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Forex Signals Brief for June 23: Has Inflation Hurt Services?

Yesterday’s Market Wrap

yesterday the volatility started again in financial markets after a two-day pause. Crude Oil resumed the decline and completed the second bearish leg, falling to $101.60 after consolidating below $110 for two days. Although this time we saw a quick bounce to $107.20 which was the support zone after the crash last Friday. A drone strike on a Russian Oil refinery could have been the catalyst for both sides, but in the end, WTI closed the day at around $104.

Yesterday the CPI inflation reports from UK and Canada showed another increase for May, which increased the odds of the Bank of Canada and Bank of England to increase the pace of interest rate hikes, although that won’t do anything rather than slow the respective economies and probably send them into recession. FED chairman Jerome Powell confirmed that yesterday, by not pressing for strong hikes further ahead this year, instead, he left the door open both ways, which sent the USD lower.

The Data Agenda Today

Today the FED chairman Jerome Powell will testify in the US Congress for the second day and we will hear if he will make fuether comments to clarify the future of the FED policy, with interest rates in particular. His comments hurt the FED yesterday and will probably decide the fate of the USD for the next few weeks, as well as set the risk tone in financial markets.

The PMI service reports started getting released early in the morning, with the Australian and Japanese service numbers, to continue with the UK, Eurozone and end with the US service reports. We will see if higher prices have hurt the consumers of services around the globe, which would make the situation more difficult for central banks.

Yesterday we continued the positive run with trading signals after booking profit on several signals on Tuesday. yesterday we had four winning signals in Forex, Gold and cryptocurrencies, while getting caught on the wrong side of NZD/USD after the jump, following Powell’s comments.

GOLD – Buy Signal

Gold has been on a downtrend since March, but yesterday we decided to try the upside after the jump on Powell’s comments. The risk in financial markets has been quite elevated, particularly as the possibility of a global recession in the coming quarters due to central banks hiking interest rates and prices surging higher has increased. But, during the jump yesterday we decided to open a buy signal which closed in profit pretty fast.  

XAU/USD – H1 chart

USD/JPY – Buy Signal

We have been bullish on USD/JPY for a long time and continue to remain so as the sentiment for the JPY remains dovish, which is sending this pair higher. Earlier this week we saw new highs as the price approached 137 and yesterday we decided to open another buy signal which closed in profit as this pair bounced off the 50 SMA (yellow) on the H4 chart.

USD/JPY – 60 minute chart

Cryptocurrency Update

Cryptocurrencies retraced higher on Sunday after the crash late last week, and have been retesting the top side, but without much success. The previous two days closed as dojis in most major crypto coins, which are reversing signals and yesterday we saw a small bearish move. So, perhaps they are resuming the decline again, but we will see in the coming days if the bearish momentum will pick up or not.

Booking Profit on ETHEREUM Shorts

Ethereum has been crashing in recent months, falling below $1,000 last week, although we saw a quick reversal and a move above that major level again. But, the continuation since Sunday has been weak and the 50 SMA (yellow) turned into resistance, so my colleague Arslan opened a sell Ethereum signal there, which closed in profit as the price turned lower again.

ETH/USD H4 chart

ETH/BTC Approaching the TP Target

ETH/BTC turned bearish in December last year, and has been on a downtrend, with moving averages acting as resistance on the H4 chart. The latest retrace higher ended below the 100 SMA (green) and we decided to open a sell signal, as sellers are still in control.

ETH/BTC – Daily chart

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