Two trades to watch: EUR/USD, AUD/USD
EUR/USD rebounds ahead of eurozone GDP and German inflation. AUD/USD rises ahead of RBA interest rate decision.
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EUR/USD looks to eurozone GDP and German inflation
EUR/USD is capitalizing on a weaker USD at the start of the week after steep losses last week.
Growing divergence between the ECB and the Fed dragged on the pair after the hawkish Fed meeting.
This week it’s the turn of the ECB. Before that, eurozone GDP is expected to show growth slowed significantly in Q4 as Omicron cases rose.
German inflation is also due to show inflation easing in January to 4.3% YoY, down from 5.3% in December. Slowing inflation could take pressure off an already dovish ECB.
Where next for EUR/USD?
EUR/USD has risen off 1.1136 the 18-month low hit last week and is heading towards resistance at 1.1190 the late November low.
A break above here, in addition to the bullish crossover on the MACD could help the price rise towards 1.1230 the December low and the 50 sma at 1.1270.
That said the 50 sma crossing below the 100 sma suggests gives a bearish signal. Sellers could look for a move below 1.1120 last week’s low to open the door to 1.11 round number and 1.10 psychological level.
AUD/USD rises ahead of RBA
AUD/USD is pushing higher on Monday after booking losses of over 2.7% last week.
A more hawkish than expected Fed plus risk off sentiment sent the pair tumbling last week.
Today, the risk on mood and optimism ahead of the RAB meeting is helping AUD/USD rise back above the key psychological level of 0.70.
Softer than expected Chinese data is being shrugged off
The RBA is due to end the pandemic bond buying programme. However, as this is expected investors will be more focused on any shift towards a more hawkish stance.
The RBA so far has indicated a 2023 rate hike. However, the statement could point to a 2022 rise if wage growth is faster than forecast.
Where next for AUDUSD?
AUDUSD rebounded off 0.6967 reached last week. The retaking of 0.70 the key psychological level, in addition to the bullish crossover on the MACD are keeping buyers optimistic of further gains.
Buyers will be looking for a move over 0.7090 a support (Jan 24 & Dec 20) to negate the near term down trend and look ahead 0.7142 the 50 sma.
On the flip side sellers could look for a move below 0.6967, which could open the door to 0.6930 the multi-month falling trend line support.
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