RBA, ECB, NFP to Drive Next Week’s Price Action

Talking Points:

– This week saw a pivotal mangle of a pivotal insurgency turn on a U.S. Dollar, as price action in a Greenback signaled a probability of some-more gains ahead.

– A carol of hawkish Fed speakers appears to be a source of a Dollar’s strength; and this afternoon we hear from Fed Chair Janet Yellen and Vice Chair, Stanley Fischer forward of a bank’s ‘blackout period’ forward of their subsequent rate preference in a week-and-a-half.

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Next week brings a array of critical events to markets, with a both Australian and European Central Banks hosting rate decisions; and on Friday of subsequent week – we get what’s looking to be a pivotal Non-Farm Payrolls news as this will be a final vital information indicate to cruise before going into their two-day assembly and rate preference in a week after.

This has already been a rather sprightly week for markets, and we’re not nonetheless done. Later this afternoon, both Fed Chair Janet Yellen and Vice Chair Stanley Fischer are charity explanation to markets; and this will be a final set of open speeches by Fed officials before a bank moves into a ‘blackout period’ before a subsequent rate hike. So this will be a final event for Fed-speak to elicit sensitivity opposite markets before that subsequent rate preference in a week-and-a-half (March 14-15). Expectations for a travel in Mar have shot-higher this week, and as we looked during yesterday, a vast partial of this expostulate has been Fed commentary. This week alone, we have listened from William Dudley, Patrick Harker, John Williams, Lael Brainard, Jerome Powell and Robert Kaplan – and all have clearly suggested that a rate travel is ‘near’.

The U.S. Dollar put in aggressively bullish cost movement on Tuesday to finally poise a postulated mangle above a pivotal turn of insurgency during 101.53.

RBA, ECB, NFP to Drive Next Week's Price Action

Chart prepared by James Stanley

RBA – Tuesday Morning

The Reserve Bank of Australia hosts a rate preference on Tuesday morning (Monday dusk in a States), and a expectancy is for no move. The RBA finds itself in an unenviable position here. Concerns are unequivocally genuine around a continued and prevalent run in genuine estate prices; and progressing this week, credit rating group Standard and Poors warned that a hillside might be in sequence for many of a country’s banks as mercantile risks continue to rise.

On a other side of a silver – Australian expansion and acceleration continue to sojourn subdued, and trade numbers haven’t been quite positive. So, while this clearly eliminates a probability of an seductiveness rate hike, a cut to rates doesn’t seem to be a claim choice possibly as a fear that reduce rates will propel genuine estate prices even-higher.

The Australian Dollar put in a pivotal mangle this week. For a past ~year, AUD/USD has been held in a operation between a levels of .7200 and ~.7750. And after re-entering this section in mid-February, a span spent dual weeks during insurgency before sellers finally took control.

RBA, ECB, NFP to Drive Next Week's Price Action

Chart prepared by James Stanley

And that mangle put-in by Aussie is shown below, as sellers were finally means to move prices behind next a .7600-handle. This highlights an appealing area of support as partial of that ~year-long range, nearby a .7200 hoop where a collection of feeder Fibonacci levels reside.

RBA, ECB, NFP to Drive Next Week's Price Action

Chart prepared by James Stanley

Below, we get a small closer on that mangle to prominence a intensity for short-term movement to continue carrying-lower.

RBA, ECB, NFP to Drive Next Week's Price Action

Chart prepared by James Stanley

ECB is on Thursday

At a European Central Bank assembly on Thursday, a large doubt will expected be usually how supportive a bank is to rising inflationary army and, either or not this might spurn a start of tightening or even maybe a tapering of their bond shopping program. We expected won’t see many change here – in a week after this meeting, Dutch elections are holding place and of march in a months following we have pivotal elections in both France and Germany. The sequence of Thursday appears to be change for Mr. Mario Draghi, with a complicated sip of caution; and a press discussion is expected where any forms of sensitivity in Euro-related resources might emanate from.

On a chart, EUR/USD appears to have run-in to a rather unassailable form of support around a 1.0500 handle. We had highlighted this turn this section final week when it came behind into-play, and another revisit this week elicited buyers to move prices higher, nonetheless again.

RBA, ECB, NFP to Drive Next Week's Price Action

Chart prepared by James Stanley

What creates this section of support so impossibly engaging is a longer-term connotations during or around these levels. The ‘big run’ reduce in EUR/USD unequivocally took place before ECB QE ever got started. QE was announced in a summer of 2014, set to come online in Mar of 2015; and curiously that’s usually about where EUR/USD had set a prior-low. During many of a ECB’s QE-drive, EUR/USD remained in an upward-sloping channel, that when total with a before bear-run, produces a bear dwindle arrangement (shown below).

RBA, ECB, NFP to Drive Next Week's Price Action

Chart prepared by James Stanley

In Dec of final year – marketplace army were unequivocally many behind a behind of Euro-bears; as a one-two combo of a ECB triggering another QE program, and afterwards a Federal Reserve hiking rates for usually a second time in 10 years constructed what should’ve been a delay of bearish momentum; as both prevalent elemental army representing a span were indicating a same direction.

But a bearish movement didn’t continue for long, as we saw a small ~100-pip down-side mangle of that before Mar 2015 low before buyers stepped-in again. Deductively, this might be highlighting that a down-side run in EUR/USD is impending completion.

RBA, ECB, NFP to Drive Next Week's Price Action

Chart prepared by James Stanley

— Written by James Stanley, Analyst for DailyFX.com

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