Last week we observed bearish momentum for both currency pairs.
The AUD/USD attempted to test 0.7 but fell short. It is important to note that 0.7 is likely a strong support based on previous price actions.
The EUR/USD dipped towards the region of the lower bollinger band around 1.260. This should function as a support region.
AUD/USD Technical Analysis
Looking at the AUD/USD weekly chart above we note that the currency pair was bullish for the week. Ahead lies the middle bollinger band which should offer some resistance. It lies below 0.72. The bollinger bands are flattening. This suggests a possible period of consolidation.
EUR/USD Technical Analysis
Looking at the EUR/USD weekly chart above we note that the currency pair is bearish for the week. It tested the lower bollinger band and has eased back since. 1.12 is likely to be a strong support and hence it remains to be seen if the support will fail.
Among the currency pairs covered in our premium analysis, we see a strengthening of the US dollar with the exception of the AUD/USD and USD/CAD. When we reviewed it against the price of the Brent oil ( a feature of our premium analysis), we discovered an important insight. Members do log on to your dashboards for the latest analysis.
Oil Production Pressure
Brent oil was bullsh for the week and hit a high for 2019. The rally was likely due to Saudi Arabia cutting a greater than expected amount of crude oil production. With lesser supply, price pressure to the upside increased. Both Canada’s and Australia’s economies have huge commodities sectors and are hence sensitive to the price of oil. With the increase of the value of oil, these two currencies strengthened against the US dollar too.
US Retail Sales Drop
The US Retail Sales came in at -1.2% instead of the expected 0.1%. With the data coming in negative instead of positive, this sets a very dovish tone.
Analysts are seeing this as a strengthening of the view that the US Federal Reserve will likely be compelled to keep monetary policy accommodative. As interest rate hikes look likely to be on hold for sometime, investors may turn their attention elsewhere.
Euro Zone Woes
Across the Atlantic, the Euro Zone remains challenged by the complications of the various members’ economies. The market will be comparing both the US and Euro Zone monetary progress. If the US continues to trend back towards dovish policies while the Euro Zone steps up on tightening measures, the euro is likely to strengthen against the US dollar.
Let us take a look at the significant events for the coming week.
The Australian monetary policy minutes is due next week. Any significant development both hawish or dovish will likely create an impact on sentiments. This goes the same for the US Federal Reserve FOMC meeting minutes which is also due this week. It is a detailed record of the FOMC’s most recent meeting. Paying attention to this may bring in-depth insights into the financial and economic considerations which resulted in their votes on the decision of interest rates. Any unexpected development is likely to result in increased volatility.
The Australian Wage Price index and Unemployment Rate are also due. These are related to consumer confidence and retail sales. Needless to say, sentiments impact will be significant if unexpected developments happen.
In the Euro Zone, German Flash Services which is a survey of purchasing managers will be due for release.
In the US, we are expecting the Core Durable Goods.
Both the RBA governor and ECB president are due to make speeches towards the end of the week. As policy insights may be revealed at times, do be ready for any unexpected developments.