• AUD/USD managed to partially reverse the recent weakness.
• The key 200-day SMA around 0.6545 is the next target.
• No further rate hikes, according to the RBA Minutes.

The slight downward pressure on the US Dollar (USD) prompted a decent rebound in AUD/USD on Tuesday, rebounding from the area of recent four-week lows near 0.6480.

In line with the daily recovery of the Aussie dollar came the continuation of the uptrend in copper prices, which rose to levels last seen in late April 2023, and the small bounce in iron ore prices after finding some contention near the key $100.00 mark per tonne recently.

Meanwhile, the economic situation in China is also expected to impact the AUD. Potential stimulus measures by both the government and the PBoC may offer temporary relief, but sustained improvements in economic indicators are needed to strengthen the Australian currency and potentially initiate a significant uptrend in AUD/USD.

Back to the Reserve Bank of Australia (RBA), the Minutes from its March meeting affirmed that the central bank has abandoned its inclination towards tightening monetary policy. In contrast to the February meeting, there was no deliberation regarding the possibility of raising the cash rate target at the March gathering. Instead, the members agreed that it was appropriate to describe the policy outlook as one in which it is challenging to definitively anticipate future adjustments to the cash rate target. RBA cash rate futures still imply a projection of slightly under 50 basis points of policy rate cuts in 2024.

It is worth recalling that the RBA is among the last G10 central banks expected to consider interest rate adjustments this year.

Given the differing timelines for monetary policy adjustments between the RBA and the Fed, the Australian dollar may gather momentum later in the year, potentially leading to further appreciation in AUD/USD. If the pair surpasses the December 2023 peak of 0.6871, it could aim for a significant level of 0.7000 in the short term.

AUD/USD daily chart

AUD/USD short-term technical outlook

Further upward momentum in the AUD/USD should challenge the key 200-day SMA at 0.6544 prior to the provisional 100-day SMA at 0.6596. Once this region is cleared, spot could revisit the March peak of 0.6667 (March 8) ahead of the December 2023 high of 0.6871 (December 28). Further north align monthly tops of 0.6894 (July 14) and 0.6899 (June 16), all before the critical 0.7000 barrier.

If sellers regain control, the pair could hit the so-far April low of 0.6480 (April 1) ahead of the March low of 0.6477 (March 5), followed by the 2024 low of 0.6442 (February 13). Breaking below this level may lead to a test of the 2023 low of 0.6270 (October 26), prior to the round level of 0.6200 and the 2022 low of 0.6169 (October 13).

Looking at the big picture, the pair is projected to restore its bullish momentum once it decisively surpasses the crucial 200-day SMA.

On the 4-hour chart, the pair appears to have regained its upward momentum after dropping to the 0.6480 zone. Against this, there is temporary resistance at the 55-SMA of 0.6531, which is ahead of the 200-SMA of 0.6547 and 0.6559. However, fresh losses may drive the pair to revisit 0.6480, then 06477, and finally 0.6442. Furthermore, the MACD remained bearish, with the RSI rising to around 49.

• AUD/USD managed to partially reverse the recent weakness.
• The key 200-day SMA around 0.6545 is the next target.
• No further rate hikes, according to the RBA Minutes.

The slight downward pressure on the US Dollar (USD) prompted a decent rebound in AUD/USD on Tuesday, rebounding from the area of recent four-week lows near 0.6480.

In line with the daily recovery of the Aussie dollar came the continuation of the uptrend in copper prices, which rose to levels last seen in late April 2023, and the small bounce in iron ore prices after finding some contention near the key $100.00 mark per tonne recently.

Meanwhile, the economic situation in China is also expected to impact the AUD. Potential stimulus measures by both the government and the PBoC may offer temporary relief, but sustained improvements in economic indicators are needed to strengthen the Australian currency and potentially initiate a significant uptrend in AUD/USD.

