AUD/USD testing key trend line support ahead of FOMC

AUD/USD meeting trendline support.
AUD/USD awaits FOMC.

Ross J Burland FXStreet

AUD/USD has dumped in a broad based rally in the greenback as we await the FOMC outcome while this will be Yellen's last. Currently, AUD/USD is trading at 0.8068, down -0.13% on the day, having posted a daily high at 0.8118 and low at 0.8046.

Once again, the Aussie is testing the downside support of the Aussie's rally from 0.7880, albeit making a higher low on the hourly chart thus far. The softer than expected CPI data dip was bought back from 0.8046 and 0.8116 ahead of resistance 0.8125.40 has been effective.

Analysts at TD Securities broke down the data as follows:

"Dec qtr core CPI rose by +0.42%/qtr and remained steady at 1.87%/yr, consistent with the median forecast of 1.85%/yr. TD expected more 2-handles for the three CPImeasures, so was mildly disappointing. More importantly, the report did not challenge the RBA’s November projection of 1¾%/yr by end-2017. Our May hike is under review, but today’s report wasn’t enough. Markets to wash around again waiting for the crucial WCI released on 21 Feb (Wed).

CNY Manufacturing PMI for Jan was 51.3 (vs market: 51.6) more in line with TD (51.4) due to air pollution crackdown, deleveraging and slump in the property market all hitting the industrial output in early 2018. In contrast, services PMI surged to 55.3."

In respect of the Fed, the market is expecting a hawkish hold as the most likely outcome from the FOMC meeting. Analysts at BBH argue that growth impulses are stronger, even though headline Q4 GDP disappointed. "The part of the economy that is the most responsive to monetary policy, final domestic purchases, rose by a robust 4.8%. The IMF recently raised its US growth forecasts, and we would expect the Fed to follow suit."

AUD/USD levels

Technicals are still coming with a bullish bias with the consolidation period with monthly RSI still positive. The 0.81 handle remains congested with offers. The 200-month SMA at 0.8052 is guarding a break of 0.8000. This level guards the January 9&10 lows at 0.7809 ahead of the 200 D SMA at 0.7739.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD recedes to daily lows near 1.1850

EUR/USD keeps its bearish momentum well in place, slipping back to the area of 1.1850 to hit daily lows on Monday. The pair’s continuation of the leg lower comes amid decent gains in the US Dollar in a context of scarce volatility and thin trade conditions due to the inactivity in the US markets.

GBP/USD resumes the downtrend, back to the low-1.3600s

GBP/USD rapidly leaves behind Friday’s decent advance, refocusing on the downside and retreating to the 1.3630 region at the beginning of the week. In the meantime, the British Pound is expected to remain under the microscope ahead of the release of the key UK labour market report on Tuesday.

Gold looks inconclusive around $5,000

Gold partially fades Friday’s strong recovery, orbiting around the key $5,000 region per troy ounce in a context of humble gains in the Greenback on Monday. Additing to the vacillating mood, trade conditions remain thin amid the observance of the Presidents Day holiday in the US.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

Monero Price Forecast: XMR risks a drop below $300 under mounting bearish pressure

Monero (XMR) starts the week under pressure, recording a 4% decline at press time on Monday after a 7% drop the previous day, putting the $300 support zone in focus.