aligning with market expectations. Additionally, the market has already factored in two anticipated 25-basis-point interest rate cuts by the European Central Bank (ECB) in October, as discussed by ECB members. Furthermore, robust JOLTS data indicated a stable job market in the US, suggesting that the Federal Reserve may not need to implement a 50-basis-point rate cut in November.

Today’s Market Expectations

Today the data in the European session is mild, with the employment reports from Italy and Spain, as well as the Monthly Unemployment Rate from the Eurozone which is expected to remain unchanged at 6.4%. The OPEC-JMMC Meetings is also taking place today, however with the escalating tensions in the Middle East, it’s unlikely this meeting will change much.

In the US session we have the EIA Crude Oil Inventories which are expected to show another drawdown, confirmed by the API private inventory numbers yesterday, however, Oil will be prone to the Middle Eastern tensions. The ADP Non-Farm Employment Change will be the highlight of the day, and it is expected to jump above 100K again, changing the declining trend.

Yesterday the USD continued the upside momentum, fueled by Jerome Powell’s comments that the FED will take it slowly with rate cuts, pushing back on the 50 bps rate cut in November. We remained mostly long on the UD and had a positive day, ending it with four trading signals in total, three of which were winning forex signals.

Gold Rebounds Off the 50 SMA After the Retreat

In the meantime, we opted to open a buy trade in XAU/USD (gold), even though gold has dropped by more than $50 from its recent highs, which surged following dovish remarks from Federal Reserve Chair Jerome Powell. Despite the pullback, gold’s primary trend remains bullish, with the metal forming a potential reversal pattern. Key moving averages are supporting the upward trend by providing stability during retracements. Currently, gold is down 1%, or $30, trading at $2,628.85, but the 50 Simple Moving Average (yellow) continues to act as a major support level.

XAU/USD – H4 chart

USD/CAD Stuck Between MAs

Yesterday, oil prices saw a significant bullish rebound, surging by $4 and reclaiming the $70 mark. This rise in oil is supporting the Canadian dollar (CAD), which has pushed USD/CAD down by 50 pips. The US dollar (USD), meanwhile, has gained around 50 pips against most currencies, driven by a negative shift in risk sentiment amid ongoing conflict in the Middle East. Despite this, the CAD has strengthened by about 1 cent today, outperforming the USD, showing the CAD’s resilience amidst rising oil prices. However the 100 SMA (green) held as support on the h1 chart.

USD/CAD – H1 Chart

Cryptocurrency Update

Bitcoin Falls to $60,000 on Risk Aversion

BTC/USD – Daily chart

Ethereum Returns Below $2,500 

Ethereum has also been on a downward trajectory, with its price steadily declining since March. By June, Ethereum had dropped from $3,830 to under $3,000. Sustained selling pressure pushed the price as low as $2,200 before it briefly bounced above the 50-day moving average. The 100-week SMA now provides solid support, and recent bullish candlestick formations hint at a potential reversal of Ethereum’s bearish trend.

ETH/USD – Weekly chart