Forex Market News

Yesterday, the market sentiment shifted heavily due to the remarks made by FED Chairman Jerome Powell in his testimony before Congress on Tuesday. Powell's comments were taken as hawkish, leading experts to believe that the FED may re-accelerate the scale of rate rises. Powell admitted that the FED can lift rates higher and faster than initially expected.

Trading on Tuesday starts with big moves on the Australian Dollar. A few hours ago, we saw a rise of 25bp, which was in line with expectations. The Australian Dollar was weakened, but the rise is not to blame here. We have to look closer at the statement from the RBA, as this is where the cause of the drop is hidden. The RBA Statement suggests that we are getting closer to the end of the tightening cycle and RBA is considering initiating a pause. This caused the AUDUSD to come back to long-term lows around 0.67 and EURAUD to test the long-term high on 1.597. The sentiment for the AUD is definitely negative at the moment.

I guess that stock bulls had a great sleep at the weekend, while sellers struggled a bit. The reason for that was the Friday session on indices which finished with a decisive bullish victory and sellers' run for their lives. The German DAX used the hammer candle on the key support and jumped above the mid-term down-trendline. S&P 500 also reversed sharply and came back above the mid-term up-trendline. Dow Jones had a third consecutive bullish day after bouncing off the horizontal support on the 32500. All this looks really promising for the buyers.

Yesterday's European session on the indices started off poorly, with the German DAX breaking a key mid-term support level at 15250 points and American futures hitting new yearly lows. However, sentiment rapidly changed and indices reversed in a V-shape manner. By the end of the American session, indices were racing to see which one would close higher as sellers completely abandoned their positions.

On the first day of March, we witnessed significant weakness in the American Dollar, consistent with the signals that began to appear on many charts towards the end of February. Although the USD dropped yesterday, it was not the weakest currency in the pack; that title went to the British Pound, which continues to decline at the beginning of the European session today.

February ended on a bearish note with a failed bullish correction and a further slide south in the stock market. The European session began with optimism as indices climbed higher, but the American session dashed the buyers' hopes. Yesterday, the SP500 declined by 0.3%, Nasdaq lost 0.1%, and Dow Jones dropped 0.7%, setting new yearly lows below the 32600 point mark.