FUNDAMENTAL ANALYSIS
Carl Braganza
AUD/USD
The pair has rallied more than 2.7% in the last few days to 0.74. The strength this week came from rising commodity prices, positive employment data, as well as news from China about the setting of an economic growth target. Iron ore prices topped $150 a barrel during the week, with other energy and commodity prices rising throughout the week, helping boost Australia’s terms of trade. Additionally, news was released earlier in the week about Australia’s unemployment rate, which lowered to its lowest since the GFC, to 4.0%, with 77,400 jobs created in February. Finally, Beijing’s announcement of a 5.5% economic growth rate target, above market expectations of 4.5%, indicated positive sentiment for Australia, given that China is a major trading partner.
EUR/USD
The Euro ended the week a little higher, closing at 1.1050 with a weekly high of 1.1136. The drop in the USD came about despite the Fed’s 25 basis point interest rate hike, with risk-on sentiment after Ukraine-Russia peace talks during the middle of the week. That deteriorated to some extent on Friday with an improvement in the geopolitical landscape as well as the news of a record trade balance deficit of $27.2 billion Euros for January, with imports rising 44.3% year-on-year compared to a 18.9% rise in exports.
TECHNICAL ANALYSIS
Vikas Arkalgud
AUD/USD
The AUD has shown strength over the past week to reach 0.741USD, after positive employment data and rising commodity prices. It is now approaching the 0.744 resistance level previously reached in September 2021 and early March this year. It will be interesting to see whether the Aussie breaks through the resistance level this week upon positive fundamental factors, or responds to the resistance level and enter into a sideways market. Regarding EMAs, the 14-day EMA has now risen to just about surpass the 200-day EMA on Friday 18 March, giving a small indication of a bullish market in the AUD/USD.
On 17 March, the MACD line crossed above the signal line, indicating bullish momentum for the pair. The RSI is currently sitting at 62.36, which does not give a definitive overbought or oversold signal, so attention must be paid over the next week to whether it surpasses a reading of 70.
EUR/USD
The Euro has risen moderately over the past week to hit 1.105USD. However, the pair is still in a long-term bearish trend, with the 52-day EMA having crossed below the 200-day EMA in August 2021. It will be interesting to see whether the pair re-enters the sideways market which occurred last summer, with support and resistance lines at 1.112 and 1.149, respectively.
The MACD line crossed above the signal line on Wednesday 16 March, thereby indicating some bullish momentum for the pair. However, the RSI shows a neutral reading of 45.82, thereby not giving an overbought or oversold condition for the past week.