Back to the Reserve Bank of Australia (RBA), the Minutes from its March meeting affirmed that the central bank has abandoned its inclination towards tightening monetary policy. In contrast to the February meeting, there was no deliberation regarding the possibility of raising the cash rate target at the March gathering. Instead, the members agreed that it was appropriate to describe the policy outlook as one in which it is challenging to definitively anticipate future adjustments to the cash rate target. RBA cash rate futures still imply a projection of slightly under 50 basis points of policy rate cuts in 2024.

It is worth recalling that the RBA is among the last G10 central banks expected to consider interest rate adjustments this year.

Given the differing timelines for monetary policy adjustments between the RBA and the Fed, the Australian dollar may gather momentum later in the year, potentially leading to further appreciation in AUD/USD. If the pair surpasses the December 2023 peak of 0.6871, it could aim for a significant level of 0.7000 in the short term.

AUD/USD daily chart

AUD/USD short-term technical outlook

Further upward momentum in the AUD/USD should challenge the key 200-day SMA at 0.6544 prior to the provisional 100-day SMA at 0.6596. Once this region is cleared, spot could revisit the March peak of 0.6667 (March 8) ahead of the December 2023 high of 0.6871 (December 28). Further north align monthly tops of 0.6894 (July 14) and 0.6899 (June 16), all before the critical 0.7000 barrier.

If sellers regain control, the pair could hit the so-far April low of 0.6480 (April 1) ahead of the March low of 0.6477 (March 5), followed by the 2024 low of 0.6442 (February 13). Breaking below this level may lead to a test of the 2023 low of 0.6270 (October 26), prior to the round level of 0.6200 and the 2022 low of 0.6169 (October 13).

Looking at the big picture, the pair is projected to restore its bullish momentum once it decisively surpasses the crucial 200-day SMA.

On the 4-hour chart, the pair appears to have regained its upward momentum after dropping to the 0.6480 zone. Against this, there is temporary resistance at the 55-SMA of 0.6531, which is ahead of the 200-SMA of 0.6547 and 0.6559. However, fresh losses may drive the pair to revisit 0.6480, then 06477, and finally 0.6442. Furthermore, the MACD remained bearish, with the RSI rising to around 49.

• The Euro initially fell against the British pound, but you can see we have turned around to form a bit of a hammer early in the day.
• The 0.85 level underneath continues to be an area that a lot of people will be paying attention to because it is a large round figure and an area that historically has been very important.

So with all that being said, I think it comes together quite nicely for a potential buying opportunity that we can take advantage of. The 0.85 level is an area that a lot of people continue to see buyers jumping into the market to take advantage of this floor. But if we were to break down below the 0.85 level, then it opens up a move down to the 0.84 level.

When you zoom way out though, it’s obvious that this is a market that has seen a lot of interest in this area. So I think it’s probably worth a trade. Whether or not it sticks, we have to remain vigilant to that. But I think given enough time, we could go as high as 0.8750. And that of course is an area where we’ve seen a lot of interest previously either way.

Even if you don’t trade this particular EUR/GBP pair, it’s a very important one to pay attention to because it gives you an idea of what to do with the Euro against the dollar or the pound against the dollar. Whichever one’s doing better, if you’re shorting the dollar against one of these currencies, then you want to own that one. It’s a process called triangulation. On the other hand, if one of these currencies is doing particularly bad against the other one and they’re both doing poorly against the US dollar, well, you know which pair to short the Pound/dollar or Euro/dollar or whatever. So with all that being said, this is a very important chart. As things stand right now, I do think we’re in the process of trying to build a little bit of a base for the next bounce, but I will watch that 0.85 level very closely.

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• EUR/USD traded with decent gains and revisited 1.0780.
• Germany’s flash CPI confirmed disinflationary pressures remain in place.
• The US Dollar gave away part of its recent sharp uptick.

The noticeable drop in the Greenback prompted a similarly decent advance in EUR/USD, which managed to revisit the 1.0780 zone after bottoming out near 1.0720, or two-month lows, early on Tuesday.

Price action in spot, in the meantime, were accompanied by mixed developments in US yields, vs. a meaningful bounce in German 10-year bund yields, while the monetary policy framework stayed unchanged.

