Article by: ETO Markets
Australia's central bank chooses a data-dependent approach in response to the ongoing problems brought about by inflation and the country's faltering economy. The RBA's move on Tuesday to increase the Official Cash Rate from 4.10% to a 12-year high of 4.35% served as more evidence of this strategy. The action was a direct reaction to the most recent inflation data, which showed a noteworthy 5.6% monthly increase.
The US Treasury bond yields continue to drop as there is growing recognition that the Federal Reserve is drawing closer to the end of its policy tightening campaign, which puts US Dollar bulls on the defensive. However, the recent remarks made by a number of Fed members cast doubt on the question of whether interest rates had peaked or if more hikes were required to return inflation to the 2% target. Moreover, the cautious market sentiment ought to help keep the downside of the safe-haven Greenback in check.
In October, China's Consumer Price Index fell by 0.2% yearly instead of the 0.1% that was anticipated. CPI decreased by 0.1% after growing by 0.2% earlier. A tight relationship exists between inflation rates and gold's performance, and any indications of a slowing economy may have an effect on gold's demand.
The likelihood of Middle East supply interruptions following the Israel-Hamas conflict appears to have diminished for investors. This sent the black liquid below the 200-DMA, to a nearly four-month low on Wednesday. Other factors that contributed to this were the reduction in worries about limited global supply and the deteriorating outlook for the world economy, which is predicted to hurt fuel demand.
The latest reading of the German Consumer Price Index revealed an annual rate of 3.8%, the lowest since August 2021. No surprises were revealed. As the economy seems to be on the verge of a recession and inflation starts to decline, the European Central Bank is thought to have finished its cycle of tightening. Despite recent remarks from ECB members, who suggested that the central bank shouldn't take too much solace from recent inflation data, this is in line with market expectations.
The EUR/USD continued to rise above a bullish 20-DMA and recovered from the 50-DMA at ... Technical indicators present different hazards and a mixed picture. For the bulls, a drop below … would be a bad sign, implying more losses to come.
The 4-hour chart shows that the price is circling the 20-SMA. The final barrier before hitting the most recent high at … is …, which might be tested if it continues to advance over … over the coming hours. Conversely, a decline below … would expose … and mark the end of the current rebound.
Australia's central bank chooses a data-dependent approach in response to the ongoing problems brought about by inflation and the country's faltering economy. The RBA's move on Tuesday to increase the Official Cash Rate from 4.10% to a 12-year high of 4.35% served as more evidence of this strategy. The action was taken in reaction to the most recent Monthly Consumer Price Index data for September, which showed a noteworthy 5.6% increase over the forecast 5.4% gain.
On Thursday, the AUD/USD pair is trading close to the psychological level of key support at …, with further support coming from the 20-DMA at ... The AUD/USD pair may head lower and reach the November low at … if there is a clear break below the latter. The 23.6% Fibonacci retracement at … serves as the first obstacle on the rise. The psychological level at …, which is in line with the 38.2% Fibonacci retracement level at …, comes next.
