Aussie surges after RBA decision

GBPUSD – technical overview

The market is in a correction phase in the aftermath of the run to fresh multi-month highs in 2021. At this stage, additional setbacks should be limited to the 1.3000 area ahead of the next major upside extension towards a retest and break of critical resistance in the form of the 2018 high. Back above 1.3835 takes pressure off the downside.

• R2 1.3354 – 4 March high – Strong
• R1 1.3299 – 23 March high – Medium
• S1 1.3051 – 29 March low – Strong
• S2 1.3000 – Psychological – Medium

GBPUSD – fundamental overview

The Pound got a boost on Monday after BOE Cunliffe said further policy tightening might be necessary. Meanwhile, the UK Office for Budget responsibility sees inflation topping 9% this year. Key standouts on today’s calendar come from services PMI reads out of Germany, the Eurozone, and UK, trade data out of the US and Canada, US ISM non-manufacturing, and some Fed speak.

USDJPY – technical overview

The market has rocketed higher to fresh multi-month highs and is now staring at a retest of the critical peak from 2015 up ahead of 126.00. Technical studies are however quite extended, with scope for a sizable correction in the weeks ahead.

• R2 125.86 – 2015 high – Strong
• R1 125.11 – Figure – Medium
• S1 121.18 – 25 March low – Medium
• S2 120.95 – 24 March low – Medium

USDJPY – fundamental overview

The Yen continues to take its hits from the massive yield differential and monetary policy divergence between the BOJ and Fed. The BOJ continues with its effort to buy long bonds, with the 30 year JGB settling below 1%. Key standouts on today’s calendar come from services PMI reads out of Germany, the Eurozone, and UK, trade data out of the US and Canada, US ISM non-manufacturing, and some Fed speak.

AUDUSD – technical overview

At this stage, the market has found a bottom and is trying to work back to the topside. Ultimately, it will take a weekly close back above 0.7600 to officially shift the focus back on the topside.

• R2 0.7617 – 25 June high – Strong
• R1 0.7615 – 5 April/2022 high – Medium
• S1 0.7500 – Psychological– Medium
• S2 0.7456 – 29 March low – Medium

AUDUSD – fundamental overview

Earlier today, the RBA held its cash rate but came out with a more hawkish communication after dropping language around staying patient on policy. Implied probability for a June RBA rate hike is now over 100%. The currency has rocketed to another fresh yearly high as a result, this after already benefiting in the lead up to the decision from positive market sentiment, overall bid commodities, and solid local data. Key standouts on today’s calendar come from services PMI reads out of Germany, the Eurozone, and UK, trade data out of the US and Canada, US ISM non-manufacturing, and some Fed speak.

USDCAD – technical overview

Signs of a major bottom in the works after a severe decline from the 2020 high. A recent weekly close back above 1.2500 encourages the constructive outlook and opens the door for a push back towards next critical resistance in the 1.3000 area. Any setbacks should be well supported into the 1.2200s.

• R2 1.2625 – 22 March high – Strong
• R1 1.2593 – 28 March high  – Medium
• S1 1.2466 – 25 March low – Medium
• S2 1.2430 – 30 March/2022 low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been well bid overall on elevated commodities prices, an uptick in global sentiment and solid Canada data. Canada building permits just came in at 21% month over month versus 6.5% expected. Street consensus is now growing for a 50bp rate hike from the Bank of Canada next week. Key standouts on today’s calendar come from services PMI reads out of Germany, the Eurozone, and UK, trade data out of the US and Canada, US ISM non-manufacturing, and some Fed speak.

NZDUSD – technical overview

Setbacks have intensified in recent weeks with the market trading down to fresh multi-month lows. A recent breakdown below the 0.6700 area opens the door for a drop towards 0.6500 in the sessions ahead.

• R2 0.7000 – Psychological – Strong
• R1 0.6999 – 30 March/2022 high – Medium
• S1 0.6728 – 15 March low – Medium
• S2 0.6700 – Figure – Medium

NZDUSD – fundamental overview

The New Zealand Dollar has been tracking with commodities and risk sentiment. Overall, both of performed well of late, which has helped to drive the currency to yearly highs. The New Zealand rate market is now pricing nine 25 bp hikes in 2022 over the course of the six remaining RBNZ meetings. Key standouts on today’s calendar come from services PMI reads out of Germany, the Eurozone, and UK, trade data out of the US and Canada, US ISM non-manufacturing, and some Fed speak.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. Back above 4,700 will be required at a minimum to take the immediate pressure off the downside.

• R2 4700 – Round number – Strong
• R1 4641 – 29 March high – Medium
• S1 4374 – 18 March low – Medium
• S2 4330 – 17 March low – Medium

US SPX 500 – fundamental overview

With so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with coronavirus fallout, rising inflation, and geopolitical tension should weigh more heavily on investor sentiment in Q2 2022.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900.

• R2 2076 – Record high, August 2020 – Strong
• R1 2071 – 8 March/2022 high – Medium
• S1 1900 – Round number – Medium
• S2 1878 – 16 November high – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, coronavirus fallout, inflation risk, and geopolitical tension. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.