Australia is printing its quarterly inflation figures!
Will the report help AUD/USD extend its downtrend ahead of the Fed’s decision?
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/JPY’s Fibonacci pullback ahead of the FOMC’s decision. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
CBI: UK factory output slows from +19 to +6, price pressures come off peak
Russia to cut Nord Stream 1 gas to 20% of capacity, escalating energy tensions over Ukraine warRussia becomes China’s largest oil supplier as prices drop
Coinbase faces US SEC probe over cryptocurrency listings
Meeting minutes: BOJ agreed on need for low rates, saw wage hikes as key to outlook
Russian gas cut to Europe hits economic hopes, Ukraine reports attacks on coastal regions
Oil rises for a second day on supply tightness concerns
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.K.’s CBI realized sales at 11:00 am GMT
U.S. S&P house price index at 1:00 pm GMT
U.S. CB consumer confidence at 2:00 pm GMT
U.S. new home sales at 2:00 pm GMT
U.K. BRC shop price index at 11:01 pm GMT
AU quarterly CPI at 1:30 am GMT (Jul 27)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: AUD/USD: 4-hour
If you’ve been closely watching comdoll pairs as I have, then you’ll know that AUD/USD has been trading below a trend line resistance since mid-April when the pair got rejected at .7600.
The ball is on the bears’ side today as AUD/USD retests its trend line resistance.Of course, it also helps that the trend line is right around the 50% Fibonacci retracement of June’s downtrend and that there’s a bearish divergence on the 4-hour time frame.
Australia’s quarterly CPI report should heat things up for AUD bulls and bears. Markets expect consumer prices to slow down in Q2 compared to Q1’s growth figures.
If Australia’s inflation unexpectedly heats up, then RBA Governor Lowe and his team can make good on their hints of further rate hikes in their next meetings.
AUD/USD could bust through its months-strong trend line resistance and hit areas of interest like .7050 or .7225.
If consumer price increases slow down, however, or if traders go back to buying USD ahead of the Fed’s decision this week, then AUD/USD could extend its downtrend.
AUD/USD’s trend line resistance may hold and help drag AUD back to its monthly lows.