AUD/USD Rebounds From Fresh 2021 Low with RSI Buy Signal Taking Shape

AUD/USD attempts to retrace the decline following the Federal Open Market Committee (FOMC) interest rate decision as it bounces back from a fresh 2021 low (0.7477), with the Relative Strength Index (RSI) indicating a textbook buy signal as it rebounds from oversold territory and climbs back above 30.

AUD/USD REBOUNDS FROM FRESH 2021 LOW WITH RSI BUY SIGNAL TAKING SHAPE

AUD/USD trades below the 200-Day SMA (0.7550) for the first time since June 2020 as Federal Reserve officials forecast two rate hikes for 2023, while the Reserve Bank of Australia (RBA) appears to be a on a preset course as the central bank is unlikely to achieve its policy targets “until 2024 at the earliest.”

It seems as though the RBA is in no rush to switch gears as the central bank pledges to “not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range,” and Governor Philip Lowe and Co. may continue to strike a dovish forward guidance in the second half of the year as “inflation and wage pressures are subdued.”

However, the RBA may lay out an exit strategy at its next interest rate decision on July 6 as officials “consider future bond purchases following the completion of the second $100 billion of purchases under the government bond purchase program in September,” and indications of a looming shift in monetary policy may prop up AUD/USD if the central bank shows a greater willingness to wind down its emergency tools.

Until then, AUD/USD continue to retrace the decline following the Fed rate decision as the RSI bounces back from oversold territory, but the recent shift in retail sentiment looks poised to persist as the exchange rate trades below the 200-Day SMA (0.7550) for the first time since June 2020.

AUD/USD RATE DAILY CHART

Canadian Dollar Forecast: USD/CAD Surge Pulls Back – Loonie Levels

USD/CAD put in a massive reversal last week on the back of the FOMC.

Does the reversal have staying power? Short-term bullish momentum keeps the door open for higher-highs. The analysis contained in article relies on price action and chart formations.

Last week was big for USD/CAD, as a major push higher by bulls broke through a number of resistance levels.

It was earlier in June when sellers remained in-control of USD/CAD, angling for another test of the 1.2000 psychological level. But, as I had warned a few days prior, bears were already looking beleaguered, and a pullback started to seem more probable.

On June 2nd, bears took their swing but ended up falling short, creating a swing low at the 1.2002 spot. And as I said in the webinar last week, this was a prime example of a psychological level exerting influence on the market without having actually come into play.

Through the next couple weeks in June, ahead of the FOMC rate decision, prices continued to work-higher. Along the way a less- hawkish Bank of Canada helped to bring a bit of CAD weakness into the equation.

But it was the FOMC rate decision that made a serious dent. The Fed highlighted the potential for two rate hikes in 2023 and the US Dollar started to fly against many currencies, CAD included. Friday saw some thickening of the drama as St. Louis Fed President, James Bullard, warned that he might be willing to raise rates in 2022, even faster than the Fed had warned of just a couple of days prior. In response, the US Dollar drove even-higher and USD/CAD made a fast run towards the 1.2500 psychological level.

USD/CAD DAILY PRICE CHART

USD/ZAR Forecast: SA Rand Pulling Back After Hawkish Fed Scare

Rand resumes week in the green USD/ZAR testing long-term resistance

SOUTH AFRICAN RAND FALLS FROM BEST PERFORMING CURRENCY VS U.S. DOLLAR YTD

Last week the South African rand did not react well to the Federal Reserve’s dot plot adjustment message. This week, the local currency pushed back attempting to recover lost gains. The result is apparent from the image chart below which shows the rand slipping from the best performing currency against the dollar in 2021 to third place behind the Ukrainian hryvnia and Canadian dollar respectively – a title it has held for most of 2021.

QUESTION MARKS AROUND REFLATION TRADE SURPRESSING ZAR

With U.S. inflation concerns comparatively dissipating, South African linked commodity prices such as iron ore, platinum and gold have been significantly declining post-FOMC which has endured this week. These weaker commodity prices have a negative impact on rand strength which could hinder further rand gains.

Following on with the inflation discussion, South African CPI (May) will be scheduled on 23, June 21, 2021 at an estimated figure at 5.2% up from 4.4% prior (see calendar below). In addition, key risk announcements from the U.S. will be watched carefully with several high impact events expected throughout the week.

USD/ZAR Daily Chart

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