Sample Category Title

Daily Pivots: (S1) 0.6708; (P) 0.6739; (R1) 0.6762; More...

Immediate focus is now on 0.6693 support in AUD/USD. Firm break there will l resume the fall from 0.7156 to 161.8% projection of of 0.6854 to 0.7028 from 0.6854 at 0.6539. Nevertheless, break of 0.6782 resistance should now indicate short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, focus is staying on 0.6721 structural support. Sustained break there will argue that whole rise from 0.6169 (2022 low) has completed at 0.7156, after rejection by 55 month EMA (now at 0.7164). Deeper decline would then be see back to 61.8% retracement of 0.6169 to 0.7156 at 0.6546, even as a corrective fall. Nevertheless, strong rebound from current level will retain medium term bullishness for another rise through 0.7156 later.

Daily Pivots: (S1) 1.3587; (P) 1.3608; (R1) 1.3634; More....

USD/CAD is staying in consolidation from 1.3664 and intraday bias remains neutral. Further rise is expected as long as 1.3474 resistance turned support holds. As noted before, corrective pattern from 1.3976 should have completed at 1.3261. Break of 1.3664 will resume the rise from 1.3261. Sustained trading above 1.3684 will confirm this bullish case and bring retest of 1.3976.

In the bigger picture, outlook stays bullish with 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) intact. Break of 1.3976 resistance will resume larger up trend from 1.2005 (2021 low) to 61.8% projection of 1.2401 to 1.3976 from 1.3261 at 1.4234.

Daily Pivots: (S1) 0.9922; (P) 0.9945; (R1) 0.9965; More....

Intraday bias in EUR/CHF remains on the downside at this point. Fall from is seen as another falling leg inside the corrective pattern from 1.0095. Deeper decline would be seen back to 0.9844 support. But downside should be contained by 0.9832 to bring rebound. On the upside, above 0.9986 minor resistance will turn bias back to the upside for 1.0040 resistance instead.

In the bigger picture, with 0.9832 support intact, rise from 0.9407 (2022 low) is still expected to continue. Break of 1.0095 and sustained trading above 55 week EMA (now at 1.0021) will be a medium term bullish signal, and bring further rally to 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484). However, firm break of 0.9832 support will revive medium term bearishness and bring retest of 0.9407 low instead.

Daily Pivots: (S1) 163.04; (P) 163.41; (R1) 163.85; More...

GBP/JPY is staying in consolidation below 165.99 and intraday bias remains neutral. Further rally is still expected as long as 161.18 support holds. As noted before, corrective fall from 172.11 should have completed at 155.33 already. Break of 165.99 will target 169.26 resistance first, and then 172.11 high.

In the bigger picture, corrective decline from 172.11 medium term should have completed at 155.33. With 38.2% retracement of 123.94 (2020 low) to 172.11 (2022 high) at 153.70 intact, medium term bullishness is retained. That is, larger up trend from 123.94 (2020 low) is still in progress. Break of 172.11 high to resume such up trend is expected at a later stage.

Daily Pivots: (S1) 144.42; (P) 144.90; (R1) 145.68; More....

EUR/JPY is staying in consolidation below 145.55 and intraday bias remains neutral. Further rally is expected as long as 142.13 support holds. Corrective fall from 148.38 has completed at 137.37 already. Break of 145.55 will resume the rise from 137.37 to 146.71 resistance and then 148.38 high.

In the bigger picture, as long as 55 week EMA (now at 139.42) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, firm break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Sustained break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

Daily Pivots: (S1) 0.8844; (P) 0.8866; (R1) 0.8905; More...

Intraday bias in EUR/GBP remains neutral and outlook is unchanged. On the upside, break of 0.8895 will affirm the case that correction from 0.8977 has completed at 0.8753. Further rally should be seen to retest 0.8977.

In the bigger picture, outlook is rather mixed for now, except that price actions from 0.9267 (2022 high) are part of the long term range pattern from 0.9499 (2020 high). With 0.8720 support intact, rise from 0.8545 is in favor to continue through 0.8977. However, firm break of 0.8720 will argue that such rebound has completed, and open up deeper fall through this support level.

By referring to tightening policy with issue about timing of further hikes the RBA is increasing its options – our view is that with the inflation outlook still too high it is too early to pause in April.

The Reserve Bank Board lifted the cash rate by 25 basis points from 3.35% to 3.6%.

While this decision was widely expected the real issue was the guidance in the Governor would provide for the future.

