As was widely expected RBA remained on hold, keeping interest rates at +1.50%. The accompanying statement had a neutral to dovish tone, keeping the same arguments more or less as in the previous decision. Dovish comments included that wages growth remains low and that headline CPI rate to be lower than earlier expected in 2018, however on the bright side, inflation is forecasted to accelerate more in 2019/20 than what was previously expected. AUD/USD treated the decision as a non-event, as volatility remained low and the pair kept its sideways movement.
AUD/USD continued its sideways movement yesterday, between the 0.7410 (R1) resistance level and the 0.7370 (S1) support line. As volatility seems to remain low, we maintain our sideways bias for today and the pair could be more USD led. Technically, it would be evident that the RSI indicator in the 4-hour chart remains near the reading of 50, implying a rather indecisive market. Should traders favor AUD long positions, we could see the pair breaking the 0.7410 (R1) resistance line and aim for the 0.7440 (R2) resistance level. On the flip side, should traders favor AUD short positions we could see the pair breaking the 0.7370 (S1) support line and aim for the 0.7345 (S2) support area.
- Support: 0.7370(S1), 0.7345(S2), 0.7310(S3)
- Resistance: 0.7410(R1), 0.7440(R2), 0.7465(R3)
USD feeds on trade tensions
The USD strengthened against a number of currencies while remained stable against others yesterday. As per analysts, the USD is supported by trade tensions as the US economy seems to be in a better position to handle protectionism. However, question-marks arise if US economic growth starts to slow down because of tariffs or due to a fading effect of past tax cuts. Media reports state that there is still a lot of uncertainty about tariffs and how bad it can get, however, the issue may have started to lose steam. Should there be further headlines on tariffs we could see volatility rising.
EUR/USD remained relatively stable yesterday between the 1.1580 (R1) resistance line and the 1.1510 (S1) support line. Some bearish tendencies occurred as Germany’s industrial orders growth rate for June dropped more than expected but corrected later on and continued its sideways movement. Technically it should be noted that the pair has clearly broken the downward trend- line incepted since the peak of the 31st of July. Hence, we lift our bearish bias for a sideways movement. Should the pair’s direction be possessed by the bulls we could see the pair breaking the 1.1580 (R1) resistance line and aim for the 1.1640 (R2) resistance hurdle, while should the bears dictate the pairs’ direction we could see it breaking the 1.1510 (S1) support line and aim for the 1.1445 (S2) support barrier.
- Support: 1.1510 (S1), 1.1445(S2), 1.1375(S3)
- Resistance: 1.1580(R1), 1.1640(R2), 1.1745(R3)
In today’s other economic highlights:
In the European session, we get Germany’s Industrial output growth rate for June as well as Trade Balance figure for June. In the American session we get from the US the number of JOLTS Job Openings for June and the API weekly crude oil stocks figure, while from Canada we get the Ivey PMI for July.
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