It has been a storming run for AUD/USD ever since testing the 0.6500 mark as buyers have certainly not relented in the rebound to its highest levels since February this week. Here’s a look at the daily chart:

The pair is down 0.2% to 0.6869 at the moment but it isn’t really hurting the technical breakout this week. Buyers have managed to do a lot since the break above the 100 (red line) and 200-day (blue line) moving averages, maintaining the more bullish bias since.

The following break of the April and May highs near 0.6800 has also been key in trading yesterday, reaffirming a stronger bias for further upside momentum.

As things stand, there is little resistance before getting the 0.7000 so that could keep buyers incentivised in chasing a push higher. A hot Australian jobs report this week is also bolstering odds for a RBA rate hike in July and if equities continue their good form, a more positive risk mood should also help the pair stay buoyed in the sessions ahead.

This article was written by Justin Low at www.forexlive.com.

• Policy is on restrictive terrain, it isn’t a support to growth
• Rates should remain in restrictive territory for some more time after the summer

Again, they’re just alluding to rates staying high beyond the summer but falling short of actually confirming a rate hike in September. The door is open though and that seems to be all markets need to be convinced, at least for now.

This article was written by Justin Low at www.forexlive.com.

From a technical standpoint, this is one of the more attractive dollar charts at the moment in my view. The pair had largely been consolidating around 1.3300 to 1.3900 since the end of last year, and finally we might be seeing a break in that range.

The drop this week takes out the key trendline support (white line) and more importantly, the weekly close now may be set for a break below the November low of 1.3225. That will be a massive win for sellers if they can hold steadfast in their conviction.

Just going by the chart, it should lend to a break below 1.3200 and there is very little support standing in the way of a further run lower in USD/CAD.

The 100 and 200-week moving averages are seen at 1.3037-69 currently and they may be what offers buyers some reprieve before testing the 1.3000 mark itself. That does afford sellers with some room to roam in the meantime but the risk for those staying long in the loonie is that of oil prices I would say.

Even though equities have been enjoying a good run of form, oil has not been able to find much comfort ever since the Saudi surprise earlier this month. That could help to prevent a slide in USD/CAD but if equities continue to stay firm while the dollar flounders, the technical picture is certainly making a case for a further drop in the pair.

This article was written by Justin Low at www.forexlive.com.

As markets are still digesting the aftermath of the Fed decision yesterday, gold is finding it rough to stay afloat as Treasury yields are continuing to hold up. Gold had previously found support from its 100-day moving average (red line) in recent weeks but that level appears to be giving way now.

And from a technical perspective, that will be a massive blow to buyers in trying to maintain their resolve of searching for a rebound after the fall since May.

A firm break and hold below the key technical support above frees up the path towards testing $1,900 next before sellers may start to search for a push towards the 200-day moving average (blue line).

As mentioned previously, I’m still a firm advocate of staying bullish in gold in the long-term but I like the thought of a deeper pullback to find more attractive opportunities in this space. Patience is key. And all else being equal, a push back towards the 200-day moving average would definitely get the bulls salivating again I would say.

This article was written by Justin Low at www.forexlive.com.

Just a bit of an update to the earlier headline here. It is said that North Korea fired two missiles today and they fell within Japan’s exclusive economic zone (EEZ). Japan adds that this would be the 13th time that North Korea’s missiles have landed in the EEZ in out of about 19 previous shots. Well, at least someone is keeping count.

This article was written by Justin Low at www.forexlive.com.

Headlines:

• Euro holds steady ahead of the ECB later
• USD/JPY extends gains to 1% to highest levels since November last year
• Eurozone April trade balance -€11.7 billion vs €25.6 billion prior
• France May final CPI +5.1% vs +5.1% y/y prelim
• Switzerland May producer and import prices -0.3% vs +0.2% m/m prior
• North Korea has fired what could be a ballistic missile – Japan defence ministry

Markets:

• AUD leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.3%
• US 10-year yields up 3.1 bps to 3.829%
• Gold down 0.7% to $1,929.74
• WTI crude up 1.1% to $69.19
• Bitcoin flat at $24,925

Markets are still digesting the Fed policy decision yesterday, and I shared some thoughts on that earlier here.

It was a rather tentative session in Europe, as regional markets are also gearing up for the ECB meeting outcome later today. The central bank is surely going to hike rates by 25 bps but it will be interesting to see if they will pre-commit to another rate hike in July, which they had been talking up in recent weeks.

