The dollar is under pressure following the FOMC decision to leave rates unchanged. The more dovish than expected outlook from the Fed has not only seen the dollar weaken, but without any rate hike on the horizon, stocks and commodities have both had a good session and have rallied strongly. The coming day will be largely spent in assessing Janet Yellen’s press conference, but also of note will be the Australian Jobs data, and then later in the session we get the EU CPI and Interest Rate Decisions from both the BOE and the SNB. From the US comes the Philadelphia Fed Mfg Survey and the weekly Jobless Claims.
AUDUSD spent much of the day under pressure due to the fall in commodity prices, today heading down to 0.7415 ahead of the Fed decision. We have since seen a strong reversal higher after the Fed left rates unchanged, so far taking it back to 0.7560 and putting the chance of a move to 0.7600 - and higher - back into focus.
Today’s direction will come via the local February Unemployment data. The market is looking for a rise of 10K, with the headline rate and the participation rate both expected to remain unchanged, at 6% and 65.2% respectively. Also due is the RBA Bulletin and before that, a speech from the RBAs Debelle, either of which may create a few waves.
A strong employment outcome could see the recent high of 0.7593 being tested, with good resistance lying immediately above at 0.7600. If this is 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).
Buyers will arrive at 0.7500, and again at the 100/200 HMAs at 0.7490/0.7470. Below this now looks unlikely, but in the event that we retest the day’s lows of 0.7415, a break lower would immediately find strong support at 0.7405/10, being 38.2% of 0.7108/0.7583 (0.7405) and also 23.6% of 0.0.6826/0.7583 (0.7410). If we eventually 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 for a while.
With the daily momentum indicators looking to be in the process of rolling over, selling into strength may be a plan.
Economic data highlights will include:
RBA Debelle Speech, Unemployment, RBA Bulletin.
Jim LanglandsFX Charts
