FX Daily Strategy: Asia, March 17th

The RBA interest rate meeting is on Tuesday. We believe it will be a fluid meeting with slight chance for the RBA to hike by 25bps, in sight or recent oil spike push inflation. However, the RBA is only seeing 2 more 25bps hike in 2026. Thus, we suspect for any more moves, they will first revise their Cash rate forecast first.

On the chart, the pair edged up from the .6980 low as prices consolidate losses from the .7188 current year high. Negative daily and weekly studies suggest consolidation giving way to renewed selling pressure later and lower will see room to retest support at the .6945, 3 March low. Below the latter will see room for deeper pullback to retrace gains from the November low to the .6900 level and .6895, 38.2% Fibonacci level. Meanwhile, resistance is lowered to the .7050/.7100 congestion area which is expected to cap and sustain pullback from .7188 high.

With geopolitical tension in the spotlight, FX flows should continue to be dominated by USD movement. The greenback has been favored by market participants as a haven pick and it is going to be significantly swinging on the ebbs and flows of headlines. Looking forward, it seems to be more tilted towards deescaltion rather than the other way around. If such, the dollar could lost some steam.

The anticipated break above the 100.40 monthly high of 21 November has posted a fresh 2026 year high around 100.54, before turning back as overbought intraday studies unwind and overbought daily stochastics flatten. Immediate focus is on congestion support at 100.00. But the rising daily Tension Indicator and positive weekly charts should limit any break in renewed buying interest above further congestion around 99.50. Following cautious/corrective trade, fresh gains are looked for. A later close above 100.40/54 will improve sentiment and extend late-January gains initially towards resistance at congestion around 101.00 and the 101.15 multi-month Fibonacci retracement.

Japan’s finance minister warned that FX markets are “extremely volatile.” An escalation in terms of verbal intervention. While it stalled USD/JPY trip to 160, its impact is limited given the current geopolitical bids for USD. The 2024 circa 162 figure will likely be challenged soon if USD bids stay reckless.

USD/JPY settled back in consolidation from Friday's fresh year high at 159.75 as prices unwind overbought intraday stuides. Daily chart are stretched as well but a later extension to of the strong rally from the February low cannot be ruled out. Higher will see scope to target the 160.00 figure where reaction can be expected. Meanwhile, support is raised to the 159.00/158.90 area which should underpin. Would take break here to open up room for deeper corrective pullback to the 158.50/158.00 congestion area and strong support at 157.65.