AUD recovers as RBA held rate steady, GBPUSD drops after construction data
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Australian Cash Rate Helps AUDUSD Rebound
The Australian Cash Rate held at 4.35% on Tuesday following the massive drop of over 5% for the ASX since last Thursday. The ASX decline is the most significant one since the pandemic in March 2020.
Last week's weak CPI data hinted at rates to remain on hold as recent market volatility ensures the Reserve Bank of Australia (RBA) will remain cautious. Australia has recently started measuring inflation once a month instead of only once a quarter, which may lead the RBA to favour further tightening as inflation remains above targets.
After the news, AUDUSD has bounced sharply from the 0.6475 pivot, which saw strong demand most recently in April. ?The price has formed a large wick, suggesting that bullish momentum is strong as the price may rise to test the 200 SMA (blue line) for resistance soon.
EURAUD has seen strong resistance from the 1.7 level which coincides with the extreme swing high from August last year. The price looks likely to drop to test the 1.67 pivot level for potential support soon. ?
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UK Construction Increases at the Highest Rate in 26 months
UK Construction PMI was 55.3, up from 52.5 forecasted and 52.2 previously. The result shows purchasing managers' opinions on business conditions, as they hold the most current insights. A result above 50 indicates industry expansion, while new orders and overall activity saw much faster increases. Companies have increased purchasing activity and hiring, while increased demand reduced supply chain pressure.
Following the news release, GBPUSD has decreased following resistance from the descending trendline. The price looks likely to find support at the pivot around 1.2625 and the 100 and 200 SMAs nearby.
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