Forex Signals Brief September 16: FOMC, BOE and BOJ Meetings

Last week markets were focused on the US inflation numbers, with both the US CI (consumer price index) and PPI (producer price index) coming above expectations in the headline readings, but the core numbers came below expectations. Markets turned on the USD initially on the higher core numbers, but then reevaluated the reports and are now leaning more toward a 50 bps rate cut by the FED on Wednesday’s FOMC meeting.

That kept stock markets bullish all week, with major US indices such as S&P 500 and Dow Jones approaching the last record highs. Gold did make a new record high, pushing to $2,586 and closing the week near the highs. The weak inflation numbers from China early last week, further signaling economic weakness, which helped Gold prices. The European Central Bank lowered the deposit rate by 25 basis points again, but that didn’t deter the Euro.

This Week’s Market Expectations

Today the economic calendar is light, with China and Japan being on a bank holiday weekend, with only the Empire State Manufacturing Index, but it kicks off tomorrow with the Canadian CPI inflation report, followed by the US retail sales. We also have the UK CPI inflation and Australian employment report during the week, but the central bank policy meetings will highlight the week, with FOMC on Wednesday, the BOE on Thursday and the BOJ on Friday.

Upcoming Economic Events

• Monday:
  • New Zealand BusinessNZ Services Index
  • US Empire State Manufacturing Index
• Tuesday:
  • Eurozone and German ZEW Economic Sentiment
  • Canada CPI Inflation
  • US Retail Sales
  • US Industrial Production and Capacity Utilization
• Wednesday:
  • UK CPI Inflation
  • US Housing Starts and Building Permits
  • Federal Reserve (FOMC) Policy Decision
• Thursday:
  • New Zealand Q2 GDP
  • Australia Labour Market Report
  • Bank of England (BoE) Policy Decision
  • US Unemployment Claims
• Friday:
  • People’s Bank of China (PBoC) Loan Prime Rate (LPR) Decision
  • Bank of Japan (BoJ) Policy Decision
  • UK Retail Sales
  • Canada Retail Sales

This week the USD continued to advance in the first few days, but in the second half of the week we saw a reversal lower after the US inflation reports, while stock markets remained bullish all week. We opened 30 trading signals this week, ending up with 20 winning forex signals and 10 losing ones.

Gold Holds Above the 20 Daily SMA

Since mid-August, gold prices have been fluctuating between $2,470 and $2,531, with higher lows suggesting a potential upward trend. This prediction materialized with a bullish breakout on Thursday when prices surged above the upper resistance zone. Gold reached $2,586 and closed near the highs, indicating that further increases may be on the horizon. The previous resistance area is now likely to turn into a support zone, reinforcing expectations of continued growth.

XAU/USD – Daily chart

WTI Crude Oil Says Below $70

The price of U.S. WTI crude oil fell below $65 on Tuesday. However, by Thursday, oil prices had recovered to above $70 as OPEC+ postponed its planned October output increase, and the Gulf of Mexico temporarily ceased operations in preparation for an approaching hurricane. Despite this rebound, concerns over a global economic slowdown—particularly in China—led to a lower closing price for crude oil on Friday. This rekindled selling pressure, causing WTI to drop below $70 once again.

WTI/USD – Daily Chart

Cryptocurrency Update

Bitcoin Bounces off the 50 Weekly SMA Again

BTC/USD – Daily chart

Ethereum Bounces Off the Support

Ethereum has been in a continuous downtrend since March. After dropping sharply from $3,830 to under $3,000 in June, Ethereum saw a brief recovery, moving above its 50-day moving average. However, persistent selling pressure pushed the price down to $2,200, where it found solid support. Last week we saw a bounce off the 100 weekly SMA (green) which formed a bullish candlestick, suggesting renewed buyer interest, signaling the potential for a reversal in the current trend.

ETH/USD – Daily chart