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AUD/USD Post-FOMC Rebound Looks to AU Employment, US CPI for Fuel

AUD/USD Post-FOMC Rebound Looks to AU Employment, US CPI for Fuel

Michael Boutros, Strategist

Talking Points

  • AUD/USD trading within well-defined technical formation
  • Updated targets & invalidation levels

AUDUSD 30min

Chart prepared by Michael Boutros

Technical Outlook: Aussie is trading back within the ascending pitchfork formation highlighted back on May 31st with the post-FOMC rally reversing at the median-line extending off the May lows. Although we could see some pullback off this mark, heading into tonight’s Australian labor report & tomorrow’s U.S. CPI release, the AUDUSD outlook remains constructive while above 7324. Interim resistance stands at 7445 with a breach above targeting 7489/90, the upper median-line parallel (currently ~7525) and the 61.8% retracement of the April decline at 7570.

Keep in mind that although the pair did break above the weekly opening-range, Aussie failed to close the session above and leaves the immediate long-bias at risk. Look for interim support at the lower parallel backed closely by the October high-day close at 7360. A break below the weekly opening-range lows is needed to shift the focus lower targeting a critical support barrier at 7281/82 where the 2016 open converges on the key 61.8% retracement of the late-May advance.

From a trading standpoint, I would be looking for weakness to settle near slope support to offer long-entries while above 7360. If Aussie is going to rally, we should see more rigid support come into play. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount.

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  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long AUDUSD- the ratio stands at +1.18(54% of traders are long)-weak bearishreading
  • Yesterday the ratio was +1.13; Long positions are 0.4% higher than yesterday and 6.5% below levels seen last week
  • Traders have remained short since June 9th – (day of the monthly high)
  • Open interest is 1.6% lower than yesterday and 12.8% below its monthly average
  • Although SSI metrics put a bearish tone on the pair, long-exposure has continued to contract for the past 4 days, leaving the short-bias at risk into the upcoming event risk

Help fine-tune you entries, click here to learn more about the DailyFX Grid Sight Index (GSI)

Relevant Data Releases This Week

Other Setups in Play:

Looking for more trade ideas? Review DailyFX’s Top Trading Opportunity of 2016

---Written by Michael Boutros, Currency Strategist with DailyFX

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