Fundamental Analysis:

In the last FOMC conference meeting and economic projections, the Feds stated that interest rate hike would be data dependent. The major data’s they intend to focus on is the Labor sector, inflation reports and wage growth. Last week, data from unemployment claims and inflation showed improvement in the economy as investors are still holding grounds rate hike is expected by June or at worst September this year.

Meanwhile, the recent RBA Financial Stability Review has caused the markets to tweak expectations of a rate cut to a 61% probability at the April 7th meeting vs 49% before the release, so we are expecting a weak Australian dollar.


Technical Analysis:

The pair breached 0.7912 resistance (Feb 26 high) briefly during last week’s trading session but couldn’t sustain above that level as it topped out at 0.7937 and reversed with an engulf candlestick pattern on the 4 hours charts. Near term bias stays bearish with price actions from 0.7559 seen as a wave correction at 0.7937. The larger down trend is expected to resume later and break of 0.7559 will target next fibonacci level at 0.7182. However, decisive break of 0.7937 will indicate near term reversal and bring stronger rebound to 0.8294 resistance and above.


In the week ahead, investors will be turning their attention to Friday’s U.S. Non-farm payrolls report for further indications on the strength of the recovery in the labor market.

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