After an extremely dull Monday session, the forex is opening up a bit. Earlier, the U.S. CPI report came in on schedule at 2.2% (Feb., YoY). This value is up from the previous release, lending even more credence to the notion of a coming FED rate hike next week. The USD is struggling a bit, losing value against the AUD, EUR, and GBP.
The CME FedWatch index is holding strong at an 86% chance of a March 21 rate hike. This value is likely to change as the session unfolds, but most traders agree that a 25 BPS upward adjustment to is a foregone conclusion.
The last two sessions have been good ones for the Aussie. Price has broken above topside resistance on the daily timeframe, bringing the .8000 handle into view.
AUD/USD, Daily Chart
Here are the levels to watch for today:
Resistance(1): Upper Bollinger Band, .7940
Resistance(2): Psyche Level, .8000
Support(1): Daily SMA, .7854
Support(2): Bollinger MP, .7840
Bottom Line: Today’s range for the Aussie is still relatively tight, but showing signs of a bullish break. For the remainder of the session, I will be buying in from the Daily SMA at .7855 with an initial stop at .7834. This trade is good for 20 pips using a 1:1 R/R management plan.
If you become active in the AUD/USD, beware of this evening’s Westpac Consumer Confidence and RBA Assistant Governor Kent speech. While these are not primary market movers, they are still capable of swinging volatility significantly.