AUD/USD: 0.7455EUR/USD: 1.1110Tuesday has been mixed for the currency markets ahead of today’s FOMC Meeting. Yen strength, following the BOJ Meeting, Sterling weakness due to Brexit fears, and a lower commodity currency bloc, led by weaker commodity prices, have been the main features. The US dollar was subdued following the disappointing Retail Sales data and we will now have to wait for Janet Yellen’s take on the economic growth outlook for the next directional move. Today is going to be busy with something for everybody, and aside from the FOMC decision the US will also have the February CPI data, the Building Permits, Housing Starts, Capacity Utilisation and Industrial Production. Before then Asia gets the NZ Current Account and the Australian WBC Leading Economic Index. The UK has the Budget statement from Chancellor Osborne and the January Unemployment data, so it could be another busy one for Sterling. Note also that the Swiss national Bank will be giving its quarterly review ahead of Thursday’s SNB Interest Rate Decision. It will be a rocky ride today, so be nimble.
AUDUSD was already under pressure heading into European trade following the release of the RBA Minutes and although they contained no great surprise the risks posed by China, as pointed out in the minutes, were enough to keep the Aud below 0.7500. Further selling persisted through European and US trade, with the Aud declining to 0.7444. The weakness was in line with the selloff in commodities, once again led lower by a slump in the oil price.
The WBC Leading Economic Index will be the local focus in the coming session although most traders will be waiting for the FOMC release.
The Aud is currently hugging the 200 HMA (0.7458), but in the event of further losses, a downside break would target 0.7405/10 which should be strong support, being both 38.2% of 0.7108/0.7583 (0.7405) and also 23.6% of 0.0.6826/0.7583 (0.7410). The 4 hour and daily momentum indicators are both hinting that this is now the direction to be watching and if we do see a break below 0.7400 we could then see an acceleration towards 0.7350 (50% of 0.7108/0.7583) and lower towards 0.7300, although unlikely today.
In the event of a squeeze back to the topside, sellers will be seen at the 200 HMA and then again at 0.7500 (100 HMA). Above here would only be likely if the Fed turn out to be more cautious than expected, but if so, then look for a run towards 0.7530 and 0.7550 (both minor) ahead of Monday’s trend high at 0.7593. Above this now appears over the horizon, but if 0.7600 is ever taken out, look for a move towards the next Fibo resistance which is seen at 0.7648 (61.8% of 0.8162/0.6826). In the longer term, the next major Fibo level is at 0.7845 (38.2% of 0.9504/0.6826).
Economic data highlights will include:
WBC Leading Economic Index.
Jim LanglandsFX Charts