Regarding monetary policy, both the Federal Reserve (Fed) and the European Central Bank (ECB) are expected to begin easing cycles, possibly starting in June. However, the pace of subsequent interest rate cuts may differ, leading to potentially divergent strategies between the two central banks. Nonetheless, it is anticipated that the ECB will not significantly lag behind the Fed.

According to the FedWatch Tool offered by CME Group, the likelihood of a rate cut in June hovered around 62%.

Around a potential ECB rate cut, and prior to the release of flash inflation figures in the euro bloc on Wednesday, advanced CPI in Germany showed further disinflationary pressures during March after the CPI rose by 2.2% over the last twelve months (from 2.5%).

On the other side, Cleveland Fed President L. Mester said on Tuesday that she still sees the Fed cutting its interest rates later in the year.

Looking at the medium-term horizon, the relatively subdued fundamentals of the euro area, along with the growing likelihood of a “soft landing” for the US economy, reinforce expectations of a stronger Dollar in the medium term, especially as both the ECB and the Fed potentially implement their easing measures almost simultaneously. In such a scenario, EUR/USD could undergo a more significant correction, initially targeting its year-to-date low around 1.0700 before potentially revisiting the lows observed in late October 2023 or early November near the 1.0500 level.

EUR/USD daily chart

EUR/USD short-term technical outlook

On the upside, EUR/USD is projected to encounter early resistance at the key 200-day SMA at 1.0833 ahead of the interim 100-day SMA at 1.0875. The surpass of this region exposes the March high of 1.0981 (March 8), then the weekly top of 1.0998 (January 11) and the psychological barrier of 1.1000. Further advances from here might lead to a December 2023 peak of 1.1139 (December 28).

On the downside, another test of the so-far April low of 1.0724 (April 2) should not be ruled out ahead of the 2024 low of 1.0694 (February 14). Down from here emerges the November 2023 low of 1.0516 (November 1), seconded by the weekly low of 1.0495 (October 13, 2023), the 2023 bottom of 1.0448 (October 3), and the round level of 1.0400.

The 4-hour chart shows a significant bounce from recent lows near 1.0720. The initial level of resistance is 1.0779, ahead of the 55-SMA of 1.0817 and the 200-SMA of 1.0845. In the other direction, the next visible downward barrier looks to be 1.0724, followed by 1.0694 and 1.0656. The Moving Average Convergence Divergence (MACD) remained negative, with the Relative Strength Index (RSI) climbing past 45.

• EUR/USD traded with decent gains and revisited 1.0780.
• Germany’s flash CPI confirmed disinflationary pressures remain in place.
• The US Dollar gave away part of its recent sharp uptick.

The noticeable drop in the Greenback prompted a similarly decent advance in EUR/USD, which managed to revisit the 1.0780 zone after bottoming out near 1.0720, or two-month lows, early on Tuesday.

Price action in spot, in the meantime, were accompanied by mixed developments in US yields, vs. a meaningful bounce in German 10-year bund yields, while the monetary policy framework stayed unchanged.

Regarding monetary policy, both the Federal Reserve (Fed) and the European Central Bank (ECB) are expected to begin easing cycles, possibly starting in June. However, the pace of subsequent interest rate cuts may differ, leading to potentially divergent strategies between the two central banks. Nonetheless, it is anticipated that the ECB will not significantly lag behind the Fed.

According to the FedWatch Tool offered by CME Group, the likelihood of a rate cut in June hovered around 62%.

Around a potential ECB rate cut, and prior to the release of flash inflation figures in the euro bloc on Wednesday, advanced CPI in Germany showed further disinflationary pressures during March after the CPI rose by 2.2% over the last twelve months (from 2.5%).

On the other side, Cleveland Fed President L. Mester said on Tuesday that she still sees the Fed cutting its interest rates later in the year.