He chose to use the words, “The Board expects that further tightening of monetary policy will be needed to ensure inflation returns to target ….In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.”

The compares to the February Statement which noted, “The Board expects that further increases in interest rates will be needed over the months ahead … in assessing how much further interest rates need to increase.”

Note that in February the issue was around “how much” whereas in March it has become “when and how much.”

The assessment of those issues that the Board is following with respect to future policy the Statement provides the following insights:

• The monthly CPI suggests that inflation has peaked.
• At the aggregate level wages growth is still consistent with the inflation target and recent data suggest a lower risk of a cycle in which prices and wages chase one another.
• The Board remains alert to the risk of a price-wage spiral given the limited spare capacity in the economy.
• Household consumption growth has slowed. But in contrast, the outlook for business investment remains positive.
• Rents are increasing at the fastest rate for some years.
• Employment fell in January but that reflects changing seasonal patterns.

These insights indicate that, as should be expected, the accumulation of ten consecutive rate hikes is having an impact on the economy.

We had been expecting that the Board would continue to point to higher rates with 'guidance' along the lines of “The Board expects to increase interest rates further over the period ahead.”

In referring to monetary tightening rather than interest rates the case could be made for a very different message but the second line in the paragraph – “when and how much further interest rates need to increase" – returns the theme to interest rates rather than wider policy and adds a notable “when”.

For these reasons the case can certainly be made for a pause in April.

But we cannot overlook that the Board still has a very strong tightening bias and, by April, will still not be forecasting that inflation will return to the 2–3% target zone before mid 2025.

Recall a key reason for dismissing a pause at the December meeting was that “inflation was expected to take several years to return to the target range.”

Since then, markets have also lifted the profile for the federal funds rate by 50 – 75 basis points despite the FOMC’s forecasts expecting to lower inflation to 3.3% in 2023 compared to the RBA’s “target” of 4.75% by end 2023.

Conclusion

There is some clear evidence in the Governor’s Statement that a pause can be expected in April but the big picture for inflation has not improved sufficiently to justify that call.

We continue to expect rate increases in both April and May.

Nevertheless we will be assessing the Governor’s speeches over the next few weeks and the critical information in the Board Minutes to see whether the case for an imminent pause is justified.

DXY:

Price has broke an ascending support along with an Ichimoku cloud triggering a potential bearish move. There’s a strong 1st resistance at 104.61 too which is an overlap resistance. Price could drop from here towards 1st support at 103.76 which is an overlap support that lines up with the 38.2% Fibonacci retracement.

If price breaks that level, then the next key support is all the way down at 102.58 which is the overlap support and 61.8% Fibonacci retracement.

EUR/USD:

Price is testing a major resistance at 1.0697 which is a multiple swing high resistance. A reversal from here could see prices pushed down to 1.0577 which is the recent swing low support.

Price breaking this 1st resistance could see it rise to 2nd resistance at 1.0805 which is a key overlap resistance that lines up with the 50% Fibonacci retracement.

GBP/USD:

Price is seeing a descending resistance line push prices down towards our 1st support at 1.1923 which is a multiple swing low support. It’s worth noting that price is also seeing bearish momentum from the Ichimoku cloud, which could add to the conviction we have of price being pushed lower.

In terms of resistance, our 1st resistance is at 1.2144 which is a multiple swing high resistance that lines up with the 61.8% Fibonacci retracement.

USD/CHF:

USDCHF has dropped strongly as forecasted. We’re seeing the first major support at 0.9283 which is a 50% Fibonacci retracement and a pullback support. If price breaks that level, the next major support level price might drop to 0.9220.

USD/JPY:

Price has recently broken an ascending support but is facing support from the bullish Ichimoku cloud. It needs to break this Ichimoku cloud along with the intermediate overlap support at 135.98 to trigger a drop to 1st support at 134.46 – which is an overlap support that lines up with the major 38.2% Fibonacci retracement.

AUD/USD:

Price is seeing strong bearish momentum from a long term descending resistance line. Along with that, we can see the bearish Ichimoku cloud push prices further down. The 1st support that needs to be broken is 0.6696 which is a multiple swing low support – if price breaks this level, then the next key support level would be down at 0.6640 which is another multiple swing low support.

NZD/USD:

Price is being squeezed between a descending resistance line and an ascending support line along with an intermediate support at 0.6176. It’s worth noting that there’s strong bearish momentum from the Ichimoku cloud.

Price needs to break the intermediate support to trigger the move down to major support at 0.6131.

