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USD Support Targets in Focus- AUD Rally at Risk on Slowing CPI

USD Support Targets in Focus- AUD Rally at Risk on Slowing CPI

2013-10-22 15:20:00
David Song, Strategist
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Talking Points:

- USDOLLAR Continues to Search for Support as Non-Farm Payrolls Disappoints

- Australian Dollar Clears Resistance Ahead of Inflation Report

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10377.25

10437.33

10373.04

-0.45

136.76%

USDOLLAR Daily

Forex_USD_Support_Targets_in_Focus-_AUD_Rally_at_Risk_on_Slowing_CPI_body_Picture_3.png, USD Support Targets in Focus- AUD Rally at Risk on Slowing CPI

Chart - Created Using FXCM Marketscope 2.0

  • Continues to Carve Lower Low; Slips to Fresh Monthly Low of 10,373
  • Bearish RSI Momentum Offers Oversold Signal
  • Former Support to Offer New Resistance: 10,470 Pivot
  • Interim Support: 10,369 (61.8 expansion) to 10,375 (50.0 retracement)

Release

GMT

Expected

Actual

Change in Non-Farm Payrolls (SEP)

12:30

180K

148K

Unemployment Rate (SEP)

12:30

7.3%

7.2%

Labor Force Participation Rate (SEP)

12:30

--

63.2%

Change in Private Payrolls (SEP)

12:30

180K

126K

Change in Manufacturing Payrolls (SEP)

12:30

5K

2K

Underemployment Rate (SEP)

12:30

--

13.6%

Two-Month Payroll Net Revision (SEP)

12:30

--

9K

Average Hourly Earnings (MoM) (SEP)

12:30

0.2%

0.1%

Average Hourly Earnings (YoY) (SEP)

12:30

2.1%

2.1%

Average Weekly Hours (SEP)

12:30

34.5

34.5

Change in Household Employment (SEP)

12:30

--

133K

Richmond Fed Manufacturing Index (OCT)

14:00

0

1

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) tumbled to a fresh monthly of 10,379 following the dismal Non-Farm Payrolls report, and the greenback may face additional headwinds ahead of the Federal Open Market Committee (FOMC) meeting as the central bank is widely expected to retain its current policy at the October 29-30 meeting.

Indeed, the slowdown in job growth may prompt the FOMC to carry its highly accommodative policy stance into the following year, and we will continue to watch the downside targets for the USDOLLAR as it searches for support.

The 10,369 (61.8 percent Fibonacci expansion) to 10,375 (50.0 percent Fibonacci retracement) region may offer interim support as it remains in the process of carving out a lower low, but the bearish momentum in the Relative Strength Index may highlight a further decline in the greenback as the oscillator pushes into oversold territory. In turn, we will wait for the RSI to push back above 30 to see a more meaningful rebound in the dollar, and we will look to sell bounces in the greenback as the bearish trend dating back to July continues to take shape.

Forex_USD_Support_Targets_in_Focus-_AUD_Rally_at_Risk_on_Slowing_CPI_body_ScreenShot274.png, USD Support Targets in Focus- AUD Rally at Risk on Slowing CPI

AUDUSD Daily

Forex_USD_Support_Targets_in_Focus-_AUD_Rally_at_Risk_on_Slowing_CPI_body_Picture_1.png, USD Support Targets in Focus- AUD Rally at Risk on Slowing CPI
  • Bullish Trend Continues to Take Shape; Looking for Higher High
  • Relative Strength Index Coming Up Against Resistance (79)
  • Interim Resistance: 0.9770 (61.8 expansion) to 0.9800 Pivot
  • Interim Support: 0.9500 (38.2 retracement) to 0.9520 (38.2 expansion)

Three of the four components strengthened against the greenback, led by a 0.74 percent rally in the Euro, which was followed by a 0.71 percent advance in the Australian dollar.

The bullish momentum in the AUDUSD may continue to take shape as it clears the 0.9710-20 region (50.0 retracement), but the pair may face a more meaningful pullback over the near-term as the RSI approaches resistance (79).

With Australia’s Consumer Price report anticipated to show a further slowdown in inflation, a dismal print may prompt the Reserve Bank of Australia (RBA)to adopt a more dovish tone at the November 4 meeting, and we may see the AUDUSD target a higher low in the days ahead should as the pair looks poised for a correction.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

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