AUD/USD Rate Slips Below 200-Day SMA for First Since June 2020
AUD/USD slips below the 200-Day SMA (0.7548) for the first time since June 2020 as fresh forecasts coming out of the Federal Reserve indicate two rate hikes for 2023, and the exchange rate appears to be on track to test the
yearly low (0.7532) as it fails to retain the opening range for June.
AUD/USD trades to a fresh monthly low (0.7540) as the Federal Open Market Committee (FOMC) now forecasts the US economy to grow 7.0% in 2021, with the exchange rate largely unfazed by the sharp rise in Australia Employment as Fed officials show a greater willingness to switch gears sooner than previously projected.It remains to be seen if the Reserve Bank of Australia (RBA) will respond to the 115.2K rise in job growth as the Unemployment Rate slips to 5.1% to mark its lowest reading since February 2020, and the ongoing improvement may encourage the central bank to gradually change its tone in the second half of the year as Governor Philip Lowe acknowledges that the “level of employment in Australia is above its pre-pandemic level.”
In a recent speech at the Australian Farm Institute Conference, Governor Lowe insists that “the economy is now transitioning from recovery mode to expansion mode,” with the central bank going onto say that “the GDP data also paint a positive picture of the recovery, which has been V-shaped.”
However, Governor Lowe warns that “it is premature to be considering ceasing bond purchases” as officials sees little probability of achieving the dual mandate until 2024, and it seems as though the RBA will continue to layout a dovish forward guidance at its next interest rate decision on July 6 as the central bank head reiterates that the Board “will not increase the cash rate until inflation is sustainably within the 2–3 per cent target range.”
Until then, AUD/USD may face headwinds as the RBA appears to be on a preset course, and a further decline in the exchange rate may fuel the recent flip in retail sentiment like the behavior seen earlier this year.
AUD/USD RATE DAILY CHART
Dow Jones Price Falls to Key Trendline as Fed Enters Taper Talk Window
The Dow Jones broke beneath the rising trendline from March 2020 for the first time
A confirmed break could see the Industrial Average fall further as the index grasps for support US Dollar, Yields Surge as Fed Brings Forward Taper Timeline
DOW JONES PRICE FALLS TO KEY TRENDLINE AS FED ENTERS TAPER TALK WINDOW
The Dow Jones is at risk of breaking beneath a key trendline following the June FOMC meeting. In the corresponding press conference, Fed Chairman Jerome Powell revealed the central bank has effectively entered the taper talk window which, in addition to the revised dot plot, culminated in a relatively hawkish overall tone. As a result, the Dow Jones, Nasdaq 100 and S&P 500 fell lower as rate hike projections moved forward.
While the major indices all suffered losses, the Dow Jones appears to be on the brink of a major technical break. The trendline in question is derived from the index’s pandemic low in March 2020 and has influenced price throughout the time since. While the Nasdaq 100 and S&P 500 have since broken beneath their respective trendlines, the Dow enjoyed a supplementary level of support derived from various market peaks throughout the last fifteen months. Until Wednesday, the March trendline was unbroken since its inception.
DOW JONES PRICE CHART: DAILY TIME FRAME (JANUARY 2020 – JUNE 2021)
Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP
The single currency put in big moves against USD and JPY on the heels of yesterday’s FOMC rate decision.
In EUR/USD, it appears that we have a trend reversal whereas EUR/JPY bulls may still be able to make a case for continuation. EUR/GBP, however, presents an interesting situation for those looking to fade this recent run of Euro weakness.
The analysis contained in article relies on price action and chart formations.
The single currency has been on the move over the past 24 hours, helped along by a surging US Dollar on the heels of yesterday’s FOMC rate decision. Against both the US Dollar and the Japanese Yen, the Euro has folded over in a very noticeable manner, highlighting potential trend changes in each market. Against the British Pound, however, the Euro ran into an area of support that may be able to support reversal or pullback themes for those that are looking to fade the move.
EUR/USD AS THE BIG MOVER
The US Dollar surge was probably the most noticeable item still driving from that rate decision yesterday. EUR/USD was previously showing a stubborn element of strength, holding above the 1.2000 level for the better part of the past two months.
But, as I had warned on Tuesday, the pair was setting up in a bearish fashion, showing a lower-low to go along with a possible lower-high.
That sequence continued and as the Fed spoke yesterday, the bottom fell out of the pair.
EUR/USD TWO HOUR PRICE CHART
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