FUNDAMENTAL ANALYSIS
Jason Chen
AUD/USD
AUD/USD
To close the week, the Australian Dollar slipped by 0.68% to the 0.7440 range against the greenback after hitting a near 1 year high of 0.7660 on the second trading day of the week, the 5th of April. In the RBA cash rate decision meeting this week, the committee decided to hold the cash rate at 0.1%. In his speech, the RBA governor Phillip Lowe touched on the resilience of the Australian economy, and its momentous recovery from the Omicron wave with unemployment figures in February falling to 4.0%, a rate not seen since the Global Financial Crisis. RBA’s central forecast had unemployment fall below 4.0% later in 2022 and remain at that level throughout 2023. Furthermore, this pickup in economic activity has increased the headline inflation to 3.5%, with the underlying measure picking up to 2.6%, within the RBA’s target band. Despite this increase, it is still lower than many other countries like the US whose headline figure jumped by an annualised 7.9% in February. Therefore, all signs are pointing to a stronger Australian economy and accommodative stances from both the RBA and the Commonwealth government should continue to support the economy in the medium term.
EUR/USD
The Euro dropped to its lowest level against the greenback in over a month, closing over 1.54% down for the week. With inflation rampant in the eurozone with expected inflation to reach 7.5% in March and over 10% in the coming months, the euro is being left completely exposed. Next week, ECB will deliver an almost certain rate hike but more importantly, the markets are waiting to see what ECB president Christine Lagarde’s stance on the end of their Asset Purchasing Program. With the central bank expected to retract support for growth, combined with rising energy prices, all signs are pointing to a reduction in growth and potentially a case of stagflation. With these factors in mind, the bearish trend of the EUR/USD is likely to continue due to the multitude of potential downside risks.
Finally, it will be interesting to see how the French Presidential Election affects the currency pair as the markets may factor in a political risk premium after polls show that Marie Le Pen had closed the gap with current president Emmanuel Macron.
TECHNICAL ANALYSIS
John Ngyuen
AUD/USD
The Euro continues its downtrend slowly down from last week against the Australian Dollar, however we will likely see a potential reverse to the upside once its around the 1.08078 mark showing a lot of buy side liquidity which probably will be swept before the upmove to the various supply zones sitting on top at prices of 1.09, 1.05, 1.11. Overall, the market is currently bearish but once we see the react based off 1.08078, we can possible see a trend change to the upside before a possible rejection at 1.11. Overall two scenarios we can see in this pair. 1. If price slows down after sweeping the previous mitigation which dipped in the demand zone and forms and possible bullish doji, which in addition to a break and retest of structure to the upside, we can aim for a long with TP at the three main supply zones. 2. If price does not slow down and gives us strong momentum, we can possible go for a short given a break and retest of structure confirming the continuation of the bearish structure.
EUR/USD
Price overall on the AUD dollar has been bullish in the past week or so. However, it has recently broken structure and switched bearish. This is due to the accumulation of orders which created a sideways trend 0.745 and 0.75 which led to liquidity sweeps on both buyers and sellers. Price has now just finished its distribution and will now probably test around the 0.74 range. If we see price reacting around that range with high momentum we can conclude is a bearish pair. We can possibly see a short after the pull back. The other scenario is that if price slows down and forms doji, we can possibly go for a long given that there is a break of structure to the upside which then target our TP at the 0.76 zone where a major supply zone lies.
