With Australia just printing upbeat CPI figures and no major reports due in the next trading session, this pair might simply carry on with its climb.
Before I show y’all my chart, check out the top headlines that moved the markets in the earlier sessions:
- Richmond manufacturing index down from 19 to 14 vs. consensus at 18
- U.S. CB consumer confidence index up from 87.1 to 89.3 this month
- House delivers Trump impeachment charge to Senate
- Crude oil ticks higher on larger than expected API draw
- Australia’s Q4 2020 CPI down from 1.6% to 0.9% vs. 0.8% forecast
- Australian trimmed mean CPI up from 0.3% to 0.4% as expected
- Australia’s NAB business confidence index down from 13 to 4
- China and New Zealand sign updated free trade deal
- Chinese industrial profits up from 15.5% to 20.1% year-on-year
- U.K. steps up hotel quarantine restrictions for returnees from 30 high-risk countries
Upcoming Potential Catalysts on the Economic Calendar:
- German GfK consumer climate at 7:00 am GMT
- Credit Suisse economic expectations index for Switzerland at 9:00 am GMT
What to Watch: AUD/JPY
This pair recently busted through a descending trend line to hint that a reversal is in the cards. This correction could give Aussie bulls a better opportunity to jump in.Keep in mind that the Land Down Under just printed upbeat inflation readings, with the headline CPI coming in at 0.9% versus the 0.7% consensus and the trimmed mean figure inching higher from 0.3% to 0.4%.
Meanwhile the yen could enjoy a bit more action than the dollar, as traders steer clear of the U.S. currency ahead of the FOMC statement.
A continuation of risk-on flows stemming from the vaccine rollout might be enough to keep the higher-yielding Aussie supported against the safe-haven yen after all.
The 38.2% level looks like a strong support zone as it lines up with the former trend line resistance, but more buyers might be hanging out at the 80.00 major psychological mark at the 50% Fib.
The moving averages just made a bullish crossover to confirm that support levels are more likely to hold than break. In addition, Stochastic is approaching oversold territory to reflect exhaustion among sellers and a possible return in bullish pressure.