Forex

The pair dropped on Tuesday after Australia’s central bank paused its rate-hike cycle and remains downbeat amidst broader risk aversion, ahead of the US jobs report

The USDOLLAR daily chart is trading in its bearish channel between it lower blue and red bands. Its RSI is trading below 50. The longer it maintains on the bearish side of 50, the more pressure will be applied to the greenback. Data out this week has pointed to an economic softening.

FXCM’s USDOLLAR basket appears to be charting a head and shoulders top. This pattern is a reversal in trend from uptrend to downtrend. The pattern is yet to complete, and we note the pattern completion gap i.e., the price to neckline gap. However, the weekly RSI is below 50 (green rectangle), which suggests a bearish momentum is present. The longer the indicator maintains below 50, the more pressure will be…

The pair runs another profitable week, supported by the recent ECB-Fed policy divergence, but trades with caution today as inflation figures and other data loom

The pair pauses its four week-losing streak and rebounds from the recent slump, as fears over the banking sector ease

The pair is constructive after the US Fed was constrained to a conservative stance last week due to the banking turmoil and the BoE was forced to another increase due to the reacceleration in inflationary pressures

The Federal Reserve's communication contributed to pressure on the dollar. The US Treasury Secretary, Janet Yellen, has taken the spotlight as a market driver. On Wednesday, her announcement on "blanket" bank deposit insurance overshadowed the dovish Fed hike.

The two central banks appear to have a different approach on how the recent financial turmoil impacts monetary policy and the more hawkish stance by the ECB is supportive for the pair

The Fed raised the policy rate by 25 bps to 4.75%-5%. However, its rhetoric is more dovish than the ECB’s, which is EURUSD supportive. The spread between the German and US 2-year notes (top chart) has charted a series of higher troughs followed by higher peaks. This denotes the relative hawkishness of the ECB over the Fed. The EURUSD is sensitive to this spread with a correlation coefficient of 84%.…

The Bank of England faces rising core inflation, with a recent increase to 6.2% from 5.8% in January. Service-sector inflation is a concern, with hospitality inflation proving difficult to combat. The Bank is paying close attention to inflation numbers and is likely to announce a 25bp rate hike, but will reiterate its commitment to using tools for financial stability. If broader inflation data continues to improve, the Bank may pause…

The pair comes under pressure today, as markets are on edge ahead of the monetary policy decision by the US Fed (Wednesday) and the Bank of England (Thursday)