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Asia Pacific Market Open Talking Points

  • EUR/USD extends its bullish reversal despite cautious Draghi
  • US Dollar gains on FOMC minutes, not enough to trim losses
  • AUD/USD may climb on Chinese CPI as equities rally in Asia

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FX News Wednesday

The US Dollar traded narrowly lower on Wednesday despite bullish behavior on a couple of important fundamental developments. First, the Greenback rallied as ECB’s President Mario Draghi sunk EUR/USD in the aftermath of the central bank’s interest rate announcement. Mr Draghi reiterated that risks to the Euro-Area are still tilted to the downside, as anticipated.

His speech largely overshadowed March’s US inflation report which was mixed. While core CPI missed expectations (2.0% y/y versus 2.1% estimated), headline CPI unexpectedly soared from 1.5% prior to 1.9%. This was the most aggressive positive change since the end of 2016. In the aftermath of the inflation data and Mario Draghi, USD declined into the FOMC meeting minutes.


EUR/USD Extends Bullish Reversal Despite Draghi, AUD/USD May Rise

Check out the DailyFX Economic Calendar for critical currency event risk!

The statement noted that Fed officials generally saw that a patient approach was appropriate. That may have disappointed some doves with Fed funds futures pricing in a greater than 50% chance of a cut by year-end. DXY rose on the release on the chart below. A similar reaction was witnessed from AUD/USD over the past 24 hours. It climbed after RBA Deputy Governor Guy Debelle hinted that a wait-and-see approach for interest rates seemed like the appropriate path.

US Dollar Climbs on Draghi, FOMC Minutes

EUR/USD Extends Bullish Reversal Despite Draghi, AUD/USD May Rise

Chart Created in TradingView

EUR/USD Technical Analysis

Despite its decline on Draghi’s speech, EUR/USD extended its climb by the end of the day as it is now on its best winning streak since the middle of March. This followed the emergence of a Morning Star candlestick pattern and positive RSI divergence, both typically bullish price signals. As such, we may see a test of resistance next around 1.13022, guided by a rising support line from the bottom in early April.

EUR/USD Daily Chart

EUR/USD Extends Bullish Reversal Despite Draghi, AUD/USD May Rise

Chart Created in TradingView

Thursday’s Asia Pacific Trading Session

The S&P 500 closed to the upside on Wednesday, but it wasn’t enough to overcome a bearish reversal signal. Associated futures are pointing cautiously higher, indicating that there may be upside progress to have in equities during the Asia trading session. This may sink the anti-risk Japanese Yen.

Meanwhile, the Australian Dollar eyes upcoming Chinese inflation data. According to the Citi Surprise Index, data out of the world’s second-largest economy has been tending to outperform as of late, opening the door to an upside surprise. If this is the case, AUD/USD may find support given that China is Australia’s largest trading partner, implying upside knock-on effects, especially against the New Zealand Dollar.

Chinese CPI Data

EUR/USD Extends Bullish Reversal Despite Draghi, AUD/USD May Rise

** All times listed in GMT. See the full economic calendar here

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter