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AUD/USD Trades at Significant Resistance Post a Substantial Surge
March 16, 2017 10:51 amVideo
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The Fed announced a rate hike by 25 basis points yesterday, with rates in a range of 0.75% to 1%, in line with market expectations. Fed Chair Yellen stated that It is appropriate to gradually remove accommodation, as the US economy is going well. The medium projection for the federal funds rate is 1.4% to the end of 2017, 2.1% to the end of 2018, and 3% to the end of 2019. Therefore, we can expect two more rate hikes from the Fed by the end of this year. Nevertheless, USD plunged after the release of the rate decision due to profit-taking pressure, as markets have largely priced in since February. The fall of USD pushed other major currencies up. AUD/USD surged more than 120 points, testing the significant resistance level at 0.7700, touching a two-and-a-half week high of 0.7718. The level at 0.7700 is the major mid-to-long term resistance, significant psychological resistance, where there is heavy pressure and unlikely to be quickly broken. The bullish momentum is likely to be restrained at this level. This morning we have seen the release of Australian labour market data for February. The employment change dropped by 6.4K, falling below expectations of a 16K gain and the previous reading of a 13.5K gain, seeing the worst reading since September 2016. The unemployment rate rose to 5.9%, weaker than expectations and the previous reading of 5.7%, seeing the highest level since January 2016. The 4-hourly Stochastic Oscillator reading is around 80, suggesting a retracement. The resistance level is at 0.7690, followed by 0.7700 and 0.7715. The support line is at 0.7675, followed by 0.7660 and 0.7650. Keep an eye on the US housing market data for February, to be released at 12:30 GMT today. It includes housing starts change, building permits and initial jobless claims, which will likely influence the strength of the dollar and the movements of the dollar crosses.
Source: FX Pro Market Snapshot
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