Forex Trading

Forex Signals Brief March 26: BOJ Core CPI and Durable Goods Orders

Yesterday markets were pretty quiet with nothing on the economic calendar, while traders took some time to reevaluate the situation after the volatility we saw last week. The USD showed a slight downward trend at the start of the week but remained mostly sideways, indicating a lack of clear direction.

BOJ core CPI and US durable goods orders will highlight the day

The Euro saw a rise to a daily high of 1.0843 early in US session before stabilizing at those levels. USD/JPY initially weakened but later received some offers, possibly influenced by a weaker 2-year Treasury auction, suggesting potential difficulty in absorbing supply. The GBP gained some ground on higher CBI domestic statistics and maintained its gains during North American trade, while commodity currencies remained relatively steady.

Stock markets were quiet, but the cryptocurrency market saw significant activity, with bitcoin rallying more than $3000 today and $7000 since Friday’s close, resulting in substantial profits for equity ETF owners. Bitcoin’s surge was accompanied by a similar rally in Ethereum, which is often seen as a positive sign for risk assets.

Today’s Market Expectations

Today started with the Bank of Japan core CPI index, which was expected to tick lower to 2.5% from 2.6%, after a sudden 3-point jump last month. However, the BOJ already made their move, raising interest rates, so they don’t have much ammunition left anyway, which has been keeping the JPY bearish.

The German GfK consumer climate for March is expected to improve again after the improvement last month, which would turn this into trend, after worsening for a long time. But, this indicator still remains in negative territory. Later we have the US durable goods orders, which are expected to turn positive in February, showing a 0.4% increase MoM and a 1.2% increase YoY after the decline in January.

After that, we have the US Consumer Confidence report for March which is anticipated to hold steady at 106.7 points. In the previous report, there was a deviation from the three-month positive trend, with the data registering a notable miss across various metrics. Consumer sentiment highlighted ongoing concerns about inflation, although there was some relief regarding food and gas prices, which had eased in recent months. However, increased worries were expressed regarding the labor market and the political environment in the United States. Of particular interest in the upcoming report will be the Present Situation Index, which serves as a leading indicator for the unemployment rate.

Last week was characterized by significant volatility across various markets. Stock markets initially surged to new highs before experiencing a retreat on Friday. In the forex and cryptocurrency markets, there were notable reversals observed. However, the situation seemed to have shifted yesterday, with price action slowing down considerably. As a result, there were only two closed forex signals, both of which successfully hit their take profit targets.

Gold Returns Below $2,200 ButFinds Support at MAs

GOLD experienced a retreat last week after previously reaching a record high. However, it stabilized within a certain range. In the latter part of the week, there was another upward movement as gold buyers pushed the price to $2,222 following the FED meeting. However, gold retreated lower as the USD strengthened on Thursday. The XAU/USD pair closed the week at $2,165, forming a support zone above the 50 SMA (yellow), which prevented further decline. It seems that you opened a sell gold signal at the 50 SMA (yellow), which acted as resistance, and the trade is currently progressing well as this moving average continues to push the price of gold lower.

XAU/USD – 60 minute chart

GBP/USD Bounces Off the 200 Daily SMA

It seems that the GBP to USD rate has been trading within a range between 1.25 and 1.28 since December, but there might be a bearish breakout for GBP/USD . Buyers failed to push the price above 1.30, and over the last two weeks, we have witnessed a 3-cent decline in this forex pair. Both the FED and the BOE have been giving mixed signals regarding policy easing, contributing to the downward pressure on GBP/USD, which is now testing the bottom of the range. However, GBP buyers managed to defend the 200 SMA (purple) yesterday, preventing further downward pressure for the time being. The 200 SMA will be a crucial technical indicator to watch, as it stands above the first support zone around 1.26. This area represents a critical support level that sellers need to breach to establish a stronger bearish bias. If GBP/USD holds above this level, buyers may still have a chance in upcoming sessions, although the upside potential may be limited.GBP/USD – Daily chart

Cryptocurrency Update

Bitcoin Breaks Above the 100 SMA

Last week, Bitcoin (BTC) exhibited significant volatility in the cryptocurrency market. BITCOIN surged to a new all-time high above $73,000 early in the week. However, despite the initial bullish momentum, BTC experienced a negative reversal after reaching the peak. Bitcoin faced selling pressure towards the end of the week, causing its price to dip below $65,000 on Saturday. Nevertheless, Bitcoin saw a reversal in its price trajectory yesterday, with the selloff coming to an end. This reversal brought the price back towards the $70,000 level, indicating renewed buying interest in the cryptocurrency. However, the 100 SMA (green) stopped the climb yesterday, so BTC is currently trading between these two moving averages.

BTC/USD – 240 minute chart

Ethereum Returns Above $3,500

The consistent upward momentum in Ethereum’s price, despite occasional retracements, indicates the strength of its underlying trend. The ability of Ethereum to find support at the 50-period Simple Moving Average (yellow) on the daily chart underscores the importance of this technical level in guiding price movements. Although Ethereum experienced a bearish reversal after surpassing the crucial $4,000 milestone, the support provided by the 50-period SMA attracted buyers, leading to a rise in its price. The recent peak at $4,100 demonstrates the resilience of Ethereum’s upward trend, further supported by its ability to rebound from retracements and find support at key technical levels.

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