Packed calendar to increase volatility

The USD edged lower against its counterparts yesterday, yet the overall sideways motion seemed to be continued in a day characterized by low volatility and only a few high-impact financial releases. On a fundamental level, the market seems to remain concerned about the Fed’s intentions and we also note the possibility of a default of the US Government, despite that scenario being remote for now. US stock markets continue to send mixed signals, and besides the above issues have also to consider the earnings season and today we note the release of the earnings reports for Coinbase (COIN) as well as retailers Home Depot (#HD) and Walmart (#WMT). Back in the FX market we note the release of RBA’s last meeting minutes, during today’s Asian session. The document was characterized overall from a hawkish tone and it was characteristic that it noted that “inflation in Australia remained too high” and also that “members agreed that a further increase in interest rates was warranted”. The document tends to foreshadow further monetary policy tightening with more rate hikes to come and could provide some support for the Aussie on a monetary level. From New Zealand, we note that RBNZ is to release its interest rate decision tomorrow and the bank is widely expected to hike rates by 50 basis points, with NZD OIS implying currently a probability of 97.29% for such a scenario to materialize. Should the bank actually proceed with the aforementioned rate hike and maintain a hawkish tone in its accompanying statement which may imply that more tightening lies ahead, we may see the Kiwi getting some support. Overall, today is expected to be a busy day, with Eurozone’s preliminary PMI readings for February standing out in the European session, while forecasts tend to imply that economic activity in the area is improving. In the American session, we note the release of Canada’s CPI rates and a possible acceleration of inflationary pressures in the Canadian economy, may galvanize BoC’s hawkishness.

EUR/USD seemed to remain rather stable between the 1.0715 (R1) resistance line and the 1.0575 (S1) support line. We also note that the RSI indicator tends to remain near the reading of 50, implying a rather indecisive market and allowing for the sideways motion to continue, yet the overall movement of the pair since the 9 of the month seems to be encapsulated in a downward channel hence some bearish tendencies are also possible. Should a selling interest be expressed by the market we may see EUR/USD aiming if not reaching the 1.0575 (S1) support line. Should buyers be in charge, we may see it breaking the upper boundary of its current downward channel, the 1.0715 (R1) resistance line and aim for the 1.0855 (R2) resistance level.

USD/CAD edged higher during today’s Asian session, surfacing above the 1.3465 (S1) resistance line, now turned to support. We tend to maintain a bias for the sideways motion to continue, with the price action revolving around the 1.3465 level. Should the bulls take over, we may see price action aiming if not breaking the 1.3570 (R1) resistance line, while should the bears be in charge we may see the pair breaking the 1.3465 (S1) support line and the gates would be open for the 1.3335 (S2) support level.

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In a packed Tuesday, in the European session we also note the release of UK’s preliminary PMI figures for February, while we also note the release of Germany’s ZEW indicators for February and UK’s CBI indicator for industrial trends both for February, as well as New Zealand’s biweekly milk auction figures. In the American session, we note Canada’s retail sales for December, while from the US we note the release of preliminary PMI figures for February and the existing home sales for January while later on we get New Zealand’s trade data for the same month. During tomorrow’s Asian session, from Australia we note the release of Q4’s wage price index and on the monetary front please note that BoJ board member Tamura is scheduled to make statements.