The new trading week started quietly and calmly: It is Catholic Easter Monday, so almost all trading floors are closed today (in China, the Qing Ming Day of Purity and Clarity is celebrated). During the Asian trading session, the main currency pairs of the "major" group showed extremely low volatility, weakly moving around the opening.
As an example, the AUD/USD pair fluctuated in a 10-point price range, being at the base of the 0.76 mark. In general, the Australian dollar has been circling in the 100-point price range of 0.7540-0.7640 for a week and a half, alternately pushing off from the limits of the occupied level. Last week, the AUD/USD bears tried to consolidate within the level of 0.75, but the downward impulse faded as soon as sellers approached the support level of 0.7540 (lower line of the Bollinger Bands indicator on the daily chart). In turn, buyers cannot approach the resistance level of 0.7680 (middle line of the Bollinger Bands in the same time frame), not to mention testing this target. It is worth noting that the fluctuations of the US dollar index had a weak effect on the dynamics of AUD/USD – all the ups and downs of the US dollar fit in the 100-point range of 0.7540-0.7640.
It is clear that the market will experience low volatility throughout the day today – traders will be active again on Tuesday, when the global main trading floors start working. Moreover, tomorrow is particularly important for the AUD/USD pair – the Reserve Bank of Australia will hold its April meeting, whose members will assess the latest macroeconomic releases in the context of the prospects for monetary policy.
It should be recalled that the Central Bank extended the QE program last month, which was originally supposed to end in April. Such a scenario was quite unexpected, so the Australian dollar left the two-year price highs (area of the 0.80 level) and plunged 300 points down in just 2 days. From that point on, the AUD/USD bulls tried to recover several times, but did not rise above the price level of 0.78. Traders consider any more or massive price growth as a reason to open short positions, especially amid the general strengthening of the US currency. As a result, the Australian currency fell to the level of 0.7540 - 0.7640, and has not left it since the end of March.
Overall, the bearish mood remains for this pair – both due to the dollar's general strengthening and RBA representatives' dovish rhetoric. In particular, the deputy head of the Central Bank said last month that the regulator will not raise rates until inflation is fixed in the 2-3% range. According to his estimates, this will happen no earlier than 2024. RBA Chairman Philip Lowe said the same thing earlier, despite the growth of key macroeconomic indicators primarily in the labor market.
It should be noted that this circumstance can provide a "bearish service" to AUD/USD traders. The labor market has indeed recently shown positive dynamics. Based on the latest data, the unemployment rate in the country sharply declined to 5.8%, although the preliminary forecasts said that it should have remained at 6.4%. The indicator has been declining for four consecutive months. The increase in the number of employed people is also pleasing. Here, the overall figure in March was much better than expected, reaching 88 thousand, with a forecast of growth of 38 thousand. The growth was due to full employment, while part-time employment showed a negative result.
Given these results, traders quite reasonably expect the RBA representatives to make "hawkish" notes in the rhetoric. However, it is also possible that the members of the Australian regulator may disappoint market participants. Several experts believe that the peak of recovery in the Australian labor market has come to an end, as the government's JobKeeper assistance program ended on March 28. This opinion is shared by the deputies of Philip Lowe, and the RBA Chairman himself. It can be recalled that since the autumn of last year, subsidies under the above-mentioned program have been paid at a reduced rate and according to fairly strict criteria – the government will only provide support to those who really need help. However, the salary subsidy scheme was used by about 900,000 Australians. Analysts said that the end of the JobKeeper program will hit not only the labor market, but also the country's economy as a whole. Apparently, RBA members will consider the positive trends in the labor market through the context of this aspect.
In this case, the results of the April meeting may disappoint AUD/USD buyers. The members of the regulator will most likely make it clear again that traders should not expect the monetary policy to be tightened in the near future, and any changes can only be in the direction of easing.
From a technical point of view, the pair is between the middle and lower lines of the Bollinger Bands indicator on the daily chart, as well as on the Tenkan-sen line of the Ichimoku indicator. If the price declines below the Tenkan-sen line, that is, it consolidates below the level of 0.7600, Ichimoku will form a bearish signal "Parade of Lines'', increasing the pressure on the Australian dollar. Here, short positions can be considered with the main target of 0.7540 – this is the price low of the year, the lower limit of the almost 2-week price range, and the lower line of the Bollinger Bands indicator on D1.
