What happened in the US session?
The US dollar recovered in strength, reversing recent downside, as the other major currencies weakened overnight. The S&P closed slightly lower at the 4,081 price level.
What does it mean for the Asia Session?
Look for the major currencies to consolidate briefly before weakening further against the DXY.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
The DXY fell to retest the 102.50 price level overnight. However, the move lower was unsustained as the price rebounded sharply to end the trading session at the 103.15 price level. Following such price volatility and the rejection of the downside, anticipate further upside for the DXY. With no major news events, the volatility in the DXY was likely due to the movement of the EURUSD. If the DXY continues to trade higher, look for the price to break above the immediate near term resistance of 103.30, with the next key resistance level at 103.85.
Central Bank Notes:
- Federal Reserve hiked rates by 25bps taking interest rates to 4.75%
- Next meeting is on 23 March 2023
- Ongoing rate increases will be expected
Next 24 Hours Bias
Weak Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
As the DXY saw significant volatility but ended the session stronger overnight, this resulted in Gold trading significantly lower. Gold reversed strongly from the 1890 price level, breaking below the recent low of 1870 to form a new low at the 1860 price area. While further moves to the downside can be anticipated, look for Gold to retrace briefly before trading lower again, with the key support level area at the 1800 and 1790 price range.
Next 24 Hours Bias
Medium Bearish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The AUDUSD failed to break above the 0.70 price area strongly as the DXY recovered in strength. Despite increasing comments from the RBA’s revision of inflation targets, implying that further interest rate hikes can be expected, the AUDUSD continues to be dragged down by a stronger DXY. Currently trading at the intermediate support level of 0.6940, look for the AUDUSD to break below the 0.6930 price level to indicate further downside potential, with the next key support level of 0.6870.
Central Bank Notes:
- Cash rate stands at 3.35%
- Future rate rises are expected as RBA targets the 2-3% inflation target.
- Next meeting on 7 March 2023
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
Similar to the AUDUSD, the NZDUSD saw a strong reversal to the downside as the price rejected the 0.64 price area. Trading closer to the round number support level of 0.63, confirmation of further downside can be expected if the DXY continues to strengthen and the NZDUSD breaks the round number price level. The next key support level beyond 0.63 is at 0.62.
Central Bank Notes:
- Cash rate stands at 4.25%
- Central bank is likely to continue with the current path of rate adjustment
- Next meeting is on 21 February 2023
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The USDJPY traded with choppy price action overnight, with prices first sliding down to test the 130.30 price level before surging strongly higher to approach the 132 round number resistance level. With the Japanese Ministry of Finance highlighting challenges for the government and the Bank of Japan to achieve the target of 2% inflation consistently, this poses additional uncertainty for the Japanese Yen. Look for the price to break above the 132 price level to signal further upside potential, with the immediate key resistance level at 132.65.
Central Bank Notes:
- Cash rate stands at -0.1%
- Expanded range for 10 year JGB yield fluctuations to 0.5%
- Next meeting is on 8 March 2023
Next 24 Hours Bias
Weak Bearish
