EURUSD: ECB makes statement on monetary policy
EURUSD is showing moderate strengthening, developing the potential for "bullish" sentiment from last Friday, March 3. The Euro traded at 1.0700 and gained, and market participants hope to get additional fundamental incentives. Earlier, the single currency had already shown positive dynamics, which was conditioned by the technical factors and the US dollar ambiguity.
The previous week's macroeconomic statistics reflected a corrective momentum for February consumer inflation in the annualized figure to 8.5% from 8.6%, while analysts were expecting a decline to 8.2%, and the monthly figure was up 0.8% from last January's -0.2% while the estimate was -0.3%. The core inflation index gained 0.8% month-over-month and 5.6% year-over-year, beating the 0.0% and 5.3% forecasts, respectively. On that basis, ECB head Christine Lagarde expressed the view that the region's consumer prices will hold their peak values for some period, raising the possibility of a 0.50% interest rate correction at the end of the March meeting. Over the previous year, the regulator raised the value by 3.0%, so economists agree that the deposit rates in 2023 will rise to 4.00% from the current 2.50%. Meanwhile, the head of the department noted the resilience of the economy in the region due to the high rate of employment, while the number of unemployed remains at minimal levels.
- Resistance levels: 1.0700, 1.0765, 1.0800, 1.0850.
- Support levels: 1.0654, 1.0600, 1.0550, 1.0500.
AUDUSD: the asset is moving in an uncertain bearish signal
AUDUSD is trading in active decline, being under an uncertain "bearish" factor, which came earlier, reaching the area of 0.6700, continuing its decline.
Investors focused their attention around RBA officials' decisions which resulted in a 0.25% interest rate adjustment, reaching a target threshold of 3.6% with significant inflation risks. Meanwhile, the agency expects consumer inflation to slow in the near term due to global events and little variation in domestic demand, while the service sector's position may change less. Current estimates call for inflation at 3.0% by the end of Q2 2025. At the same time, the Reserve Bank of Australia noted the difficult situation in the employment market. Thus, the number of unemployed shows the minimum in the last 50 years, but the level of working population is gradually decreasing, and many companies have a number of problems in employment, and in order to normalize the economic situation the regulator is likely to continue the vector of "hawks" in the issue of monetary policy, aimed at promoting the idea of a regular interest rate adjustment.
- Resistance levels: 0.6750, 0.6800, 0.6850 and 0.6900.
- Support levels: 0.6700, 0.6628, 0.6583, 0.6520.
GBPUSD: the Fed's statement will have an impact on the greenback
GBPUSD currency pair shows contradictory moods, testing the level of 1.2044 because of the strengthened negative background on the "hawks" rhetoric in the Bank of England.
A day earlier the Financial Times published an article pointing to the rising expectations among investors for a further rise in the interest rate, which was increased by 0.50% to the target of 4.00% on February 2. Contrary to the head of the agency's recent comments about the absence of the need to tighten monetary policy, the futures situation indicates the coming change in analysts' sentiment towards the fact that the regulator will decide to increase the indicator by 0.50% ignoring the high risks of economic recession.
"The American" declined slightly ahead of the Fed chief's statements on the outcome of the two-day Banking Committee meeting, which takes place today and tomorrow in the Senate. According to expectations, Jerome Powell will discuss the regulator's monetary policy moves in detail, which is now the main focus for investors. Yesterday's data on Industrial Orders which showed a decline of 1.6% in January against 1.7% in December was under the influence of the local dynamics of the asset.
- Resistance levels: 1.2170 and 1.2420.
- Support levels: 1.1940, 1.1630.
Crude Oil market analysis
During the Asian trading session the price of WTI showed bullish momentum from February 23 and reached the level of 80.80, continuing the growth, having updated the local maximum of January 27.
The quotes of the asset gained support on expectations of comments from Jerome Powell, the head of the US Federal Reserve, who can clarify the future prospects for the decisions of the department, since the next meeting of department officials is announced for the end of March, and market expectations provide for an increase in the interest rate by 0.25%. Representatives of the Fed have repeatedly stated that it is too early to assess the decrease in the correction step as an approximation of the curtailment of the monetary stimulus program, because several more stages may be needed to strengthen the value, which will remain at high levels for a long time.
- Resistance levels: 81.00, 82.00, 82.62, 83.50.
- Support levels: 79.81, 78.74, 78.00, 77.00.