After a good US employment report for February, the dollar gained some ground versus its peers on Friday and throughout today’s Asian session. However, experts believe that some of the support may have come from safe haven inflows, given the ongoing conflict in Ukraine. Moreover, it should be mentioned that the Non-Farm Payrolls number for February beat the market’s forecasts by growing to an exceptional 678k, while the unemployment rate fell to 3.8 percent and the average wages growth rate slowed. Overall, the Employment Report is positive, giving the Federal Reserve the green light to continue on its aggressive rate rise path. However, the market’s focus now shifts to the publication of the US Consumer Price Index for February on Thursday. It should be observed that the stock markets in the United States were in the red, while the price of gold was rising, which is yet another sign of the safe haven flows that are now dominating the markets.
Alternatively, the conflict in Ukraine has a significant impact on the common currency since the prospect for recovery of the region’s economy remains cloudy, and the EU will have to deal with a humanitarian disaster as a result of the conflict. In addition to the interest rate decision of the European Central Bank on Thursday, traders are likely to pay particular attention to the ECB’s tone, which is expected to be dovish in light of the current uncertainties, which might further weigh on the EUR. WTI oil prices temporarily reached $125 per barrel during today’s Asian session as the likelihood of a tighter supply led traders to increase their bets on the commodity. Please keep in mind that the United States is contemplating prohibiting all imports of oil goods from Russia, which is symptomatic of the present situation in the country. The Australian dollar, on the other hand, seems to have gained significant support since the prices of a lot of the things it exports have climbed.
The Australian dollar continued in an upward trend, and during today’s Asian session, the pair targeted the 0.7430 (R1) resistance line. As long as the pair maintains above the upward trendline that has been in place since the 28th of February, we believe the bullish view for the pair will continue. Although the RSI indicator below our 4-hour chart has beyond the level of 70, this does not necessarily signify a bearish trend; rather, it may indicate an overbought condition and a subsequent correction down in the price of our currency pair. If the bulls are able to maintain control over the pair’s direction, we may see the AUD/USD pair break over the 0.7430 (R1) resistance line and go towards the 0.7480 (R2) resistance level. If the bears gain control, we may see the pair break through the previously noted upward trendline, the 0.7375 (S1) support line, and head towards the 0.7315 (S2) support level, which is the next major support level.
Prior to correcting upward, the EUR/USD accelerated its decline, challenging the 1.0820 (S2) support line for a second time. In general, we maintain a bearish outlook for the pair as long as the pair remains below the downward trendline that has guided it; however, please note that the RSI indicator below our 4-hour chart has dropped below the reading of 30, which confirms the bear’s dominance, but may also indicate that the pair has been oversold and that a correction higher is possible. We expect the pair to break through the 1.0870 (S1) support line, the 1.0820 (S2) level, and head towards the 1.0765 (S3) support obstacle if the selling activity continues to be sustained. We might see the pair breaking over the 1.0935 (R1) resistance line and attempting to reach the 1.1000 (R2) level if buyers are in control of the pair’s direction.
Other highlights for today
Today, during the European session, we will have the Halifax House Price Growth Rate for February in the United Kingdom, Germany’s industrial orders for January, and the Sentix indicator for the Eurozone for March. Japanese current account balance for January and Australian NAB Business confidence and conditions indicator for February are both set to be released during Tuesday’s Asian session, and RBA Governor Bullock is slated to speak.
As for the rest of the week
To be released on Tuesday during the European session are the January industrial production growth rates for Germany and Eurozone, as well as the fourth quarter GDP revision and the January trade statistics for Canada. As part of the Asian session on Wednesday, we’ll learn about Japan’s revised annual GDP rate for Q4 and China’s February inflation indicators. For the month of February, we will receive corporate goods prices from Japan; consumer price indexes from Norway, the Czech Republic, and the United States; weekly initial jobless claims data from the United States; and, on the monetary front, the ECB’s interest rate decision will be released, followed by a press conference. To round up the week, the UK GDP and manufacturing production growth rates for January will be released together with Canada’s employment statistics for February on Friday. In the United States, we’ll receive an early reading on March consumer sentiment from the University of Michigan.
EUR/USD H4 Chart
Resistance: 1.0835 (R1), 1.1000 (R2), 1.1055 (R3)
AUD/USD H4 Chart
Support: 0.7375 (S1), 0.7315 (S2), 0.7275 (S3)
Resistance: 0.7430 (R1), 0.7480 (R2), 0.7550 (R3)
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