USD/CAD:

Price is seeing strong bullish momentum from the ascending support line and the bullish Ichimoku cloud. This could push prices up further towards 1.3667 which is a major swing high resistance. It’s worth noting that there’s a short term descending resistance line that is pushing and squeezing prices a bit.

If price were to break the ascending support line, the next key support is down at 1.3519 which is an overlap support that lines up with the 38.2% Fibonacci retracement.

DJ30:

Price is no wrestling major overlap resistance at 33474 which also happens to be a 61.8% Fibonacci retracement. If price reverses from here, the first support it could drop to is 33205 which is a pullback support and a short term 38.2% Fibonacci retracement.

If price breaks down the 1st resistance, then it could rise up to 2nd resistance at 33839 which is a bigger 61.8% Fibonacci retracement.

GER30:

Price is now testing major swing high resistance at 15657 and if price were to break this level, the next overlap resistance from the D1 timeframe is at 15851.

However, if price were to reverse from here, the next major support is down at 15234 which is an overlap support.

BTC/USD:

Price is in a descending channel and seeing our 1st resistance at 22910 which is a Fibonacci retracement and a pullback resistance. If price reverses from this level, we could see the bearish momentum take prices lower to 21367 which is an overlap support.

It’s worth noting that price has finally broken a long term ascending support-turned-resistance line which suggests that we might be seeing a longer term shift to bearish momentum.

US500

Price is testing a major overlap resistance at 4073 which also lines up with a 61.8% Fibonacci retracement.. If price were to reverse from this level, we could see it drop to the 1st support level at 3995 which also happens to be an overlap support and a 50% Fibonacci retracement.

Breaking that support could see a further drop to 3918 which is a recent swing low support.

ETH/USD:

Price is in a bearish descending channel with our 1st resistance at 1591 and the 1st support really near at 1549. Price is currently being squeezed between these 2 levels and a break of either should either see prices with recent multi-swing high resistance at 1679 or recent swing low support at 1462.

WTI/USD:

We’re seeing price test major resistance at 80.81 which is a recent swing high resistance. It is worth noting that price is seeing a recent ascending support line suggesting that there might be bullish momentum. A push from here could see prices test recent multi-swing high resistance at 82.63.

If price were to break the ascending support along with the recent 1st support at 79.76, we could see a bigger drop to 2nd support at 77.48 which is an overlap support and 50% Fibonacci retracement.

XAU/USD (GOLD):

Price is approaching our 1st resistance at 1865 which is an overlap resistance along with a 38.2% Fibonacci retracement. If price were to react off this level, we could see it drop back down to the 1st support level which is a major overlap support – breaking that level would then trigger a drop to 2nd support at 1804 which is a recent swing low support.

Daily Pivots: (S1) 1.5763; (P) 1.5824; (R1) 1.5932; More...

EUR/AUD accelerates to as high as 1.5963 so far. Intraday bias stays on the upside for retesting 1.5976 high. Decisive break there will resume whole rally from 1.4281. Next target will be 61.8% projection of 1.4281 to 1.5976 from 1.5254 at 1.6302. On the downside, below 1.5826 minor support will turn intraday bias neutral and bring consolidations first, before staging another rise.

In the bigger picture, the strong support from 55 week EMA (now at 1.5396) is raising the chance of bullish trend reversal. On break of 1.5976, focus will be on 1.6434 cluster resistance (38.2% retracement of 1.9799 to 1.4281 at 1.6389). Sustained break there should confirm that whole down trend form 1.9799 (2020 high) has completed. However, rejection by this cluster resistance will make medium term outlook neutral at best.

Australian dollar experienced a broad decline today following a subtle dovish shift in the statement, raising speculation of a potential earlier pause in the tightening cycle. While the general expectation of another hike in April remains unchanged, May is getting slightly more uncertain. So far, New Zealand dollar is the strongest performer today, followed by the European majors. Yen and dollar are the weakest next to Aussie. The greenback is likely to be impacted by the upcoming semi-annual testimony by Fed Chair Jerome Powell, with traders closely monitoring any hints of a 50bps hike this month and his outlook on the terminal rate.

Traders should keep an eye on CHF/JPY, as the franc experienced a sharp jump yesterday following stronger-than-expected Swiss CPI data, ahead of the SNB rate decision later in the month. As a result, today's remarks from SNB Chair Thomas Jordan will be particularly important, and may trigger volatility. From a technical perspective, the rise from 137.40 is still ongoing, with sustained trading above channel resistance confirming the completion of the entire correction from 151.43, and potentially leading to a retest of that level.