Looking at the medium-term horizon, the relatively subdued fundamentals of the euro area, along with the growing likelihood of a “soft landing” for the US economy, reinforce expectations of a stronger Dollar in the medium term, especially as both the ECB and the Fed potentially implement their easing measures almost simultaneously. In such a scenario, EUR/USD could undergo a more significant correction, initially targeting its year-to-date low around 1.0700 before potentially revisiting the lows observed in late October 2023 or early November near the 1.0500 level.

EUR/USD daily chart

EUR/USD short-term technical outlook

On the upside, EUR/USD is projected to encounter early resistance at the key 200-day SMA at 1.0833 ahead of the interim 100-day SMA at 1.0875. The surpass of this region exposes the March high of 1.0981 (March 8), then the weekly top of 1.0998 (January 11) and the psychological barrier of 1.1000. Further advances from here might lead to a December 2023 peak of 1.1139 (December 28).

On the downside, another test of the so-far April low of 1.0724 (April 2) should not be ruled out ahead of the 2024 low of 1.0694 (February 14). Down from here emerges the November 2023 low of 1.0516 (November 1), seconded by the weekly low of 1.0495 (October 13, 2023), the 2023 bottom of 1.0448 (October 3), and the round level of 1.0400.

The 4-hour chart shows a significant bounce from recent lows near 1.0720. The initial level of resistance is 1.0779, ahead of the 55-SMA of 1.0817 and the 200-SMA of 1.0845. In the other direction, the next visible downward barrier looks to be 1.0724, followed by 1.0694 and 1.0656. The Moving Average Convergence Divergence (MACD) remained negative, with the Relative Strength Index (RSI) climbing past 45.

• The Swiss franc has been back and forth during the trading session on Monday, as this market is going to continue to see a lot of noisy behavior.
• The ¥167 level underneath has been offered support a couple of times, and therefore I think it’s possible that we would see a situation where we have a lot of noise in this area.

The Swiss franc initially did try to rally against the Japanese yen, but as it pulled back it looks like we are just simply settling into some type of short-term range. This is a pair that I watch quite often, due to the fact that one of the facts of life when trading currencies is that you are trying to move with interest rates. The Swiss franc and the Japanese yen are two of the world’s favorite funding currencies, and even though the Bank of Japan recently increased interest rates to a whopping 0.1%, the reality is that the Swiss National Bank has recently cut rates. That’s part of why we are seeing a downtrend in the short-term, but in the longer term we still see an interest rate differential that pays you to own this pair at the end of the day. Granted, it’s not a lot but it’s enough to continue to favor shorting the Japanese yen.

Ultimately, this is a situation where if we can break above the 50-Day EMA above, which is closer to the ¥169 level, then we could see quite a bit of upward momentum. In that environment, I would anticipate that the Japanese yen would get eviscerated against most currencies, not just this one. After all, this will be the “weakest currency” to match up against the Japanese yen, so this will give you a good idea as to how many people will be jumping into short the yen, and start buying other currencies in pairs like the GBP/JPY, NZD/JPY, and AUD/JPY currency markets. In other words, this chart is a bit of a harbinger for what happens with the JPY overall.

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• GBP/USD recovered modestly after falling to multi-week lows.
• 1.2590 aligns as strong resistance for the pair.
• Investors await US JOLTS Job Openings data and comments from Fed officials.

GBP/USD broke below 1.2600 in the American session on Monday and touched its weakest level in seven weeks below 1.2550. The pair stages a rebound in the European trading hours on Tuesday but it could find it difficult to clear the strong 1.2590 resistance.

Renewed US Dollar (USD) strength after the ISM Manufacturing PMI arrived at its highest level since September 2022 at 50.3 on Monday weighed heavily on GBP/USD. Moreover, the Prices Paid Index, the inflation component of the PMI survey, rose to 55.8 in March from 52.5 in February, highlighting a strengthening input inflation and further supporting the USD.

Early Tuesday, the data from the UK showed that S&P Global/CIPS Manufacturing PMI got revised higher to 50.3 in March from 49.9 in the flash estimate and helped Pound Sterling find a foothold.

Later in the day, JOLTS Job Openings data for February will be featured in the US economic docket. A reading above 9 million could help the USD preserve its strength, while a print at or below 8.5 million could have the opposite effect on the currency’s performance.

