RBA’s interest rate decision in focus

The USD edged lower on Friday and during today’s Asian session, yet the overall picture of its sideways motion seems to be maintained for now. At the same time, we have to note that gold’s price was able to take advantage of USD’s slipping and edged higher while also US stockmarkets climbed higher on Friday, with all three major US stock market indexes, Dow Jones, S&P 500 and Nasdaq being in the greens, supported from the improved market sentiment. Overall, in the coming week, we highlight the testimony of Fed Chairman Powell during tomorrow’s American session as well as the release of the US employment report for February on Friday. During tomorrow’s Asian session, we note the release of RBA’s interest rate decision. The bank had already expressed its intentions for further rate hikes and the market expects the bank to deliver a 25-basis points rate hike in its next meeting. AUD OIS imply a probability of 82.3% for such a scenario. Should the bank actually hike rates we may see the Aussie getting some support as the market repositions itself, yet in such a case attention is expected to fall on RBA Governor Lowe’s accompanying statement.

Should the bank maintain a confident, hawkish tone, foreshadowing more rate hikes to come, we may see the bullish effect on AUD intensifying as the market’s expectations for the bank’s hawkish intentions are to be verified. On the flip side, signs of hesitation and uncertainty, could turn the rate hike to a dovish hike and weaken the Aussie.  

EUR/USD edged higher, yet seems to maintain its sideways motion between the 1.0715 (R1) and the 1.0575 (S1) levels. Despite our sideways movement bias, we would like to point out some slight bullish tendencies of the pair, given also that the RSI indicator has surpassed clearly the reading of 50 in a continuous upward movement. Should the bulls maintain control we may see the pair breaking the 1.0715 (R1) line and aim for higher grounds. Should the bears take over, we may see EUR/USD diving below the 1.0575 (S1) level.

AUD/USD remains in a sideways motion between the 0.6720 (S1) and the 0.6800 (R1) levels which is also supported by the RSI indicator which is running along the reading of 50 currently. Yet RBA’s interest rate decision could alter the pair’s direction. Should a selling interest be expressed we may see the pair breaking the 0.6720 (S1) line, while should the bulls take over we may see the pair breaking the 0.6800 (R1) line.

Other highlights for the day:

Today in a busy European session, we note the release of Switzerland’s CPI rates for February, Eurozone’s construction PMI figure for February, Eurozone’s Sentix index for March, UK’s construction PMI figure for February, and  Eurozone’s retail sales growth rate for January. In the American session we note the release of the US factory orders growth rate for January. During tomorrow’s Asian session, besides RBA’s interest rate decision, we get Australia’s trade data for January and China’s trade data for February.  

As for the rest of the week

On Tuesday we get Germany’s industrial orders growth rate for January, while on the monetary front, Fed Chairman Jerome Powell speaks. On Wednesday we make a start with Japan’s current account balance for January, Germany’s industrial output for the same month, Eurozone’s revised GDP rate for Q4 and Canada’s trade data for January, while on the monetary front we note the release of BoC’s interest rate decision. On Thursday we note the release of Japan’s revised GDP rate for Q4, China’s inflation metrics for February, Sweden’s GDP rate for January and the US weekly initial jobless claims figure. On Friday during the Asian session, we note the release from Japan of BoJ’s interest rate decision and later on we get UK’s GDP and manufacturing output growth rates for January, Norway’s CPI rates for February, the Czech Republic’s CPI rates for the same month, Canada’s employment data for February and highlight the release of the US employment report for February with its NFP figure.

EUR/USD H4 Chart

Support: 1.0575 (S1), 1.0430 (S2), 1.0290 (S3)

Resistance: 1.0715 (R1), 1.0855 (R2), 1.1000 (R3)

AUD/USD H4 Chart

Support: 0.6720 (S1), 0.6625 (S2), 0.6545 (S3)

Resistance: 0.6800 (R1), 0.6900 (R2), 0.7010 (R3)

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