AUD/USD: 2-way trades likely – OCBC

FXStreet Insights Team FXStreet

Australian Dollar (AUD) continued to trade near recent highs post-RBA cut yesterday. RBA cut its OCR by 25bps as expected, citing restrictive financial conditions 'which is weighing on demand and is helping to bring down underlying inflation'. The tone of the statement is somewhat balanced but still underscores our view that the rate-cutting cycle is likely to be a shallow one. AUD was last at 0.6360 levels, OCBC's FX analyst Christopher Wong notes.

Bullish momentum on daily chart intact

"RBA opined that 'the labour market has remained strong” and revised down unemployment rate to 4.2% from 4.4% previously anticipated. Labour cost growth has eased but remains high. At the press conference, Governor Bullock emphasised that the decision to cut rates 'do not imply that future rate cuts along the lines suggested by the market are coming' and later described market pricing as 'unrealistic'."

"She mentioned that the board will need more data that inflation is continuing to decline. RBA reiterated that they would highly prioritise 'sustainably returning inflation to target', and cautioned that 'disinflation could stall, and inflation would settle above the midpoint of target range'."

"Overall, we continue to view RBA rate cut cycle as shallow and is in a no-hurry-to-cut type of easing path. Bullish momentum on daily chart intact while RSI is near overbought conditions. 2-way trades likely. Resistance at 0.6370, 0.6420 (100-DMA). Support at 0.6310, 0.6280 (21-DMA)."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.