The markets maintain the trading ranges established yesterday, so not much has happened overnight. EUR/USD is close to 1.2061 support, GBP/USD is trading below the level of 1.3780 and USD/JPY is close to the highs at 109.46.
On Tuesday 1st of May, the Europe and much of Asia are out for holiday. The main macro event is US ISM manufacturing data release, but the UK will post the Manufacturing PMI as well. Later on, Canada will present the GDP for the first quarter. Overnight, traders will get Caixin PMI in China, where a moderate decline in the manufacturing index should be expected as was the case with the official PMIs released yesterday morning.
AUD/USD analysis for 01/05/2018:
The Reserve Bank of Australia has decided to keep the interest rate unchanged at the level of 1.5% as widely expected. The RBA point of view expressed in the statement is the same as we have consistently seen with the recent inflation report being described as "in line with the Bank's expectations". That would tend to suggest that RBA will remain cautious around the inflation outlook and forecast 1.75% for 2018. Given that the trimmed mean printed 0.5% for the March quarter, the implication is that the RBA does not expect any marked lift in the quarterly pace through 2018. In fact, relative to six months ago tightening financial conditions; slowing housing markets; and a slowdown in jobs growth gives them even more scope to remain cautious.
Let's now take a look at the AUD/USD technical picture at the H4 time frame. Despite the extremely oversold conditions, the market has broken above the technical support at the level of 0.7524 after the RBA decision was announced. The next technical support is seen at the level of 0.7502 and if broken, then AUD will be at the lower level since December 2017. The nearest technical resistance is seen at the level of 0.7578.
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