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AUD/USD Outlook at Risk on Dovish RBA- EUR/USD Breakout Takes Shape

AUD/USD Outlook at Risk on Dovish RBA- EUR/USD Breakout Takes Shape

2014-05-05 15:40:00
David Song, Currency Strategist
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Talking Points:

- USDOLLAR Outlook to Turn Increasingly Bearish on Close Below 10,440

- EUR/USD Bullish Breakout Taking Shape; Looking For Close Above 1.3870

- AUD/USD& AUDJPY to Retain Narrow Range Going Into RBA Meeting

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) continues to show a limited reaction to the positive developments coming out of the world’s largest economy, and the reserve currency remains at risk of giving back the advance from back in October (10,354) as the Federal Reserve remains reluctant to move away from its highly accommodative policy stance.

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10445.87

10449.45

10438.74

-0.01

40.51%

Even though we’re still watching the monthly opening range, the USDOLLAR may have set the high for May (10,495) as price & the Relative Strength Index (RSI) retain the bearish trend from earlier this year, and a close below the 10,440 region would favor a further decline in the greenback as it fails to preserve the range-bound price action carried over from April.

With Fed Chair Janet Yellen scheduled to speak later this week, the fresh batch of central bank rhetoric may continue to heighten the bearish sentiment surrounding the dollar should the prepared remarks drag on interest rate expectations, and we will retain our approach of looking for opportunities to ‘sell bounces’ until we see a meaningful shift in the Fed’s policy outlook.

AUD/USD Outlook at Risk on Dovish RBA- EUR/USD Breakout Takes Shape

Join DailyFX on Demandto Cover Current U.S. dollar Trade Setups

Read More:

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Crude COT Positioning Remains Just off of Record

USDOLLAR Daily

AUD/USD Outlook at Risk on Dovish RBA- EUR/USD Breakout Takes Shape

Chart - Created Using FXCM Marketscope 2.0

  • Failure to Retain Range-Bound Prices Raises Risk for Further Losses
  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,406 (1.618 expansion)

Release

GMT

Expected

Actual

Markit Purchasing Manager Index Services (APR F)

13:45

54.5

55.0

Markit Purchasing Manager Index Composite (APR F)

13:45

--

55.6

ISM Non-Manufacutring Composite (APR)

14:00

54.0

55.2

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--- 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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