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AUD/USD boosted by surging iron ore price, USD/JPY moves sideways

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AUD/USD was powered by the surging iron ore price this week while the momentum for USD/JPY has waned.

Source: Boomberg


The commodity currency was in favour this week, fuelled by the powerful iron ore price's upward momentum. The iron ore price jumped by more than 5% on Tuesday, the third straight day of gain, over rising concerns that a prolonged military tension between Russia and Ukraine could further curb its global supply.

As such, the iron ore Australian-related currency has been pushed towards the highest level of the year at around 0.7289 despite the unchanged interest rate decision from the RBA on Tuesday.

From a technical point of view, the pair of AUD/USD has been skewed into the uprising tunnel since the end of January which could bring the 0.73 level back insight. Current support is found at 0.7261. Below that level, the conjunction that the 20, 50, and 100 days moving average meets around 0.7193 should act as massive support for the pair. However, if broken through, it will press the pause button for AUD/USD's bull.

AUD/USD Daily Chart

AUD/USD Daily ChartSource: IG


Intensified battle on the land of Ukraine continued to weigh heavily on US and European equities with the US bond yields falling sharply as risk appetite shifted again following the deterioration of global risk sentiment. As a result, the curve steepened as 2-year government bond yields dropped from 1.45% to 1.34%, and the 10-year government bond yields sank from 1.86% to 1.68%, the lowest level since early January.

Even though the greenback is expecting at least a 25bps rate hike for the next fortnight, the US dollar versus fellow havens JPY has moved sideways from the upward trend line, entering the consolidation phase.

According to the daily chart, the pair is finding their support above the 100 days moving average for now and struggling to regain control over the level at 114.8. The previous trend line has turned up the pressure level for the pair to strike for which could release some selling pressure in the area of $115.86-$116.

From a longer-term perspective, the momentum for the pair has waned but remains valid. The weekly candlestick stayed within the ascending moving trajectory and was supported by the 20-weekly MA. RSI is pointing south and is still glued to the 50 above the zone.

USD/JPY Daily Chart

USD/JPY Daily ChartSource: IG

USD/JPY Weekly Chart

USD/JPY Weekly ChartSource: IG

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Hebe Chen | Market Analyst, Australia
02 March 2022

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