By Fast Brokers – The Aussie briefly popped past March highs during the Asia trading session after the RBA decided to hike its benchmark rate by another 25 basis points. The RBA opted to forgo warnings in the form of declining retail sales and building approvals data and decided Australia’s economy still needs to be cooled down. The response in the Aussie is surprisingly tepid since one may expect the currency pair to register solid gains considering analysts were on the fence in regards to the probability of another interest rate increase. Meanwhile, upward momentum in the Aussie is being limited by negative psychological developments in the EU. Fresh uncertainty has sparked in Greece as government officials question the effectiveness of the IMF’s involvement in potential financial assistance packages from the EU. Hesitant remarks from Greece’s government have sent bond yields higher and the Euro stumbling lower. Meanwhile, the Cable is also being dealt a blow as reality begins to sink in that the UK will face a tight parliamentary election. These two psychological developments are leading investors away from the risk trade, thereby hampering intraday gains in the Aussie. However, the RBA’s rate hike could prove to be a positive for the Aussie’s medium-term outlook, particularly since the central bank implied that it will not hesitate to hike again should conditions warrant such action. For the time being investors will turn their attention to the U.S. with the release of the FOMC’s meeting minutes. Investors will be looking to see if the Fed has become more positive on America’s economic recovery in the wake of recent encouraging fundamental data. Although Australia will be relatively quiet on the data front tomorrow, the BoJ’s monetary policy meeting followed by a key UK Services PMI release could spark activity in the FX markets. Additionally, investors should keep an eye out for any more developments in Greece.
Technically speaking, the Aussie faces technical barriers in the form of intraday and 1/14 highs. Speaking of which, the Aussie is creeping towards previous 2010 highs, meaning the 93 area could prove to be a tough barrier to crack over the near-term. As for the downside, the Aussie has multiple uptrend lines serving as technical cushions along with intraday, 3/31, 3/15 lows. Additionally, the psychological .92 and.91 levels could serve as a technical cushion should it be tested.
Price: .9226
Resistances: .9230, .9247, .9264, .9278, .9291, .9304
Supports: .9214, .9194, .9185, .9173, .9161, .9143
Psychological: .91, .92 March Lows and Highs
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Market Commentary provided by Fast Brokers.
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