Morning Forex Meeting: Busy week in central bank meeting; AUD / USD: Failure on a resistance

Key points of the article:

• Central banks ball this week
• AUD / USD: Aussie’s rebound facing an area of ​​polarity

Currency Table-Time Horizon: Daily

Central banks ball this week

The dollar is stable at the start of the week in which meetings of central banks, especially the Federal Reserve, are likely to liven up currency markets, while the pound fell slightly after Boris Johnson warned against the impact of the new Covid-19 variant.

The pound slipped slightly after British Prime Minister Mr Johnson said on Sunday Britain was facing a ‘tidal wave’ of the omicron variant of the coronavirus and two doses of the vaccine would not be enough to contain it.

The markets have seen big swings since the appearance of the new strain due to fears that it could have a major impact, which initially led to flows to safe-haven stocks. Reports that the disease may not be as severe as feared caused those flows to reverse last week.

Breaking news about the omicron variant aside, the most important scheduled events for currency markets this week are central bank policy meetings, with six of the G10 central banks and a number of central banks from across the country. emerging markets that need to come together.

Central banks are going to have to strike a difficult balance between omicron-induced uncertainty and high inflation levels. The most important meeting is the two-day Federal Reserve meeting which ends on Wednesday.

Investors now expect the Fed to announce an accelerated cut to its bond buying program, opening the door to at least one interest rate hike next year.

An acceleration in tapering would likely support the dollar, especially against currencies whose central banks are likely to be slower to tighten.

The Fed meeting could certainly prove to be the catalyst for EUR / USD to break towards 1.10. However, investors might prefer to wait for the ECB meeting the next day before continuing the movement. USD / JPY could also put pressure on 115 after the Fed meeting.

The European Central Bank and the Bank of Japan will both review their policies this week. The Bank of England, the central banks of Norway and Switzerland will also meet.

AUD / USD: Aussie’s rebound facing an area of ​​polarity

The bullish rally in the Australian dollar is facing an area of ​​polarity above 0.7175. The prices have failed to exceed it during the last 4 sessions with the appearance of wicks and a fence with each attempt below this level.

The pair remains below a 34-period moving average and a longer-term 200-period average. Repeated resistance failures could therefore revive bearish momentum towards the December low at 0.6992.

The breakout of 0.7175 could prolong the Aussie’s rebound towards 0.7290.

Evolution of AUD / USD in daily data:

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