Yesterday’s Market Wrap
Markets had been awaiting the FOMC meeting which took place yesterday evening, although we had other events. Risk sentiment turned negative early in the European session and stock markets opened with a bearish gap as Russia’s president Vladimir Putin called for the mobilization of reserve troops on threats from the West. Crude Oil benefited from that and surged around $3. But, the tonnes calmed down and Oil reversed back down as we headed into the FOMC meeting.
The FED raised interest rates by 0.75% for the third time, taking them to 3.25%. The US dollar jumped in the aftermath of the FOMC decision, hitting fresh highs across the board and breaking major levels against all major currencies.
The FOMC dot plot is the major reason why the dollar was strong. The projections are for 4.4% by the end of this year and that’s with just two meetings left. It would imply big further hikes from 3.25% currently, which will probably be 75 bps and 50 bps. projections for next year are at 4.6%, which implies more hiking in 2023 beyond that before flattening out. That’s higher than markets were expecting.
Today’s Market Expectations
Today is another big day, with strong rate hikes expected on the economic calendar. The Swiss National Bank SNB raised interest rates by 0.75% from -0.25% to 0.50% after delivering a 50 bps hike in the last meeting. The CHF has been strong and the tightening that the SNB started in the last meeting is going to help it appreciate further. The Bank of England is expected to deliver a 50 bps hike later on, which would take them to 2.25%, although the GBP is not expected to benefit much from that.
Yesterday the volatility was high in the morning as the risk sentiment turned negative on Russian news, but then improved which sent most markets on a rollercoaster. Then came the FED meeting in the evening which also sent most assets on another rollercoaster. We opened eight trading signals in forex and commodities, closing the day with four winning and four losing ones, as markets kept spiking higher and reversing lower.
The Euro has been bearish this week, resuming the decline after stalling around the parity level for several days. The 20 SMA (gray) has turned into resistance during the decline, indicating strong selling pressure. We continue to sell this pair and yesterday we closed another EUR/USD signal in profit.
EUR/USD – H4 chart
Remaining Short on WTI Oil
Crude Oil also remains bearish, trading close to $80, although we are seeing buying pressure down at the area above $80 once again. Yesterday we saw a jump which caught us on the wrong side and we decided to sell Oil again before the FED as the bounce faded, but once again there were buyers close to the support zone.
US WTI Oil – 60 minute chart
Cryptocurrencies reversed higher on Monday after turning bearish last week, but on Tuesday there was no continuation of the bullish reversal as major crypto coins stalled, apart from Ripple XRP which continues to remain bullish. Yesterday we saw another attempt from buyers immediately after the FOMC decision, but that attempt failed and the bearish momentum returned.
BITCOIN Failing Below $20,000
Bitcoin turned bullish in the last two days, making some decent gains and yesterday we saw another attempt at the top side right after the FED decision. But the 200 SMA (purple) stopped the climb right below the 20,000 level and sellers returned after that.
BTC/USD – H1 chart
Ripple Pushing Above $0.43
XRP/USD has been one of the most bearish cryptocurrencies since the legal battle with the SEC (Securities and Exchange Commission) started nearly two years ago and the zone around $0.40 turned into resistance since June. In the last three days, we have seen a reversal as both Ripple Labs and SEC are pushing for a quick ruling over the case, which traders thought might go in favour of Ripple, hence the bullish momentum. On Monday we saw a reversal after buyers failed to push above $0.40, but yesterday buyers finally pushed the price above $0.40, reaching $0.43 yesterday.
XRP/USD – H4 chart