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AUDUSD Opening Gap in Focus as Pair Remains Capped by 200-Day SMA

AUDUSD Opening Gap in Focus as Pair Remains Capped by 200-Day SMA

2014-03-24 15:30:00
David Song, Strategist
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Talking Points:

- USDOLLAR Struggling to Maintain Gains from FOMC Meeting; Carving Lower High?

- AUDUSD Continues to Eye 200-Day SMA (0.9143); Weekly Opening Gap in Focus

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10567.65

10584.24

10560.53

-0.04

63.93%

USDOLLAR Daily

Forex-AUDUSD-Opening-Gap-in-Focus-as-Pair-Remains-Capped-by-200-Day-SMA_body_Picture_3.png, AUDUSD Opening Gap in Focus as Pair Remains Capped by 200-Day SMA

Chart - Created Using FXCM Marketscope 2.0

  • String of Failed Closes Above 10,590 Keeps Downward Trending Channel in Focus
  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,470 Pivot

Release

GMT

Expected

Actual

Chicago Fed National Activity Index (FEB)

12:30

0.08

0.14

Fed's Jeremy Stein Speaks on U.S. Economy

13:00

Markit Purchasing Manager Index Manufacturing (MAR P)

13:45

56.5

55.5

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) remains at risk for further losses following the failed attempts to close above the 10,590 region, and the greenback may continue to carve a series of lower highs & lower lows should the fundamental developments coming out of the U.S. economy dampen the outlook for growth and inflation.

The limited follow-through subsequent to the Federal Open Market Committee (FOMC) meeting suggests market participants remain bearish against the greenback as price retains the downward trending channel from earlier this year, and reserve currency may continue to trade heavy over the remainder of the month as Fed officials remain in no rush to normalize monetary policy.

Indeed, San Francisco Fed President John Williams, who closely worked under Chair Janet Yellen, argued that the policy outlook has not changed amid the ongoing slack in the real economy, and went onto say that there’s limited scope for the central bank to normalize monetary policy sooner rather than later amid the persistent treat for disinflation.

With that said, a move and a close below the 10,555 (50.0 percent Fibonacci retracement) may fuel a more meaningful run at the 10,470 pivot, and the reserve currency may face additional headwinds in the coming days should we see a growing number of Fed officials talk down interest rate expectations.

Read More:

US Dollar Unlikely to Break to Fresh Highs - Time to Sell?

Price & Time: Beware the End of March?

Forex-AUDUSD-Opening-Gap-in-Focus-as-Pair-Remains-Capped-by-200-Day-SMA_body_ScreenShot254.png, AUDUSD Opening Gap in Focus as Pair Remains Capped by 200-Day SMA

AUDUSD Daily

Forex-AUDUSD-Opening-Gap-in-Focus-as-Pair-Remains-Capped-by-200-Day-SMA_body_Picture_1.png, AUDUSD Opening Gap in Focus as Pair Remains Capped by 200-Day SMA
  • Preserves Bullish Trend But Remains Capped by Monthly Range & 200-Day SMA (0.9143)
  • Interim Resistance: 0.9200 (100.0% expansion) to 0.9210 (61.8% retracement)
  • Interim Support: 0.8860 (61.8 expansion) to 0.8890 Pivot

Join DailyFX on Demandto Cover Current Australian dollar Trade Setups

Two of the four components strengthened against the greenback, led by a 0.35 percent in the Australian dollar, but it seems as though the AUDUSD will remain limited by the 200-Day SMA (0.9143) over the next 24-hours of trade as it has yet to fill the gap from the weekly open.

Nevertheless, the technical outlook for the AUDUSD continues to favor the topside objectives as price & the Relative Strength Index (RSI) retains the bullish trend from earlier this year, but the pair may preserve the monthly range ahead of the Reserve Bank of Australia (RBA) meeting on March 31 as market participants weigh the outlook for monetary policy.

The AUDUSD may lose its appeal should RBA Governor Glenn Stevens may take a more aggressive approach in talking down the higher-yielding currency, and the central bank may sound more dovish this time around in an effort to further assists with the rebalancing of the $1T economy.

--- 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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