Aussie forms inverted head and shoulders ahead of RBA decision
The US dollar was little changed today as investors continued to focus on the impressive economic data from the United States. On Friday, data by the Bureau of Labour Statistics (BLS) showed that the economy added more than 900,000 jobs in March while the unemployment rate fell to 6.0%. Similarly, in the same period, the participation rate and the number of hours worked rose. US bond yields rallied after the strong numbers as the market starts to price in a faster economic recovery. The ISM will publish the latest US non-manufacturing PMI numbers later today.
The British pound rose against the US dollar as traders reacted to the optimism that the UK will ramp up its testing and vaccination drive. In a statement, Boris Johnson said that the government will provide free test kits to local pharmacies and promote regular testing. The government has also placed some limitations on travel from some countries. It has also vaccinated most of the adult population, meaning that the UK will be among the first countries to reopen. Johnson expects to lift movement restrictions on April 12.
The Australian dollar was little changed as the Reserve Bank of Australia (RBA) started its April monetary policy meeting. It will deliver its interest rate decision tomorrow morning. Analysts expect that the bank will leave interest rates unchanged and hint to winding-down of some of the pandemic response tools. That’s because recent data have pointed to some recovery of the commodity-rich country and the robust housing prices.
The AUD/USD pair is trading at 0.7622, which is slightly below last week’s high of 0.7640. On the four-hour chart, the pair has formed an inverted head and shoulders pattern, whose head is at 0.7530. The price is also slightly below the 23.6% Fibonacci retracement level and is slightly above the 25-day moving average. Therefore, the pair may bounce higher ahead of the RBA decision.
The EUR/USD declined to an intraday low of 1.1745, as US bond yields rose. On the hourly chart, the pair has moved below the important resistance at 1.1787, which was the highest level last week. It has also moved below the short and longer term moving averages while the MACD has moved below the neutral line. The pair may keep falling as traders target the year-to-date low of 1.1700.
The GBP/USD pair rose to an intraday high of 1.3868, which was slightly above the important resistance at 1.3850. On the four-hour chart, the price is slightly below the upper Bollinger Bands while the Bulls Power has continued to rise. The signal and main line of the MACD have also risen. Therefore, the pair may keep rising as bulls target the next key resistance at 1.3950.