Originally published by Blueberry Markets
As we know the RBA released their meeting minutes this week with no real change in tone. Uncertainty remains the same here as the RBA remain concerned over the developments in the labour and property markets. The focus for the RBA will be the changes in unemployment, if they see a decrease in unemployment, they are more likely to leave rates unchanged with an outlook of growth in the near future. However, that remains to be unseen and will be watched closely by investors.
The 4hr chart is forming a bearish flag pattern with price remaining trapped between the key demand zone of 0.7050 and minor resistance of 0.7160. A break lower will see the key demand zone tested again with the potential for further downside if key data softens. More than likely this market will stay within the bear flag pattern as the US dollar continues to remain under pressure also with the FED likely to reiterate a dovish tone in their upcoming meeting minutes.
EUR/USD will be a key chart to watch developments on this week as the pair remains above the key demand zone between 1.1200 and 1.1300. The Eurozone growth continues to slow with the latest German ZEW Economic Sentiment showing a slowdown in the German economy. The ECB is set to publish their Account of Monetary Policy Meeting with Draghi to talk the day after. We could expect Draghi to set a dovish tone here as the data remains poor.
Despite all this, with the Eurozone, the outlook for the USD doesn’t look much better. Last week the US dollar data was poor with CPI, Retail Sales and PPI all falling. This data which the FED wanted to keep an eye on suggests they will more than likely hold interest rates. Anything more dovish out of the FED will set the US dollar up for a fall.
The chart above shows EUR/USD remaining above the range currently. We could see this market fluctuate significantly. If the FED, take a more dovish tone in their meeting minutes the EUR/USD could rise into last week’s highs. This then could be turned around by ECB President Draghi come Friday. Range bound market looking likely to continue here for the major currency pair.