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GBP/USD Risks Further Losses on BoE- AUD to Face Verbal Intervention?

GBP/USD Risks Further Losses on BoE- AUD to Face Verbal Intervention?

David Song, Strategist

Talking Points:

- GBP/USD to Eye 1.5900 Going Into BoE as Martin Weale, Ian McCafferty Remain the Minority.

- AUD/USD Bearish Momentum in Focus; Will RBA Continue to Implement Verbal Intervention?

- USDOLLAR Hits Near-Term Targets on Strong NFP; RSI Remains Capped.

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GBP/USD

GBP/USD Daily Chart
  • GBP/USD vulnerable for a further decline going into the Bank of England (BoE) interest rate decision on October 9 as the Relative Strength Index (RSI) dips back into oversold territory.
  • BoE may refrain from releasing a policy statement once again as Martin Weale & Ian McCafferty stand as the minority.
  • Despite the flip earlier this week, the DailyFX Speculative Sentiment Index (SSI) now shows net-long positioning in GBP/USD as the ratio stands at +1.83.

AUD/USD

AUD/USD Daily Chart
  • AUD/USD retains bearish outlook ahead of the Reserve Bank of Australia (RBA) policy meeting on October 7, with RSI push back below 30.
  • Despite expectations of seeing the RBA preserve its current policy, toughen verbal intervention from Governor Glenn Stevens may generate another set of lower-lows in the exchange rate.
  • Next downside targets come in around 0.8525 (50.0% expansion) to 0.8550 (38.2% expansion).

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USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11132.42

11142.81

11016.09

1.04

228.59%

GBP/USD Risks Further Losses on BoE- AUD to Face Verbal Intervention?USDOLLAR Chart

Chart - Created Using FXCM Marketscope 2.0

  • The Dow Jones-FXCM U.S. Dollar Index hits near-term target around 11,120 (1.618% expansion) to 11,138 (61.8% expansion) as U.S. Non-Farm Payrolls (NFP) climbs 248K in September.
  • Despite the series of higher highs, need to see a push higher in the RSI to favor further USDOLLAR strength as the oscillator remains capped around the 83.00 region.
  • With a slew of Fed officials speaking next week, will watch their take on inflation amid subdued wage growth.
  • Still need to see a bearish RSI break to favor a near-term correction; former resistance zone around 10, 752 (38.2% expansion) to 10,759 (61.8% retracement) remains in focus.

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GBP/USD Risks Further Losses on BoE- AUD to Face Verbal Intervention?

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--- Written by David Song, Currency Analyst

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

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