Forex Technical Analysis

Asian session brought the interest rate decision from Australia. We did not experience any surprise here - the rates went 25bp higher. What was surprising was the dovish statement from the RBA that caused a negative reaction to the AUD.

The end of the previous week brought a significant shift in the global indices, with a strong sell signal transforming into a legitimate buy one in just two days.

A lot is currently happening on indices. Yesterday, most of them set the new mid-term lows early in the day. Later on, however, they resulted in a strong V-shaped reversal which created promising bullish reversal patterns in a few cases. In today’s analysis, we have the German DAX, whom we analyzed a few days ago. Back then, we were bullish by saying this:

A lot is happening today on the Euro. First of all, we had the inflation data that surprised rather negatively. The number was a bit lower than the previous month but came above expectations (8.5 vs 8.3% exp). We also got a few insightful comments from ECB’s Lagarde, stating that the 50bp rate hike is still on the table, as the inflation is still too high. Furthermore, she stated that there should not be a recession in the Eurozone and that the interest rates won’t return to where they were two or three years ago. All the statements should be pretty hawkish and bullish for the Euro, but they’re actually not…

The weakening of the US dollar has been a boon for commodities, which tend to have an inverse correlation with the currency. In this analysis, we'll focus on Brent Oil, which has been range-bound for the past few weeks, struggling to find a clear direction.

The EURUSD experienced a rough February, especially in its first few days, with only a few bullish candles appearing on the charts. However, yesterday's candle may have the potential to change the game.