We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
More View more
Real Time News
  • #Dow Jones stages impressive recovery on a firm NFP report. #FTSE 100 eyes UK general election. Get your equities technical analysis from @JMcQueenFX here: https://t.co/o28UcG6N3l https://t.co/SwGAaFCFND
  • Why do you require consistency in trading and why does it matter? Find out: https://t.co/f4y1FOOZnM #tradingstyle https://t.co/x5HgYopWc5
  • The USD may rise if the FOMC re-affirms its data-dependent approach and cools 2020 rate cut bets. US retail sales and CPI data may also give the Fed impetus to hold rates. Get your $USD market update from @ZabelinDimitri here: https://t.co/XnDITaDOox https://t.co/A480uVMqF2
  • What tools does the ECB have left to stimulate the Eurozone? Where is the #Euro heading? Find out from Chief Eurozone Economist at Pantheon Macroeconomics Claus Vistesen only on Trading Global Markets Decoded #podcast hosted by @MartinSEssex here:https://t.co/Twr44cZ1GB https://t.co/DXlDH5Cp9e
  • The price of oil extends the advance from the October low as #OPEC and its allies pledge to take additional steps to balance the energy market. Get your crude #oil market update from @DavidJSong here: https://t.co/llGq8yPFH4 #OOTT https://t.co/1OCVOIrK98
  • Gold closed lower after paring early-week gains post-NFP on Friday. But will price finally break support? These are levels that matter on the XAU/USD weekly chart. Get your gold technical analysis from @MBForex here: https://t.co/ovGheRg4MQ https://t.co/ZEQSYktj0w
  • What is your #tradingstyle? Take the quiz and let us know: https://t.co/LPBOcS0Vtd https://t.co/l6FvtcADEH
  • Asia’s vast and growing importance to the world economy is not yet matched by the presence of a currency trading center to rival the established order. Get your update on market drivers in Asia from @DavidCottleFX here: https://t.co/E2hqoRdO7q https://t.co/dnrAMFK4U2
  • Geopolitical developments send #oil prices soaring or falling. Get your market update from @MartinSEssex here:https://t.co/XVXLyG8vjq #OOTT https://t.co/RMk5Eb5fLU
  • Negative yielding government bonds – What are they telling us? Find out from @nickcawley1 here: https://t.co/F6JuhmrvPT https://t.co/KdpSjQSJ8F
Italy, Emerging Markets and Fed Offer Support for an AUD/USD Short

Italy, Emerging Markets and Fed Offer Support for an AUD/USD Short

2018-10-03 02:00:00
Daniel Dubrovsky, Analyst

AUD/USD Trading Strategy: Pending Short at 0.71998

  • Italian budget woes and emerging market fears could weigh against the Australian Dollar
  • Meanwhile the Federal Reserve continues overtaking the RBA from an interest rate view
  • Pending short AUD/USD at 0.71998 for optimal risk-reward, entry order has been placed

We just released our 4Q forecasts for equities in the DailyFX Trading Guides page

Fundamental AUD/USD Short Argument

A pickup in the US Dollar from the latter half of last week amidst Italian budget woes offered DXY its longest winning streak on a daily basis (5 days) since August 15th. The greenback appreciated against its major peers. The decline in market mood, particularly from European benchmark stock indexes, offered a second fundamental reason for declines in the ‘pro-risk’ Australian Dollar and more could be ahead.

From a sentiment perspective, there could yet be a chance that the European Commission rejects the budget proposed by Italy’s anti-establishment government heads. This would add momentum to the trading dynamic witnessed in recent days. Meanwhile the appreciation in the US Dollar as the Fed just raised rates in September continues to pressure emerging markets such as India and South Africa.

Developing nations have been facing rising global borrowing costs and oil prices as current account deficits ballooned. Their depreciating currencies makes it more difficult to repay external debt. This has contributed to the MSCI Emerging Markets ETF flirting with bear market territory a couple of times in the past few months. A rocky road ahead for emerging markets, which may sink equities, potentially bodes ill for AUD.

Meanwhile from a yield perspective, the Federal Reserve is expected to continue overtaking its Australian counterpart. One more hike is mostly expected by the end of this year with three more to potentially come in 2019. As for the RBA and judging by their most recent monetary policy announcement, it may only deliver one interest rate hike in 2019. And that is not even fully priced in by the markets.

AUD/USD Technical Analysis and Trade Setup

The Australian Dollar seems to have resumed its dominant downtrend against the US Dollar from February after a bullish reversal patternfailed to offer lasting upside progress. With a descent through a near-term rising support line, AUD/USD may reach the September 11th low at 0.70852 next. Meanwhile, a descending resistance line from September 21st seems to be keeping the pair from heading higher.

Given the fundamental argument and the technical progress in the Australian Dollar, an entry order has been placed to sell AUD/USD at 0.71998 rather than at current prices. This has been done to meet a minimum of a 3-to-1 risk-reward ratio using a daily stop above 0.72381 and a target of 0.70852. A close above the former would also be a break above the near-term descending trend line.

Near-term support is also the December/May 2016 lows between 0.7160 and 0.71452. In the event AUD/USD doesn’t push higher to the entry point, a bounce around this area may offer that opportunity. But the pair could also descend through it. With that in mind, we will be closely watching this trade setup depending on how events unfold. You may follow me on twitter @ddubrovskyFX for updates to the trade.

AUD/USD Daily Chart

Italy, Emerging Markets and Fed Offer Support for an AUD/USD Short

Chart created in TradingView

Other Active Trades

EUR/USD Pending Short at 1.1672

AUD/NZD Long at 1.09168

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.