Forex Signals Brief Feb 13: All Attention Is at the US CPI Numbers
Yesterday was characterized by a light calendar and minimal changes overall, with Asian markets being off for the Chinese New year although there were some noteworthy moments. Initially, the USD slipped lower but then reversed and moved up, while US bond yields experienced selling. EUR/USD dipped to 1.0757, while the GBP/USD also slipped below 1.26 lows.
The market saw a swift reversal as investor sentiment improved in the equities market. This turnaround breathed new life into commodities, leading to a bounce in Oil prices after comments from the Saudi Energy Minister, bolstering the CAD as well. Indices continued to move higher and make new record highs, while the foreign exchange market saw relatively little change throughout the day.
Today’s Market Expectations
The UK unemployment rate is expected to tick higher to 4.0% this time from 3.9%. Although the traders’ attention is likely to be on wage growth figures, with Average Earnings excluding Bonus anticipated to be at 6.0%, down from 6.6% previously, and Average Earnings including Bonus expected to be at 5.7%, down from 6.0% earlier. This data will influence market expectations for the BOE monetary policy.
The CPI report from Switzerland comes next, with headline inflation year-on-year forecasted to tick down 1.6% from 1.7% previously. The Swiss National Bank’s (SNB) Chairman Jordan has indicated that the central bank expects inflation to average less than 2% for the year, despite a short-term uptick.
The US Consumer Price Index (CPI) report will be the highlight of the day, and inflation year-on-year (Y/Y) is anticipated to lose 5 points, falling to 2.9%, down from the previous reading of 3.4%. The Core CPI Y0Y is expected to tick lower to 3.8%, a slight decrease from the previous 3.9%, while the core MoM reading is expected to remain steady at 0.3%. The month-on-month (MoM) measure is expected to remain unchanged as well at 0.2%. A lower-than-expected reading would accelerating rate cut expectations from the FED and a higher-than-expected figure possibly delaying them.
Last week the price action was fast for the most part, but it wasn’t the easiest to trade since most forex pairs kept making reversals, as well as Gold. As a result, we opened 20 forex signals, with eight signals reaching the take profit target and eight closing in loss. So, we ended up in breakeven after all.
Gold Breaks Below the 50 Daily SMA
Currently, sellers are dominating the gold market, evidenced by the formation of lower highs, indicating a downward trend. Moving averages, especially the 50-day Simple Moving Average (SMA) on the daily chart, have historically provided reliable support during pullbacks. However, the breach of this moving average suggests a shift in momentum, with the price now trading below it. The focus now shifts to the next key moving average, the 100-day SMA (green). Additionally, the seasonal strength typically observed in gold during January and early February, attributed to increased purchases for the Chinese New Year, typically concludes with the onset of the Lunar New Year holidays.
XAU/USD – 240 minute chart
USD/JPY Approaches Closer to 150
USD/JPY experienced a decline below 139 during the early European session yesterday, but found support near the 20-period Simple Moving Average (SMA) depicted in gray on the hourly (H4) chart. This support prompted a recovery, with the price climbing approximately 50 pips higher. However, as the European trading session nears its end, volatility is expected to diminish, prompting a cautious approach. Therefore, we opt to remain on the sidelines for the time being, awaiting the CPI report from the US.
USD/JPY – 240 minute chart
Cryptocurrency Update
Bitcoin Pierces Above $50,000 Finally
Bitcoin’s price was approaching $50,000 despite an increase in BTC outflows in recent days as buyers liquidate past positions. However, buyers still have control, with the price topping January’s high. Yesterday buyers had another go and they pushed the price above $50,000 at last, so the next target it $55,000.
BTC/USD – Daily Chart
Booking Profit on Ethereum
ETHEREUM‘s price has been gaining upside momentum after the retreat lower in January, which sent it close to $2,000. We decided to open a buy ETH signal down there which was going well as buyers came back. Yesterday they pushed the price above $2,600, triggering the take profit on our trade.
Ethereum – Daily Chart
- ETH Buy Signal
- Entry Price: $2,290
- Stop Loss: $2,590
- Take Profit: $1,750
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