News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Low
High
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
Gold
Bearish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • A short-term ascending channel is under threat after Bitcoin’s first attempt to break through a stubborn resistance zone failed. Get your market update from @nickcawley1 here: https://t.co/RbnADE05iu https://t.co/HcrqaKg5F3
  • Is the Eurozone entering into a second debt crisis? Find out here: https://t.co/27Y8gKO0xY https://t.co/qHyg1KpVKH
  • And the Monday Asia trading session has officially begun. A pair to have on your watch list to kick off early trade: $AUDUSD post head-and-shoulders' neckline (and 200-DMA) breakdown https://t.co/iuYqEN5xpv
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Find out about the recent history of ISM data, how to track it, and how to trade its release here: https://t.co/MZtBh88nOv https://t.co/DIP9cgoSUt
  • Here are the top scheduled event risks on my calendar for the coming week. Global PMIs, a few rate decisions, the Fed's bank stress test results, the Fed's favorite inflation indicator and a run of Fed speak among much more: https://t.co/3jIl4PvHiA
  • I know it is a cognitive bias, but it seems that every time I take a day off, there are significant market moves. Dow's tumbled into a 5th straight session Friday with 10-day correlation to Nasdaq most extreme negative in 4 years https://t.co/V3U6IOAEXz
  • *Reminder: Weekly Strategy Webinar tomorrow morning at 8:30am EST (12:30GMT) on DailyFX!! - lots to discuss on the back of last week's #Fed Fireworks! https://t.co/lxd5fZnn4H
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/l0j9vLrMIp
  • Markets Week Ahead: Gold, Dow, Pound-Dollar, BoE Rate Decision, Fed Risk, PMIs Check out my recap of last week and preview of upcoming event risk, plus all the latest forecasts from the @DailyFX team below. Link to Analysis - https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2021/06/20/Markets-Week-Ahead-Gold-Dow-Pound-Dollar-BoE-Rate-Decision-Fed-Risk-PMIs.html $GLD $DJI $GBPUSD #Trading
  • Traders focus a lot of their energy on spotting the perfect time to enter a trade. While this is important, it is ultimately where traders choose to exit trades that will determine success. Learn about the three types of trading exit strategies here: https://t.co/muYkTNXH7s https://t.co/hbZPJmoOHe
Italy, Emerging Markets and Fed Offer Support for an AUD/USD Short

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

Daniel Dubrovsky, Strategist

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.

DISCLOSURES