In Asia, Nikkei closed up 0.34%. Hong Kong HSI is down -0.21%. China Shanghai SSE is down -0.45%. Singapore Strait Times is up 0.28%. Japan 10-year JGB yield is down -0.0041 at 0.500. Overnight, DOW rose 0.12%. S&P 500 rose 0.07%. NASDAQ dropped -0.11%. 10-year yield rose 0.019 to 3.983.

RBA hikes 25bps, notes lower risk of prices-wages spiral

RBA raised the cash rate target by 25bps to 3.60%, which was widely anticipated. The bank also signaled the need for further tightening of monetary policy. Nevertheless, there was a notable dovish twist in the the statement about a lower risk of prices-wages spiral.

The central bank said monthly CPI indicator suggested that "inflation has peaked in Australia". The central forecasts is for inflation to decline this year and next to around 3% in mid-2025. Medium-term inflation expectations remain "well anchored".

Growth over the next couple of years is expected to be "below trend". Labor markets remains "very tight, although conditions have eased a little". Wage growth is "still consistent with the inflation target" and "recent data suggest a lower risk of a cycle in which prices and wages chase one another".

It indicated that "further tightening of monetary policy will be needed". The timing and extent of further interest rate hikes will depend on "developments in the global economy, trends in household spending and the outlook for inflation and the labour market".

AUD/CAD and AUD/NZD near downside breakout after RBA

Australian Dollar weakened broadly despite RBA's rate hike. This is attributed to the less hawkish statement by RBA indicating a "lower risk of a cycle in which prices and wages chase one another".

As AUD/CAD nears a breakthrough of 0.9099 temporary low, a deeper decline is expected as long as 0.9214 resistance holds. The next target for the fall from 0.9545 is 61.8% retracement of 0.8596 to 0.9545 at 0.8959. Bullish convergence conditions in 4 hour MACD suggest that stronger support may be seen there to bring a rebound.

Likewise, AUD/NZD is poised to break through 1.0794, with the decline from 1.1085 targeting the 1.0735 support or further to the 61.8% retracement of 1.0469 to 1.1085 at 1.0704. Sustained break there could pave the way to retest 1.0469 low. The near-term outlook will remain bearish as long as the 1.0890 resistance holds.

Japan's Wage Growth Disappoints in January, Real Earnings Fall the Most Since 2014

Japan's nominal labor cash earnings rose by 0.8% yoy in January, below expectations of 1.9% yoy. The strong growth rate of 4.1% yoy in December was an anomaly due to lump-sum payments, rather than regular wage rises. The level of wage growth is far below the required level needed to maintain a 2% inflation rate, as indicated by outgoing BoJ Governor Haruhiko Kuroda.

Moreover, real cash earnings of workers have declined by -4.1% yoy, indicating that their real wages have fallen the most since 2014. The continuous decline in real wages for ten consecutive months shows that inflation has surpassed earnings.

Later in the week, BoJ is expected to keep its ultra-loose monetary policy unchanged, including the negative short-term interest rate of -0.10% and the 10-year yield cap at 0.50% at Kuroda's final meeting before handing over the reins to Kazuo Ueda. The declining real wages poses a challenge for the incoming governor to achieve the inflation target set by the central bank.

Looking ahead

Swiss unemployment rate and foreign currency reserves, Germany factor orders will be released in European session. But the major focus will be on Fed Chair Jerome Powell's semi-annual testimony.

EUR/AUD Daily Outlook

Daily Pivots: (S1) 1.5763; (P) 1.5824; (R1) 1.5932; More...

EUR/AUD accelerates to as high as 1.5963 so far. Intraday bias stays on the upside for retesting 1.5976 high. Decisive break there will resume whole rally from 1.4281. Next target will be 61.8% projection of 1.4281 to 1.5976 from 1.5254 at 1.6302. On the downside, below 1.5826 minor support will turn intraday bias neutral and bring consolidations first, before staging another rise.

In the bigger picture, the strong support from 55 week EMA (now at 1.5396) is raising the chance of bullish trend reversal. On break of 1.5976, focus will be on 1.6434 cluster resistance (38.2% retracement of 1.9799 to 1.4281 at 1.6389). Sustained break there should confirm that whole down trend form 1.9799 (2020 high) has completed. However, rejection by this cluster resistance will make medium term outlook neutral at best.

Economic Indicators Update