Investors will also pay close attention to comments from Federal Reserve (Fed) officials. The CME FedWatch Tool shows that markets are pricing in a nearly 60% probability of a 25 basis points Fed rate cut in June, suggesting that the USD faces a two-way risk depending on policymakers’ tone. If market participants refrain from pricing in a policy pivot in June, the USD could continue to outperform its rivals.

GBP/USD Technical Analysis

The 200-day Simple Moving Average (SMA) aligns as stiff resistance at 1.2590. In case GBP/USD fails to clear that level, technical sellers could remain interested. On the downside, static support seems to have formed at 1.2540 before 1.2520 (beginning point of the latest uptrend) and 1.2500 (psychological level).

Above 1.2590, the 50-period SMA on the 4-hour chart could act as interim resistance at 1.2620 ahead of 1.2650 (100-day SMA) and 1.2670-1.2680 (Fibonacci 61.8% retracement, 200-period SMA).

• GBP/USD recovered modestly after falling to multi-week lows.
• 1.2590 aligns as strong resistance for the pair.
• Investors await US JOLTS Job Openings data and comments from Fed officials.

GBP/USD broke below 1.2600 in the American session on Monday and touched its weakest level in seven weeks below 1.2550. The pair stages a rebound in the European trading hours on Tuesday but it could find it difficult to clear the strong 1.2590 resistance.

Renewed US Dollar (USD) strength after the ISM Manufacturing PMI arrived at its highest level since September 2022 at 50.3 on Monday weighed heavily on GBP/USD. Moreover, the Prices Paid Index, the inflation component of the PMI survey, rose to 55.8 in March from 52.5 in February, highlighting a strengthening input inflation and further supporting the USD.

Early Tuesday, the data from the UK showed that S&P Global/CIPS Manufacturing PMI got revised higher to 50.3 in March from 49.9 in the flash estimate and helped Pound Sterling find a foothold.

Later in the day, JOLTS Job Openings data for February will be featured in the US economic docket. A reading above 9 million could help the USD preserve its strength, while a print at or below 8.5 million could have the opposite effect on the currency’s performance.

Investors will also pay close attention to comments from Federal Reserve (Fed) officials. The CME FedWatch Tool shows that markets are pricing in a nearly 60% probability of a 25 basis points Fed rate cut in June, suggesting that the USD faces a two-way risk depending on policymakers’ tone. If market participants refrain from pricing in a policy pivot in June, the USD could continue to outperform its rivals.

GBP/USD Technical Analysis

The 200-day Simple Moving Average (SMA) aligns as stiff resistance at 1.2590. In case GBP/USD fails to clear that level, technical sellers could remain interested. On the downside, static support seems to have formed at 1.2540 before 1.2520 (beginning point of the latest uptrend) and 1.2500 (psychological level).

Above 1.2590, the 50-period SMA on the 4-hour chart could act as interim resistance at 1.2620 ahead of 1.2650 (100-day SMA) and 1.2670-1.2680 (Fibonacci 61.8% retracement, 200-period SMA).

• China reported an expansion in manufacturing activity after six months of contraction.

• The US reported the first expansion in manufacturing activity in over a year and a half.

• This week, markets will get a lot of data on the US labor market.

The AUD/USD price analysis reveals a bullish narrative as the dollar relents after a strong rally. On Monday, the dollar strengthened after an upbeat manufacturing report reduced rate cut bets in the US. However, this report came after China’s positive manufacturing figures, which strengthened the Aussie and put a floor on excessive declines in the pair.

On Sunday, China reported an expansion in manufacturing activity after six months of contraction. The purchasing managers’ index increased from 49.1 in February to 50.8 in March, beating forecasts. A value above 50 shows expansion. Consequently, it boosted the Australian dollar, which is a proxy for the yuan.

Similarly, the US reported the first expansion in manufacturing activity in over a year and a half, boosting the dollar on Monday. Increased manufacturing activity reflects a robust economy despite higher interest rates. The Fed has kept interest rates high for some time to reduce demand in the economy which drives inflation. Therefore, if demand is still high, policymakers will hesitate to start lowering interest rates. 