The dollar is mostly steady, with the help of a big jump higher in USD/JPY during Asia trading. The pair ran up from a low of 139.95 all the way above 141.00 and pushed to a high of 141.50 in European morning trade.

There weren’t much news driving the move but the technicals are your best bet in trying to read into the situation.

Besides that, the dollar is mostly little changed against the rest of the major currencies bloc. EUR/USD is largely hanging around 1.0820-30 levels, being little changed on the day currently.

The kiwi is the only exception with NZD/USD down 0.7% to 0.6163 amid a more cautious risk mood and also a further weakening in the Chinese yuan. The aussie is able to stay more resilient after a hot jobs report, which prompted traders to think about a RBA rate hike in July.

Elsewhere, gold is under pressure in the aftermath of the Fed decision and looks poised to break below its 100-day moving average at long last in a potential fall towards $1,900 next.

This article was written by Justin Low at www.forexlive.com.

The Federal Reserve yesterday surprised the market by
maintaining interest rates at 5.00-5.25% but revising the projected terminal
rate in the Dot Plot by adding 50 basis points. The Fed’s decision to pause at
this meeting was aimed at gathering more economic data before considering
another potential rate hike in July. This approach is supported by the weaker
details in the latest NFP report and further disinflation in the latest CPI report, although the core readings remain
persistently high.

During the press conference,
Fed Chair Powell mentioned that the July meeting is „live,“ although
he did not make any firm commitments. The USDJPY rallied on a more hawkish Fed.
Overall, this demonstrates the Fed’s readiness to take additional steps to
address inflation, while emphasizing that their actions will depend on the
economic data.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDJPY broke
out of the blue box and extended the rally towards the 142 level. The buyers
kept leaning on the red 21 moving average in the
past days and eventually succeeded as the Fed delivered a more hawkish than
expected decision. The 142.17 resistance will be
key as a break above it would open the door for a bigger rally into the 150
level. The sellers are likely to defend the resistance and position for a
bigger pullback into the upward trendline.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the USDJPY
rally keeps diverging with the
MACD right
when it’s coming near the 142 resistance. This is generally a sign of weakening
momentum often followed by pullbacks or reversals. The next move will be most
likely decided by today’s economic data, but on the technical side the sellers
will be looking to short at the 142 resistance, while the buyers will want to
long at a pullback into the 140.38 support.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely yesterday’s breakout and the subsequent rally. From a risk management
perspective, the buyers should wait for a pullback into the support turned
resistance at 140.38 where they can enter with a
better risk to reward ratio and target the 142 resistance. The sellers, on the
other hand, will either wait to enter at the 142 resistance or pile in more
aggressively if the price falls below the 140.38 support.

Today,
we will see the US Jobless Claims and Retail Sales reports. Tomorrow, the focus
will shift to the University of Michigan Consumer Sentiment survey. Another big
miss in Jobless Claims could potentially raise the market concerns on the
labour market, leading to a more dovish rates pricing that should send Treasury
yields lower and the USDJPY with it.

Conversely, if the data beats expectations,
it should keep the tight labour market view and thus lift Treasury yields and
the USDJPY pair. Additionally, the market will be interested in in the decrease
in long-term inflation expectations in tomorrow’s UMich report. A higher
reading could suggest a potential de-anchoring of inflation expectations going
on, which may raise concerns and lead to a more hawkish pricing.

This article was written by ForexLive at www.forexlive.com.

The missile is reported to be fired towards the East Sea, according to the South Korean military. This is quite a common event by now but still should never be taken lightly. For geographical context:

This article was written by Justin Low at www.forexlive.com.

This follows from Goldman Sachs‘ call earlier this week here:

• Goldman Sachs slashed its December Brent forecast to $86 /bbl (from previous estimate $95)

As a reminder, oil prices took a hit after Goldman’s revised forecast, with WTI crude hitting a low of $66.85 earlier this week before rebounding off its 200-week moving average to just above $70 at the moment.

This article was written by Justin Low at www.forexlive.com.

• Prior -1.4%
• Market index 208.8 vs 194.7 prior
• Purchase index 163.2 vs 151.7 prior
• Refinance index 434.1 vs 409.7 prior
• 30-year mortgage rate 6.77% vs 6.81%

That’s a solid bump up in mortgage applications in the past week but it comes after several weeks of rather subdued activity. Both purchases and refinancing activity improved as rates come down just ever so slightly ahead of the Fed decision this week.

This article was written by Justin Low at www.forexlive.com.