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USDOLLAR Eyes Lower Low- AUD Fills Gap But Needs Close Above 0.9100

USDOLLAR Eyes Lower Low- AUD Fills Gap But Needs Close Above 0.9100

David Song, Strategist

Talking Points:

- USDOLLAR at Risk for Lower Low Ahead of FOMC Meeting

- AUDUSD Looking to Fill Weekly Opening Gap; Watching for Close Above 0.9100

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10513.81

10562.78

10508.34

-0.46

152.75%

USDOLLAR Daily

Forex_USDOLLAR_Eyes_Lower_Low-_AUD_Closes_Gap_But_Needs_Close_Above_0.9100_body_Picture_3.png, USDOLLAR Eyes Lower Low- AUD Fills Gap But Needs Close Above 0.9100

Chart - Created Using FXCM Marketscope 2.0

  • Failure to Push Above 10,590 (50.0 retracement) Risks Lower High
  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,470 Pivot

Release

GMT

Expected

Actual

Advance Retail Sales (FEB)

12:30

0.2%

0.3%

Advance Retail Sales ex Autos (FEB)

12:30

0.1%

0.3%

Advance Retail Sales ex Auto and Gas (FEB)

12:30

0.2%

0.3%

Advance Retail Sales Control Group (FEB)

12:30

0.2%

0.3%

Initial Jobless Claims (MAR 8)

12:30

330K

315K

Continuing Claims (MAR 1)

12:30

2903K

2855K

Import Price Index (MoM) (FEB)

12:30

0.5%

0.9%

Import Price Index (YoY) (FEB)

12:30

-1.9%

-1.1%

Business Inventories (JAN)

14:00

0.4%

0.4%

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) extended the decline from earlier this week despite the slew of positive developments coming out of the U.S. economy, and the greenback faces a growing risk for a lower low as the Relative Strength Index (RSI) threatens the bullish momentum carried over from the previous month.

As mentioned in DailyFX on Demand, a downside break in the RSI may push the USDOLLAR back down towards the 10,470 region, and we will maintain our approach for ‘selling bounces’ in the greenback as it carves a lower high in March.

With that said, we may have to wait the Federal Open Market Committee (FOMC) interest rate decision to see a meaningful rebound in the dollar as the central bank is widely expected to reduce its asset-purchase program by another $10B, and we will continue to watch the downside targets ahead of the policy meeting as the reserve currency search for support.

Forex_USDOLLAR_Eyes_Lower_Low-_AUD_Closes_Gap_But_Needs_Close_Above_0.9100_body_ScreenShot214.png, USDOLLAR Eyes Lower Low- AUD Fills Gap But Needs Close Above 0.9100

AUDUSD Daily

Forex_USDOLLAR_Eyes_Lower_Low-_AUD_Closes_Gap_But_Needs_Close_Above_0.9100_body_Picture_1.png, USDOLLAR Eyes Lower Low- AUD Fills Gap But Needs Close Above 0.9100
  • Waiting for Opening Gap to be Filled on Close-Basis; Needs Close Above 0.9100
  • Interim Resistance: 0.9200 (100.0% expansion) to 0.9210 (61.8% retracement)
  • Interim Support: 0.8670 (100.0% expansion) to 0.8700 (78.6% retracement)

Join DailyFX on Demandto Cover Current Australian Dollar Trade Setups

The greenback weakened across the board, led by a 1.21 percent advance in the Australian dollar, and the AUDUSD looks poised to fill the Sunday opening gap on a close-basis following the upbeat employment report coming out of the $1T economy.

Indeed, the technical outlook continues to favor further advance for the AUDUSD as price and RSI retains the bullish trend from earlier this year, but a failed close above 0.9100 may generate a pullback in the exchange rate as the Reserve Bank of Australia (RBA) looks for a weaker currency.

In turn, we will maintain a long-term bearish outlook for the Australian dollar, and the AUDUSD may continue to carve a lower high in March as Governor Glenn Stevens prefers the exchange rate close to the 0.8500 handle.

--- 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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