US dollar strengthened on Fed comments. The President of the Federal Reserve Bank of Philadelphia Patrick T. Harker said the matter of interest rate hike may be considered on the next Fed meeting on April 27. The President of the Federal Reserve Bank of Chicago Charles Evans said he expects the rakes to be hiked twice this year due to better inflation. The majority of market participants now estimate the June rate hike at about 60%. Let’s consider the US dollar strengthening against the Australian dollar which will look as a downside movement on the chart.
The next Reserve Bank of Australia (RBA) meeting is scheduled on April 5. The current 2% interest rate is expected to remain unchanged. Nevertheless, most investors expect the rate may be cut to 1.75% in the third quarter of the current year. The more or less significant data are to be released in Australia only on March 31 — the real estate market data. Market participants expect the comments from RBA on and the release of February external trade data. The Australian dollar is sensitive to the ferrous and non-ferrous metals prices, coal and beef. Together these goods account for a bit more than half of Australia’s exports.
On the daily chart AUDUSD: D1 rose almost 12% from its 7-year low hit in mid-January. Now it is struggling for downside correction. The MACD indicator has formed a bearish signal. Parabolic has not reversed yet and continues advancing. RSI has left the overbought zone and has formed the negative divergence but has not yet reached the level of 50. The Bollinger bands have widened a lot which means higher volatility. The bearish momentum may develop in case the Australian dollar rate falls below the 1st Fibonacci retracement level and the Parabolic signal at 0.744. This level may serve the point of entry. The most risk-averse traders may wait for pair to break above the last fractal high at 0.768. Having opened the pending order we shall move the stop to the next fractal high following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 0.768 without reaching the order at 0.744, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
|Sell stop||below 0.744 or 0.741|
|Stop loss||above 0.768|