Forex Signals Brief November 21: Unemployment Claims to Remain Stable

Yesterday the main event for the day was the US inflation report for October, while today US Unemployment Claims will highlight the day, which are expected to remain stable, confirming that the US employment sector is in good shape, perhaps giving the USD another push higher.

The UK inflation report yesterday showed an increase in both, the headline CPI and core CPI consumer inflation numbers. That sent GBP/USD 40 pips higher, climbing above 1.27, but buyers couldn’t keep the gains and it eventually reversed lower after the BOE rejected the jump in inflation as a one-off.

After several days of decline, the US dollar regained strength, with the Dollar Index (DXY) climbing higher. In contrast, risk-sensitive currencies weakened, as the EUR/USD slipped back toward the 1.05 level. The US session was devoid of major economic data releases, but markets turned their attention to speeches by two Federal Reserve officials.

Fed Governor Lisa Cook delivered remarks, followed by Michelle Bowman, who struck a notably hawkish tone. Bowman emphasized that the central bank might be closer to achieving a neutral policy rate than many expect. She highlighted the importance of maintaining a cautious and flexible stance on monetary policy to navigate economic uncertainties effectively.

Today’s Market Expectations

Reports from New Zealand indicate that the Treasury plans to update its economic and budgetary forecasts due to ongoing declines in productivity. Chief Economic Adviser Dominick Stephens stated that the economic recovery, initially expected to commence by late 2024, is now anticipated to begin later than previously projected. Slower economic growth is compounding the government’s challenges in balancing its budget. Reduced tax revenues are creating additional fiscal strain, even as the government plans to implement spending cuts and austerity measures to address the widening fiscal deficit. The revised forecasts will likely reflect the prolonged economic slowdown and its impact on New Zealand’s fiscal outlook.

In the labor market, Initial Jobless Claims remain within the consistent range of 200K–260K, established since 2022. However, Continuing Claims have been showing recovery after hitting cycle highs caused by storm and strike disruptions. Despite some improvement, consensus remains divided. The most recent Continuing Claims reading fell slightly to 1,873K from 1,884K, while this week’s Initial Claims are forecasted at 223K, up from the prior 217K. These labor market metrics remain a focal point for assessing broader economic resilience.

Yesterday we saw another reversal in the markets. The sentiment turned negative in financial markets, sending European stocks and risk currencies down, while the USD down in the US session. As a result, many traders got whipsawed by the quick direction shift twice. However, we ended the day with 5 winning forex signals and four losing ones, after opening 11 trades yesterday.

Gold Bounces Off the 100 Daily SMA

Gold has begun to regain momentum after dropping from $2,790 in late October to a two-month low last Thursday. Although it briefly tested the 100-day SMA near $2,550, the price rebounded strongly, surpassing the key $2,600 level and avoiding a close below it. The bullish momentum aligns with the reversal signal indicated by Friday’s doji candlestick, suggesting that gold may be resuming an upward trajectory. This could mark the end of its recent correction phase as Gold pushed to $2,650 yesterday.

XAU/USD – Daily Chart

USD/JPY Climbs Above 155 Again

The USD/JPY pair experienced a sharp 3-cent drop on Friday, driven by heightened risk aversion. The decline extended into early Monday, bringing the pair down to 153.28 amidst falling equity markets. However, on the daily chart, sellers encountered strong support at the 20-day SMA, which helped to halt the downward momentum. Following this support, buyers stepped in, sparking a recovery that lifted the pair by 2 cents over the next two days. This rebound signaled a potential end to the recent selloff. Despite the overall 3.5-cent decline, consistent buying at key levels propelled the pair back above 155 yesterday, reaffirming its broader bullish trend.

USD/JPY – Daily Chart

Cryptocurrency Update

Bitcoin Makes Another High Above $94K Again

BTC/USD – Daily chart

Ethereum Retreats but Holds Above $3,000

Similarly, Ethereum recovered after falling below $2,500, climbing to $3,450 and reclaiming its position above the 50-day simple moving average. The recent performance of both assets underscores renewed investor confidence in digital currencies, suggesting positive prospects despite ongoing vulnerability to market corrections.

ETH/USD – Daily chart