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Monday's FX Analysis: EUR/USD, GBP/USD, AUD/USD

Published 03/12/2018, 06:12 AM
Updated 07/09/2023, 06:31 AM

EUR/USD

U.S. Nonfarm Payrolls better than expected but wage inflation misses its target again.

The euro rose across the board after the European Central Bank dropped its pledge to expand its quantitative easing bond purchasing stimulus program, in a more hawkish rate statement than expected.

Fed Chair Powell said that there are no elements strong enough in U.S. recent inflation data to raise interest rates vigorously.

U.S. Core CPI ticked up for the second month in a row, while U.S. Retail Sales in contraction.

Federal Reserve Chairman Jerome Powell told Congress the central bank remains on track to gradually raise interest rates, but soft U.S. economic data tempered gains.

In our previous analysis we expected a re-test of 1.22 area with chances to fall below 1.217 Demand Area, and this happened. Now the overbought in area 1.2385 is pushing prices down to that level again.

Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:

Weekly Trend: Neutral
1st Resistance: 1.2385
2nd Resistance: 1.2552
1st Support: 1.2170
2nd Support: 1.2080

GBP/USD

Last UK Manufacturing PMI data confirmed a disappointing trend.

Last Job market, Construction and Services PMI data came higher than analysts’ expected. Subdued only by the industrial production and recent Retail Sales data.

May wants financial services to be included in a free trade deal - something she believes it is still possible to achieve despite accusations from Brussels that her approach amounts to 'cherry picking' the best bits of the EU.

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The Federal Reserve should continue to raise U.S. interest rates this year in response to faster economic growth fueled by recent tax cuts as well as a stronger global growth.

As written previously, now we can only expect a break and consolidation below 1.38 pointing at 1.375 Demand Area.

Our special Fibo Retracement is confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2001:

Weekly Trend: Overbought
1st Resistance: 1.3921
2nd Resistance: 1.4125
1st Support: 1.3750
2nd Support: 1.3610

AUD/USD

Australia GDP data ticked down again. Also last Australia Retail Sales came poorer than expected, while RBA kept interest rates unchanged.

Australia construction work done relevantly lower than expectations. Last Australia CPI (inflation release) ticked down. Also last Australia GDP data were worse than expected, deteriorating the hopes of a future hawkish RBA behavior.

The Fed signaled its confidence about inflation and growth in the U.S. The Fed said that inflation is likely to rise this year, boosting expectations for further interest rate hikes under incoming central bank head Jerome Powell.

After the re-test of 0.7916 area we expected a crash down to 0.783 area again. And this is happening. Now, the violation of 0.7828 level can trigger a long-term bearish cycle.

Our special Fibo Retracements are confirming the following S/R levels against the Monthly and Weekly Trendlines obtained by connecting the relevant highs and lows back to 2012:

Weekly Trend: Overbought
1st Resistance: 0.7916
2nd Resistance: 0.7980
1st Support: 0.7735
2nd Support: 0.7680

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