Today’s data highlight is Australia Q4 CPI in the Asian session, but it is not a catalyst for AUDUSD.. Another round of US-China trade talks and FOMC meeting are the key drivers.
- Westpac Economics are forecasting headline CPI at 0.3% for the quarter, which would see the annual pace ease to 1.5% from 1.9% (mkt. 0.4%, 1.7%).
It is widely expected that the FOMC likely to keep policy on hold in Wednesday’s meeting and the also expect the first press conference of 2019 could wrap up with a lack of surprise.
- Senior economist Bill Diviney at ABN AMRO said: “We think the 2019 set of voting members will have a more dovish tilt than that of 2018”.
Ahead of today’s data and event risk, I discuss technical overview for AUDUSD, AUDJPY, and USDJPY in this article.
As traders remained cautious ahead of the data and event risk the Australian dollar weakened 0.2% against most-traded currencies, while against GBP decreased 0.6% against AUD on Brexit woes.
For AUDUSD, the hourly chart structure shows that AUDUSD likely to remain between 0.7140-0.7175 before the Q4 CPI release. As per the higher time frame (H4/Daily) the price action caught between 0.7235-0.7070. On the higher side, 0.7200-0.7235 shall be the key area where one can look at, sustained trade above 0.7235 Jan 11 high will resume the upmove taking the cross higher towards 200MAs placed at 0.7295 and 0.7330 prior swing low.
Flip side a close below the critical support level 0.7075 will push prices lower towards 0.7020/0.7000.
On a monthly basis, among AUD/crosses AUDCAD outperformed with 2.50% followed by AUDUSD and EURAUD with 1.5% each while AUDCAD fell 1.30%.
The AUDJPY closed at 78.20 on Tuesday. According to the daily chart, the critical support level is placed at 77.90, followed by 77.50. If the cross starts the northward journey, key resistance levels to watch out are 78.60 and 79.10 Jan 18 high. Sustained trade above 79.10 will resume the upmove taking the cross higher towards 50MA placed at 79.60 and 80.20 its 20MA (Weekly).
Flip side a close below the key support level 70.50 will push prices lower towards 77.00 and 76.60 levels.
USDJPY trade back at virtually unchanged levels, with dollar index (KTM: USDX) modestly lower On Tuesday. The price halted after rising to 110.00 and failed to gain a footing above the double top pattern at 110.00. The daily indicators give a mixed outlook with oscillator negative crossover and RSI lacks conviction. Support at the 109.00has held firmly in recent days keeping the momentum in a narrow range between 109.00-110.00. To confirm a change in trend, the price needs to erase the double to pattern at 110.00. In this case, 110.80 and 111.30 are the next destinations in the near term.
On the downside, a break below the 20MA sits at 109.00 may trigger loses towards 108.60, 108.00 and 107.60.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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