Forex Signals Brief October 10: USD in Retreat Mode Until Thursday

Yesterday’s Market Wrap

Yesterday markets opened with a bang, as risk assets opened with a bearish gap, although later markets were calm/ They settled down quickly from the spike in Middle Eastern uncertainty following Hamas’s unexpected attack on Israel over the weekend. Equities were down initially, with S&P 500 futures down 0.6% but later risk sentiment improved without any reason and this index ended up around 2.5% higher.

The USD and the JPY were the two leading gainers in FX, however later the USD started retreating lower, continuing the price action of the last two days of last week, with US bonds also retreating lower. The CAD made some decent gains, being aided by a rise in Oil prices due to the geopolitical crisis. WTI oil is up more than 3%, closing the day above.

In forex, the Euro was the laggard after the USD, after EUR/USD closed the day around the opening levels, while all other major currencies continued to gain against the USD. Gold was the biggest beneficiary from all this uncertainty, opening with a $15 gap higher and continuing up above $1,860.

Today’s Market Expectations

Today the economic calendar is very light again, although the North American markets reopen after a bank holiday weekend, so let’s see where they take us. Later on, we have FOMC members Kashkari and Waller hold speeches but it’s unlikely that they move markets too much.

According to the price action in the markets, there is a sense that most of the tensions in the Middle East will be water under the bridge in a few days. Even more so because the market’s attention remains on macroeconomics, and the US CPI data is coming up on Thursday. So, while we are seeing some risk-off/on flows now, they may be quickly forgotten since market behavior tends to forget and move on to the next big event that will follow.

Yesterday the price action was slow after the initial gap in most assets. Some of them closed the gap while it still remains open in most others. We opened many trading signals yesterday, although only three closed, with two being winning forex signals and one hitting SL.

GOLD Feeling Bullish All of A Sudden

Since May, XAU has been making lower highs, and the decline escalated in late September, when it began falling downward, losing around $140. Despite the formation of a support zone above $1,810, Gold traded in a range, with the top at roughly $1,830. But the tensions in the Middle East which erupted over the weekend, turning risk sentiment down in financial markets, and gold is profiting from this. It began with a bullish gap higher last night and has moved over $1,850 on the H4 chart, with the 50 SMA (yellow) acting as support. So, while gold is bullish for the time being, we’re seeking for a favorable zone to start a long-term sell Gold signal after the situation has calmed down.

XAU/USD – Daily chart

Gold Sell Signal
Entry Price: $1,835
Stop Loss: $1,850
Take Profit: $1,815

Preparing to Sell AUD/USD at the 50 Daily SMA

The AUD/USD pair hit a new high just over 0.6400 on Friday, catching a broad-market risk appetite bid that drove the US Dollar (USD) down throughout the FX market as market risk appetite turned risk-on to conclude the week. Despite the fact that purchasers encountered the 20 SMA (gray) on the daily chart, which functioned as resistance and halted the ascent that day. Despite Friday’s much-needed reprieve, we remain negative on this currency pair, as the Aussie is still down roughly 11% year to date against the USD.

Cryptocurrency Update

The 200 SMA Continued to Reject BITCOIN

BTC/USD – Daily chart

BTC Buy Signal
Entry Price: $26,248.2
Stop Loss: $24,500
Take Profit: $28,000

ETHEREUM Testing the Downside Again

Late last month, the price of Ethereum began to rise off its support level, indicating that there was some purchasing interest and demand for Ethereum at around $1,600. Buyers have repeatedly entered the zone above this level, but the 100 SMA (green) has served as resistance on the daily chart. Following Sunday’s advance, we had a reversal at this moving average, which wiped all of September’s gains.