EUR/USD volatility diminishes while AUD/USD rallies on RBA rate hike and USD/JPY slips
Outlook on EUR/USD, AUD/USD and USD/JPY as RBA hikes rates top 4.10%, the highest since 2012.
EUR/USD volatility diminishes
Last week EUR/USD bounced off its two-month low at $1.0636 to Friday’s high at $1.0779 as the US agreed to raise its debt ceiling. Since then volatility has diminished with range trading between these extremes taking place.
Potential support below Monday’s $1.0675 low can be spotted along the March-to-June tentative uptrend line at $1.0644 whereas immediate resistance is seen along the two-month tentative downtrend line at $1.075.
Failure at the $1.0636 May low on a daily chart closing basis would target the January and March lows at $1.0516 to $1.0484. Above the May-to-June downtrend line at $1.075 sits last week’s $1.0779 high.
AUD/USD rallies on surprise RBA rate hike
AUD/USD is on track for its fourth consecutive day of gains as the Reserve Bank of Australia (RBA) surprised market participants with a 25-basis point (bp) rate hike to 4.10% in order to combat inflationary and wage growth pressures.
The cross thus rallied close to the 200-day simple moving average (SMA) at $0.6693 which may act as resistance, together with the February-to-June downtrend line at $0.6723.
Were it to be overcome, the April and May highs at $0.6806 to $0.6818 could also be in view. Slips may find support around Friday’s high at $0.6639 and at the 18 May low at $0.6605.
USD/JPY comes off seven-month high
USD/JPY tried to recover on the back of a depreciating US dollar on Monday and managed to heave itself back up to ¥140.45, close to its six-month high at ¥140.93, before slipping back as the greenback gave back some of its recent gains.
The cross now weighs on the May-to-June uptrend line at ¥139.22, a fall through which would put last week’s low at ¥138.44 back on the plate. Failure there would engage the ¥137.91 to ¥137.77 March and early-May highs which are expected to withstand the first test.
While no currently unexpected rise takes the currency pair to above Monday’s ¥140.45 high, downside pressure is likely to dominate.
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