Exploring the Dynamic Interplay of AUD/USD and GBP/USD in the Forex Market
U.S. – Economic Developments in February 2023
US Fed raised Rates
Up 25 basis points for the first time since 2022
In the US, the Federal Reserve raised the fed funds rate by 25 basis points for the first time since March of 2022. Non-farm payrolls showed a significant increase in January with 517k jobs added, and the unemployment rate dropped to 3.4%. However, the ISM Manufacturing Index decreased to its lowest level since May 2020, with new orders declining. In contrast, the ISM Services Index returned to strong growth after contracting in December. In Canada, GDP advanced at a slow pace of 0.1% in November, with output gains limited across industries. The Bank of Canada will release its January labour force survey and the first release of the Bank of Canada minutes from their latest policy deliberation next week. The Canadian financial markets were influenced by the US events this week, with Canadian yields falling after Chair Powell's press conference and then reversing course on Friday in the wake of the hot US jobs report.
EUR/USD Exchange Rate Analysis
Euro Bulls
ECB is one of the most hawkish central banks
Last week saw a bearish outside candlestick in EUR/USD after reaching a new long-term high, which is a bearish sign.
Despite the bearish price action, the bullish trend remains statistically valid as price hasn't fallen by 3 days ATR.
Deep pullbacks within trends are common for this currency pair.
The fundamentals for the Euro remain bullish, with ECB as one of the most hawkish central banks.
The price might rise this week in line with its long-term trend (notably reliable in this currency pair).
Bulls should wait for more bullish price action in the daily time frame before entering a new long trade.
GBPUSD 1.20
Sterling exhaustion looking imminent
Currency Pair Analysis: AUD/USD and GBP/USD
GBP/USD hit hard during the week and is threatening the 1.20 level.
Market may rally, but the market will be looking for short-term exhaustion signals to sell.
Intermediate top in the bear market rally is likely.
Jobs number delivered reality to the markets, bear market rally against USD may be over.
AUD/USD pulled back from 200-Week EMA and may threaten the 0.69 level, possibly sending market down a couple of hundred pips to the 0.67 level.
For short-term rallies, the market will look for exhaustion signs to sell again, as USD rally may commence.
A daily close above the highs of last week is needed to become bullish on the Aussie dollar.
AUDUSD 0.69
A week of short term rallies off USD news
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