Last week’s fundamental news largely followed the consensus expectations. Most eyes were on the Federal Reserve, which held the interest rate at 4.5% despite President Donald Trump’s pleas for an interest rate cut. In fact, Trump has called for the rate to be lowered as much as 2.5%, which would bring it to 2%.
Still, Fed Chairman Jerome Powell is mindful of the Trump administration’s tariff policy and its influence on inflation.
"No one holds these ... rate paths with a great deal of conviction, and everyone would agree that they're all going to be data dependent," Powell said at the press conference.
Other notable central bank actions were the Bank of Japan’s hold at 0.5%, a widely anticipated Swiss National Bank’s cut to 0%, and the Bank of England’s hold at 4.25%.
The most important geopolitical event of the week was the US involvement in the Israel-Iran conflict, which included airstrikes on three nuclear facilities. These actions could disrupt the global oil supply and drive oil prices higher, strengthening the Canadian dollar.
The week ahead will bring news from European manufacturing and speeches from central bank leaders, including Powell and his UK counterpart, Andrew Bailey.
Key News:
- Monday: EUR, GBP, and USD – Manufacturing/Services PMI
- Tuesday: CAD – CPI, USD – Powell Testify, GBP – Bailey Speech
- Wednesday: AUD – CPI, USD – Powell Testifies
- Thursday: GBP- Bailey Speech, USD – GDP, Unemployment Claims
- Friday: CAD – GDP, USD – Core PCE Price Index
Pairs In Focus
1. AUD CAD
This pair has been in focus for two consecutive weeks. After a first breakout, it staged a pullback but failed to reach the resistance at 0.89450, and closed the week below the key level of 0.88800.
AUD/CAD daily chart, Source: TradingView
The ongoing conflict with Iran, which is pushing the price of oil higher, could be the trigger that solidifies the lower low on this pair, as the Canadian dollar benefits from higher oil prices.
2. GBP AUD
The pound has benefited from the rate decision being held, despite three dissents instead of the anticipated two. After a brief pullback, which failed to reach the support at 2.05, the price rebounded. However, to turn bullish, it should clearly close above 2.0845 on the daily chart.
GBP/AUD daily chart, Source: TradingView
If that occurs, further rallies are possible toward the 2.10400 resistance level, and possibly higher.
Notes:
- AUD NZD: Briefly broke out of the range higher before retracing. The short-term bias remains bullish.
- AUD CHF: Tried to challenge the key level at 0.53240 and failed multiple times. The trend remains bearish.
- AUD SGD: After four attempts to stay above the 0.83450 level, it turned bearish and will likely test support at 0.82650.
- AUD JPY: Price action is tightening, indicating that a breakout might be on the cards soon. Short-term potential is higher to the upside.
- CHF JPY: Continues the strong bullish momentum, with a potential to move about 150 pips more and reach the key level and a previous high at 180.
- CAD JPY: Remains in a relatively tight consolidation, but the bias is to the upside.
- EUR AUD: After a brief pullback, the price continues reaching for highs from March.
- EUR/JPY: Reached a new yearly high. Temporary resistance above could be around 169.270.
- EUR NZD: Rallied and made a fresh high. A temporary resistance could be around 1.94880.
- GBP JPY: Overcame strong resistance around 196.400. The key levels above are around 198.200 and 199.800.
- NZD JPY: Made a marginally higher high before declining late in the week. The bias is slightly bullish.
- NZD CHF: Strongly rejected from the 0.49265 key level. A continuation of the bearish trend could test the support at 0.48.
Note: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article's contents. Readers may use this data for information and educational purposes only.
