Article by: ETO Markets
Following US Federal Reserve Chair Jerome Powell's hearing before the House Financial Services Committee, the agony on the Greenback grew. Powell stated that if they are more certain that there is additional proof of declining inflation, interest rate reductions are still likely to occur in the upcoming months.
The market had anticipated that the Fed will change course on policy in the second half of this year, as Chair Powell confirmed. As of right now, markets are pricing in a 70% possibility—a marginal increase from the 63% likelihood observed only the day before—that the Fed may start lowering rates in June.
China's trade balance for February was CNY 890.8 billion, a significant increase above the previous figure of CNY 540.90 billion. In the reported month, exports increased significantly by 7.1% YoY, compared to 2.3% in January and 1.9% predicted. In February, the nation's imports increased 3.5% YoY, up from 0.2% in January.
The latest Australian foreign trade statistics was released by the Australian Bureau of Statistics on Thursday. It shows that the country's trade surplus increased to 11,027 million MoM in February, compared to 11,500 million projected and 10,743 million in the previous reading. Further information reveals that Australia's monthly Goods and Services Exports for December were 1.6% of the previous 1.8% statistics. Imports of goods and services up 1.3% in February MoM compared to a 4.8% increase in January.
Amidst fresh speculations on a rate hike by the Bank of Japan, follow-through buying is drawn to the Japanese Yen. The USD bulls are on the defensive because to the uncertainty surrounding the Fed's plan of rate cuts. The market's attention is still fixed on Friday's release of the highly anticipated US NFP report.
The idea of a higher dollar in the near term is supported by the sluggish fundamentals of the euro zone in contrast to the robust recovery of the US economy, especially in light of the potential that the ECB and the Fed would begin their easing programs almost simultaneously.
On Wednesday, the EUR/USD reached a five-week high of ... It then increased by around two-thirds of a percent during the day to close the day slightly below ... The intraday market action penetrated the … handle by breaking past a short-term resistance zone.
For the fourth straight trading day, the EUR/USD pair is expected to close higher. Since the last swing down into the … level, EUR/USD has increased by almost 2%.
AUD developments should be closely monitored in relation to China. In fact, persistently solid economic data are essential for strengthening the Australian currency and maybe starting a more robust upward trend in the AUD/USD exchange rate, even though possible stimulus measures in that nation might provide short-term respite. The Australian dollar is projected to receive additional support when commodities prices rise in tandem with a potential comeback of the Chinese economy.
It is important to note that if the AUD/USD convincingly breaks above the pivotal 200-DMA at …, the negative trend should reverse. The 4-hour chart indicates that the spot appears to have broken above the area of recent consolidation. The first obstacle arises at … and is succeeded by ... Conversely, … offers prompt support, while … and … are not far behind.
