The Australian dollar has dropped more than 2cents over the last 24 hours following worse than expected inflation data. Quarterly CPI figures surprised the market, indicating a contraction in inflation of -0.2%. This sent the Australian dollar tumbling over 200 pips from a high of 0.7764 to a low of 0.7550 having since retraced. Market focus will remain on the Reserve Bank of Australia’s decision next week. Despite CPI missing expectations, the RBA may need more time to digest current market conditions. As current expectations for a rate cut are sitting at 53%, this could pose a decent opportunity for traders with a bullish bias.
Significant movements were also seen in the NZD/USD pair as the RBNZ decided to hold rates at the current 2.25% level. The RBNZ made sure to downplay the recent improvement in the global economic outlook, as they maintained a clear easing bias. The NZD jumped 1.7% off the back of the news, currently trading at 0.692.
Central banks have been active this week with meetings scheduled for RBNZ, FOMC and BoJ. The Federal Reserve meeting resulted in a 9-1 vote to hold rates at current levels. The Federal Reserve expects economic conditions to improve however expect inflation to remain low in the near term. Despite the slightly less dovish rhetoric, policy makers will be placing emphasis on data in the weeks leading up to both June and July meetings. With the upcoming U.S election and British referendum in this same period, there is potential for significant changes market fundamentals.
Currency Updates:
Trade EUR/USD Intraday: further advance.
Pivot: 1.1270
Our preference: long positions above 1.1270 with targets @ 1.1340 & 1.1380 in extension.
Alternative scenario: below 1.1270 look for further downside with 1.1245 & 1.1215 as targets.
Comment: the RSI lacks downward momentum.
Supports and resistances:
1.1420 **
1.1380 ***
1.1340 ***
1.1327 Last
1.1270 ***
1.1245 ***
1.1215 ***
Trade USD/JPY Intraday: further advance.
Pivot: 110.75
Our preference: long positions above 110.75 with targets @ 111.80 & 112.45 in extension.
Alternative scenario: below 110.75 look for further downside with 110.25 & 109.90 as targets.
Comment: the RSI lacks downward momentum.
Supports and resistances:
113.00
112.45
111.80
111.49 Last
110.75
110.25
109.90
Trade GBP/USD Intraday: caution.
Pivot: 1.4520
Our preference: long positions above 1.4520 with targets @ 1.4585 & 1.4640 in extension.
Alternative scenario: below 1.4520 look for further downside with 1.4465 & 1.4410 as targets.
Comment: intraday technical indicators are mixed and call for caution.
Supports and resistances:
1.4670 **
1.4640 **
1.4585 **
1.4538 Last
1.4520 ***
1.4465 ***
1.4410 ***
Trade AUD/USD Intraday: under pressure.
Pivot: 0.7685
Our preference: short positions below 0.7685 with targets @ 0.7545 & 0.7495 in extension.
Alternative scenario: above 0.7685 look for further upside with 0.7725 & 0.7765 as targets.
Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
Supports and resistances:
0.7765
0.7725
0.7685
0.7600 Last
0.7545
0.7495
0.7465
Trade SPI 200 (ASX) (M6) Intraday: key resistance at 5233.
Pivot: 5233
Our preference: short positions below 5233 with targets @ 5145 & 5111 in extension.
Alternative scenario: above 5233 look for further upside with 5270 & 5300 as targets.
Comment: as long as 5233 is resistance, look for choppy price action with a bearish bias.
Supports and resistances:
5300
5270
5233
5192 Last
5145
5111
5090
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