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AUD/USD, EUR/USD Triangles Eye Continuation Targets

AUD/USD, EUR/USD Triangles Eye Continuation Targets

Christopher Vecchio, CFA,

Talking Points:

- AUDUSD triangle breakout eyes A$0.7440, A$0.7680.

- EURUSD triangle breakout eyes $1.1435/65.

- See the October forex seasonality report that favors US Dollar weakness.

The US Dollar remains on weak footing, with new lows eyed in the USDOLLAR Index. In particular, the thrust appears to be driven by AUDUSD and EURUSD, as GBPUSD has more or less consolidated the past two days and USDJPY hasn't budged from its ¥118.20/25 to ¥121.70/75 (with price starting to edge itself outside of its recent triangle without a significant break, we must recognize that a sideways range, not a symmetrical triangle, may be the appropriate interpretation).

Both AUDUSD and EURUSD are currently in the midst of continuation efforts outside of their bullish triangles, and with some distance to run before their final targets are reached, it's likely we see new lows in the USDOLLAR Index soon.

Fed rate hike probabilities

In the near-term, with US economic data momentum slumping again (the Citi Economic Surprise Index is at -26.3, down from -16.9 one month ago) and markets pricing out the likelihood of the Federal Reserve raising rates this year (see chart above), the US Dollar's fundamental footing is eroding. In context of recent seasonal trends, October is shaping up to be a rough month for the greenback.

See the above video for a fundamental overview of the USD-complex, plus technical considerations in EURUSD, GBPUSD, AUDUSD, USDJPY, and the USDOLLAR Index.

Read more: Euro Set to Respond to Policymakers’ Speeches amid Thin Calendar

--- Written by Christopher Vecchio, Currency Strategist

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