Last week, data on consumer sentiment, GDP and home sales came in higher than expected, highlighting a robust economy. At the same time, inflation is on a downtrend. Therefore, there is more confidence that the US will avoid a recession caused by higher interest rates. 

This week, markets will get a lot of data on the US labor market. These figures might alter the rate-cut outlook.

AUD/USD key events today

AUD/USD technical price analysis: Price escapes bullish channel, eyes new lows

On the charts, the AUD/USD price has broken out of its bullish channel and might soon reach new lows. The bias is bearish as the price is making lower lows and highs below the 30-SMA. At the same time, the RSI trades in bearish territory below 50. 

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Bears broke below the channel support before retesting it and making new lows. This confirmed the channel breakout. However, the price is currently rising to retest the 0.6520 resistance level and the SMA. Given the bearish bias, it might reverse at this resistance and fall to the 0.6450 support level.

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• The dollar has risen against the Japanese yen yet again during the Monday session, but that’s not really a big surprise considering the interest rate differential.
• The 152 yen level above continues to be a massive barrier that the market does not look like it’s going to be able to break through easily, but when it does, it’s going to truly send this market straight up in the air.

This could kick off a massive “FOMO trade” that a lot of people will be inclined to jump into. This is a market that continues to see a lot of volatility, and therefore you have to be cautious about the position size, but this thing could run.

At that point, I would anticipate that the US dollar would go looking to the 155 yen level rather quickly. You can think of this, for the most part, like a beach ball being held underwater, because once it breaks the surface, there should be a lot of inertia to propel the pair higher. Short-term pullbacks at this point in time continue to be buying opportunities because, there’s no fundamental reason for this USD/JPY pair to fall anytime soon.

All of that being said and the fact that the interest rate differential gets you paid at the end of the day, you do need to be cognizant of the fact that the jobs report is on Friday. That normally has a major influence on this pair, so we could get a pullback due to that, but I would only be a buyer of that dip. The 150 yen level underneath looks to be a major short-term floor in the market, and the fact that the 50-day EMA is approaching that level also makes it very interesting. In general, I have no interest in shorting this pair, at least not any foreseeable future that I have plotted out. That doesn’t mean that things can’t change, but right now, with the Bank of Japan raising interest rates to just a paltry 0.1%, it’s not quite enough to get people away from the carry trade.

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AUD/USD Current Price: 0.6483

• Chinese positive news maintained AUD/USD afloat at the beginning of the day.
• Falling United States stocks undermined commodity-linked currencies.
• AUD/USD maintains its bearish stance ahead of the Asian opening.

The Australian Dollar (AUD) plummeted against its American rival at the beginning of the week, with the pair heading into Tuesday’s opening trading near the March low at 0.6476. The pair aimed north during Asian trading hours as good news from China underpinned the mood. AUD/USD peaked at 0.6537 as the Chinese Caixin Manufacturing PMI surged to 51.1 in March from 50.9 in February, also beating the expected 51.

The pair retreated in a dull European session and accelerated its slump after Wall Street’s opening, as US indexes edged lower after the long weekend. Financial markets are digesting Friday news, which showed US inflation as measured by the Personal Consumption Expenditures (PCE) Price Index, held at 2.8% YoY in February. Following the report, Federal Reserve (Fed) Chairman Jerome Powell said the central bank is in no rush to hike rates amid still high inflation and a resilient economy.

Australia will return from a long weekend and kick-start the week with a busy macroeconomic calendar. The country will publish the March TD Securities Inflation report, an estimate provided by the University of Melbourne. The ANZ Job Advertisements report will also be on the docket, while the Reserve Bank of Australia (RBA) will release the March Commodity Index SDR and the minutes of the March Meeting. Back then, Australian policymakers held the Cash Rate steady at 4.35% and reaffirmed their commitment to bring inflation back to target. “The Board needs to be confident that inflation is moving sustainably towards the target range. To date, medium-term inflation expectations have been consistent with the inflation target, and it is important that this remains the case,” policymakers remarked.

