The USD is gaining ground across all major Forex pairs. European geopolitical concerns appear to be driving investors to purchase US assets despite US data indicating the country's economy weakening.
The Reserve Bank of Australia hiked interest rates by 50 bps earlier in the session, leaving it at 1.85%; this is the third consecutive 50 bps hike from the RBA in an effort to control inflation and restore price stability.
The AUD could see high volatility in the upcoming sessions as Australia is scheduled to release high-impact news this week. On Wednesday, they will announce the Balance of Trade; expert consensus is a 14B surplus, although a 1.965B drop from the previous month; Australia’s economy relies heavily on the export of commodities.
On Wednesday, RBA will release a Statement on Monetary Policy which will give market participants a better picture of economic expectations for Australia, likely bringing high volatility to AUD forex pairs.
The US will also release major news this week, with the main focus on Non-Farm Payrolls, which will have high impact on the value of the USD; a significant drop is expected with a 223K consensus; a 149K drop from the previous month, which could weaken the USD against other major currencies.
The Bollinger bands are wide, allowing the pair to move in either direction with high volatility. The pair found resistance close to the upper band, which, combined with fundamental factors, weakened the AUD.
The pair continues trading above the short and long-term moving averages, but this could change very soon as the gap between the MAs is shrinking; we would expect a crossing of the moving averages in the short term, which would indicate a trend reversal.
The pair found strong support on the 38.2% Fibonacci retracement at $0.69110; if the price completes the breakout, we would see the AUD significantly lower. The relative strength index is at 50%, allowing the pair to continue moving downwards before entering an oversold status.
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