Risk sentiment may be the name of the game in the next couple of hours as traders price in easing restrictions in China and maybe a less hawkish Fed tightening schedule.
I’m looking at AUD/USD’s triangle for clues, yo!
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
BIS: central banks need to act “quickly and decisively before inflation becomes entrenched”
IMF cuts 2022 US GDP growth to 2.9%, says the path to avoiding a recession is ‘narrowing’China’s industrial firm profits fell by 6.5% y/y in May, less than the 8.5% annualized decline in April
People’s Bank of China (PBoC) injected 100B CNY into the banking system, the largest daily injection since March 31
Gold rises as G-7 nations plan to ban bullion imports from Russia
Shanghai to resume dine-in at restaurants in low-risk areas
European stocks hit two-week highs as commodities rebound
Dollar struggles as big rate hike bets cool
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.S. core durable goods orders at 12:30 pm GMT
U.S. pending home sales at 2:00 pm GMT
BOJ’s core CPI at 5:00 am GMT (June 28)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: AUD/USD
There are not a lot of top-tier economic data scheduled for release in the next trading sessions, so major currencies will likely take their cues from overall risk sentiment.
The odds favor risk-takers after the PBoC injected legit moolah into the banking system just as Shanghai eased some of its COVID restrictions.Meanwhile, talks of the Fed likely not needing a 75-basis-point hike in July got traders selling USD.
This is partly why AUD/USD popped up from its .6880 lows to trade closer to the .6950 minor psychological area.
AUD/USD trading firmly above .6950 means that it has broken above a descending triangle resistance as well as the 100 and 200 SMAs on the 1-hour time frame. The upside breakout could push the pair to inflection points like .7000 or .7075.
Of course, the U.S. markets could get hit with another round of risk aversion. AUD/USD could get rejected at the triangle resistance and make its way back to its .6880 previous lows.
What do you think? Will AUD/USD break higher today? Or will the descending triangle pattern lead to a downside breakout?