AUD/USD short-term technical outlook

The AUD/USD pair trades around 0.6480, and the daily chart shows bears are in full control. The pair develops below all its moving averages, with the 200 Simple Moving Average (SMA) heading south below directionless shorter ones. At the same time, technical indicators gain downward momentum within negative levels, in line with another leg south towards 0.6441, the year’s low.

In the 4-hour chart, the risk skews to the downside. AUD/USD accelerated lower once it broke below a now bearish 20 SMA. The longer moving averages grind lower above the shorter one, with the 100 SMA aiming to cross below the 200 SMA, usually a strong bearish signal. Finally, the Momentum indicator turned lower after a period of neutral consolidation, while the Relative Strength Index Indicator hovers around 36, in line with a bearish extension.

Support levels: 0.6475 0.6440 0.6400

Resistance levels: 0.6595 0.6530 0.6565  

AUD/USD Current Price: 0.6483

• Chinese positive news maintained AUD/USD afloat at the beginning of the day.
• Falling United States stocks undermined commodity-linked currencies.
• AUD/USD maintains its bearish stance ahead of the Asian opening.

The Australian Dollar (AUD) plummeted against its American rival at the beginning of the week, with the pair heading into Tuesday’s opening trading near the March low at 0.6476. The pair aimed north during Asian trading hours as good news from China underpinned the mood. AUD/USD peaked at 0.6537 as the Chinese Caixin Manufacturing PMI surged to 51.1 in March from 50.9 in February, also beating the expected 51.

The pair retreated in a dull European session and accelerated its slump after Wall Street’s opening, as US indexes edged lower after the long weekend. Financial markets are digesting Friday news, which showed US inflation as measured by the Personal Consumption Expenditures (PCE) Price Index, held at 2.8% YoY in February. Following the report, Federal Reserve (Fed) Chairman Jerome Powell said the central bank is in no rush to hike rates amid still high inflation and a resilient economy.

Australia will return from a long weekend and kick-start the week with a busy macroeconomic calendar. The country will publish the March TD Securities Inflation report, an estimate provided by the University of Melbourne. The ANZ Job Advertisements report will also be on the docket, while the Reserve Bank of Australia (RBA) will release the March Commodity Index SDR and the minutes of the March Meeting. Back then, Australian policymakers held the Cash Rate steady at 4.35% and reaffirmed their commitment to bring inflation back to target. “The Board needs to be confident that inflation is moving sustainably towards the target range. To date, medium-term inflation expectations have been consistent with the inflation target, and it is important that this remains the case,” policymakers remarked.

AUD/USD short-term technical outlook

The AUD/USD pair trades around 0.6480, and the daily chart shows bears are in full control. The pair develops below all its moving averages, with the 200 Simple Moving Average (SMA) heading south below directionless shorter ones. At the same time, technical indicators gain downward momentum within negative levels, in line with another leg south towards 0.6441, the year’s low.

In the 4-hour chart, the risk skews to the downside. AUD/USD accelerated lower once it broke below a now bearish 20 SMA. The longer moving averages grind lower above the shorter one, with the 100 SMA aiming to cross below the 200 SMA, usually a strong bearish signal. Finally, the Momentum indicator turned lower after a period of neutral consolidation, while the Relative Strength Index Indicator hovers around 36, in line with a bearish extension.

Support levels: 0.6475 0.6440 0.6400

Resistance levels: 0.6595 0.6530 0.6565  

EUR/USD Current price: 1.0740

• European Central Bank officials delivered hawkish comments on Sunday.
• The United States ISM Manufacturing PMI surged to 50.3 in March.
• EUR/USD approaches February low at 1.0694, aiming to break below it.

The EUR/USD pair fell on Monday to 1.0730, its lowest since mid-February. The US Dollar surged after Wall Street’s opening, as stocks dipped while solid United States (US) data reflected the strength of the local economy. Last Friday, Federal Reserve (Fed) Chairman Jerome Powell repeated that the central bank is in no rush to trim interest rates as inflation remains high while the economy is resilient.

