Australia Overcoming Omicron?
Things are pointing in a better direction for Australia. Particularly, headlines speculate that Australia has now reached the peak of COVID infection from the current Omicron wave.
January 13th was the highest day for daily cases. Hospitalizations have started to decrease since January 21st. It is clear, however, that the incubation and resolution times for omicron are shorter than those of other strains.
The health minister suggested that the government might seek assistance from private providers. However, two Australian states have a policy of admitting all active COVID cases. This led to an increase in hospitalizations. This made it more difficult to compare the data with other countries.
Record Low for NZD/USD
Sentiment continues to be bearish across most risk assets, putting the NZD/USD down to 0.67 for the first time since November 2020.
Stock markets fell again, benefiting USD as the safe-haven currency. The medium-term bearish trend was confirmed by the December lows of 0.67. The main resistance is at 0.67. The outlook is bearish as long as the Kiwi trades lower than it.
If negative momentum continues, we may see a rapid decline to 0.66 this week. To reverse the downtrend, the pair could climb above the 0.67 resistance. A relief rally could help bring the pair up to 0.6780.
The Fed’s decision this week could be a confirmation of Fed’s hawkishness that it is willing to raise rates in March. However, the Fed could also announce that it will soon reduce its balance sheet. The USD could continue its bullish momentum going into the decision.
100-MA Curbs EUR/USD Advances
EURUSD is still showing a lacklustre push. It drifts between a 1.1310 SMA and the 1.1345 Bollinger Band. The wider downtrend, which began at a peak of 1.2266, is being protected by the falling SMAs.
The Bollinger band hints that the pair is not very volatile at present, with the lower Bollinger band at confined to a 1.1247, and the upper band confined to a 1.1442. The oscillators indicate that short-term guiding forces have diminished, which is also confirmed by the absence of the Bollinger bands.
While the RSI and MACD seem to be nearing their neutral thresholds, the %K stochastic line is still drifting around oversold and therefore isn’t signalling any kind of conclusive directional charge.
A reinforced support zone between the 1.1271-1.134 lows and the 50-day SMA of 1.1310 could prevent a price fall if sellers push the price below the SMA at 1.310. If the price falls below the 50-day SMA at 1.1310, the support foundation of 1.1146-1.1234 that extends back to March 2020 could be in place.
If this support base fails to muffle negative tendencies, then the price might plunge for the 1.0986/1.1017 border. It has been in place since the April/May 2020 period.
What’s Ahead for the Bank of Canada?
Wednesday’s meeting of the Bank of Canada will discuss monetary policy. The Committee held rates at 0.25%, its lowest level ever, and stated that it does not expect a rate increase until mid-2022. Markets are expecting more than 60% of a rate increase at this meeting. However, the inflation rate remains high.