EUR/USD, EUR/GBP and AUD/USD lower on hawkish Fed remarks
EUR/USD and AUD/USD took a hit as the US Dollar appreciated after Fed Chair Jerome Powell hinted at a 50-basis point rate hike in May with EUR/GBP recovering amid weak UK data.
EUR/USD gives back recent gains on Fed Chair’s hawkish remarks
EUR/USD’s rally off last week’s low at $1.0758 has taken the cross to the minor $1.0933 to $1.0945 resistance zone which provoked failure yesterday as hawkish US Federal Reserve (Fed) comments pushed the US Dollar higher.
Invited to a panel hosted by the International Monetary Fund (IMF), Fed Chair Jerome Powell said a 50-basis point (bp) rate increase was “on the table” for May and reiterated that Fed officials were committed to “front-end loading” inflation-fighting efforts.
The 8 April low at $1.0837 has thus been revisited, below which lies key support at the mid-April trough at $1.0758. If slid through, the April 2020 low at $1.0727 would be eyed and then the March 2020 low at $1.0638. Only a currently unexpected advance above the $1.0933 to $1.0945 late March low and 6, 7, 11 and 21 April highs would have bullish implications and put the February-to-April resistance line at $1.1043 on the map.
EUR/GBP capped by the 55-day simple moving average (SMA) at £0.8358
EUR/GBP’s bounce off last week’s £0.825 low has taken the cross to the 55-day SMA at £0.8358, before it faltered.
With UK Consumer Confidence falling to its lowest level since 2008 and UK retail sales in March dropping by 1.4%, much worse than the anticipated 0.3% decline, the currency pair is heading back up again, though.
Above yesterday’s high at £0.8367 the 11 April peak can be found at £0.838, a rise above which would change the short-term outlook back to being bullish. Minor support sits at the 28 March low at £0.8322 and also at the 8 April low at £0.8308 with further potential support seen at the 23 March £0.8296 low.
AUD/USD falls through three-month uptrend line
AUD/USD continues its descent from its early April high at $0.7661 and has now slid through the three-month uptrend line at $0.7338, driven by hawkish comments from the Fed Chair Jerome Powell hinting that a half-point rate hike was likely to be seen next month and saying that a recession in the US was difficult to avoid.
The 23 February high at $0.7284 is now in focus, below which another potential downside target can be spotted at the 10 February high at $0.7249.
Minor resistance above the breached uptrend line is seen at the 18 April $0.7343 low and also at the 22 March trough at $0.7376. While no rise above the next higher 21 April $0.7458 high ensues, the April downtrend will remain intact.
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