Forex Signals Brief July 28: Will US Q2 GDP Change Market After Fed Hike?

Yesterday’s market wrap

Yesterday the FED moved to raise interest rates by 0.75% for the second time as expected, but there was still potential for a subtle downgrade from the Federal Reserve on growth and future rate hikes , which would be positive for risk and negative for the USD.

Even a slight shift in Powell was all the markets needed to sell the US dollar and buy risky assets and that’s what happened. He repeated that “inflation is far too high” and “the labor market is far too tight”. But markets changed when he said “another unusually large increase might be appropriate, but that depends on the data by then.” It gave the impression that another 75 bps is unlikely. It was subtle, but it was this change that the markets were looking for that drove risk assets higher and the dollar lower.

The data agenda today

Today, markets will likely trade the fallout from the FED’s decision in the first European session, while in the US session we have the first reading of the second quarter US GDP, which is expected to show an expansion of 0.4% for the previous quarter, after growth of 1.6%. contraction that we saw in the first quarter. Powell left the ball on the economic data, so this will be the first decent report and we’ll see how the markets react to it. In addition to this, German CPI inflation figures are also released today, which will give an indication of the upcoming Eurozone inflation report.

We didn’t overemphasize forex signals yesterday despite fairly low volatility as markets approached the Fed’s rate decision. We saw a sudden move after the rate hike closed one of our trade signals in profit and the other in loss. This was after having two similar signals on gold earlier yesterday, so we had a mixed day.

GOLD Oil Sell/Buy Signals

Crude rose last week, moving above the moving averages and the 200 SMA (purple) turned into support now on the H1 chart. yesterday gold pulled back and my colleague Arslan opened a sell signal which closed in profit. I decided to open another signal, this time on the upside, but it closed in a loss as gold continued to decline to the 200 SMA before jumping after the Fed rate hike.

XAU – 60 minute chart

[[GBP/USD] – Buy signal

GBP/USD was also bearish, but made a bullish reversal two weeks ago, while the USD fell and has been bullish ever since, with the moving averages serving as support. Yesterday I decided to open a forex buy signal as price pulled back towards the 100 SMA (green) on the H1 chart and we took profits as this pair rebounded from the Fed rate hike .

GBP/USD chart – S1

Cryptocurrency update

It’s pretty obvious that cryptocurrencies now follow risk sentiment in financial markets, as they fall when sentiment is negative and rise when it turns positive, as we saw yesterday after the rate hike in the EDF. Jerome Powell hinted at a slower pace of rate hikes which drove the crypto market higher.

ETHERUM Being rejected at the 100 SMA

Ethereum led the crypto market higher last week as the Power-of-Stake merger, which is expected to take place on July 31, approaches. But, the buyers failed to push the price above the resistance at $1,700 and eventually the price reversed. We opened a buy signal yesterday as the trend was still up, but the reversal happened and we lost that trade.

ETH/USD – Daily Chart

Bitcoin Fall below the 50 SMA

Bitcoin has been hitting higher lows over the past few weeks and it is now reaching higher highs as buyers push the price above the resistance zone and moving averages on the H4 chart. We opened two BTC sell signals last week, trying to sell this cryptocurrency at the top of the range, but both signals closed in a loss as buyers remained in control.

BTC/USD – Daily Chart

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