Hawkish comments from European Central Bank (ECB) officials did not help the Euro. Austrian Central Bank Governor Robert Holzmann said on Sunday that the ECB could cut interest rates before the US Fed. When the ECB would pull the trigger “will depend largely on what wage and price developments look like by June,” Holzmann added.

Data-wise, the US S&P Global Manufacturing PMI was 51.9 in March, below the 52.5 expected. However, the ISM Manufacturing PMI unexpectedly surged to 50.3 in the same month after contracting for 16 consecutive months.

Germany will release on Tuesday the preliminary estimate of the March Harmonized Index of Consumer Prices (HICP), expected at 2.4% YoY, while the US will release February Factory Orders and JOLTS Job Openings for the same month. Additionally, several Fed officials will be on the wires during the American afternoon.

EUR/USD short-term technical outlook

The EUR/USD pair bounced from the mentioned intraday low but looks poised to extend its slump. In the daily chart, moving averages are gaining downward traction well above the current level, with the 200 SMA currently around 1.0840, the 50% Fibonacci retracement of the 1.0694/1.0981 rally. At the same time, technical indicators head firmly lower, approaching oversold readings. A critical support level is now the base of the aforementioned range at 1.0694, also February´s monthly low.

The 4-hour chart supports another leg south, as the Momentum indicator heads lower vertically, while the Relative Strength Index (RSI) indicator consolidates at around 31. At the same time, a sharply bearish 20 Simple Moving Average (SMA) extended its slide below the longer ones, capping advances just ahead of the 1.0800 mark.

 Support levels: 1.0730 1.0695 1.0660

Resistance levels: 1.0770 1.0805 1.0840  

EUR/USD Current price: 1.0740

• European Central Bank officials delivered hawkish comments on Sunday.
• The United States ISM Manufacturing PMI surged to 50.3 in March.
• EUR/USD approaches February low at 1.0694, aiming to break below it.

The EUR/USD pair fell on Monday to 1.0730, its lowest since mid-February. The US Dollar surged after Wall Street’s opening, as stocks dipped while solid United States (US) data reflected the strength of the local economy. Last Friday, Federal Reserve (Fed) Chairman Jerome Powell repeated that the central bank is in no rush to trim interest rates as inflation remains high while the economy is resilient.

Hawkish comments from European Central Bank (ECB) officials did not help the Euro. Austrian Central Bank Governor Robert Holzmann said on Sunday that the ECB could cut interest rates before the US Fed. When the ECB would pull the trigger “will depend largely on what wage and price developments look like by June,” Holzmann added.

Data-wise, the US S&P Global Manufacturing PMI was 51.9 in March, below the 52.5 expected. However, the ISM Manufacturing PMI unexpectedly surged to 50.3 in the same month after contracting for 16 consecutive months.

Germany will release on Tuesday the preliminary estimate of the March Harmonized Index of Consumer Prices (HICP), expected at 2.4% YoY, while the US will release February Factory Orders and JOLTS Job Openings for the same month. Additionally, several Fed officials will be on the wires during the American afternoon.

EUR/USD short-term technical outlook

The EUR/USD pair bounced from the mentioned intraday low but looks poised to extend its slump. In the daily chart, moving averages are gaining downward traction well above the current level, with the 200 SMA currently around 1.0840, the 50% Fibonacci retracement of the 1.0694/1.0981 rally. At the same time, technical indicators head firmly lower, approaching oversold readings. A critical support level is now the base of the aforementioned range at 1.0694, also February´s monthly low.

The 4-hour chart supports another leg south, as the Momentum indicator heads lower vertically, while the Relative Strength Index (RSI) indicator consolidates at around 31. At the same time, a sharply bearish 20 Simple Moving Average (SMA) extended its slide below the longer ones, capping advances just ahead of the 1.0800 mark.

 Support levels: 1.0730 1.0695 1.0660

Resistance levels: 1.0770 1.0805 1.0840