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Retail AUD/USD Crowd Turns Net-Short Ahead of China CPI

Retail AUD/USD Crowd Turns Net-Short Ahead of China CPI

Talking Points:

- AUD/USD Rebound Vulnerable to Slowing China Inflation- Opening Monthly Range in Focus.

- XAU/USD Outlook Remains Bearish; Close Below $1227-$1231 to Trigger Further Losses.

- USDOLLAR Risks Larger Correction as RSI Continues to Fall Back From Overbought Territory.

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AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • AUD/USD breaks out of descending channel even after the rate cuts from the Reserve Bank of Australia (RBA) and the People’s Bank of China (PBoC).
  • Looks poised for a large rebound as the Relative Strength Index (RSI) comes off of oversold territory; will keep a close eye on China’s Consumer Price Index (CPI) which is expected to slow to an annualized 1.0% in January, which would mark the slowest rate of growth since November 2009.
  • DailyFX Speculative Sentiment Index (SSI) may foreshadow a larger shift in retail positioning as crowd turns net-short AUD/USD, with the ratio currently standing at -1.06.


XAU/USD Daily Chart
  • Looks as though former resistance around $1227 (23.6% expansion) to $1231 (78.6% retracement) will act as near-term support, but favor the approach to sell-bounces in Gold as it fails to retain the bullish RSI momentum.
  • Want a break & close below the near-term support region to favor a further decline as the precious metal continues to carve a series of lower-highs.
  • Will favor the downside targets as a bearish trend takes shape on the RSI, with the next region of interest coming in around $1218 (78.6% expansion).

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Read More:

Price & Time: USD/SEK Leading The Way Again?

EURUSD Reacts to Long Term Slope and Fibonacci Levels

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11821.9111839.5911807.63-0.0345.41%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar monthly opening range in focus as the RSI comes off of overbought territory; will keep a close eye on the ascending channel from back in July as the greenback faces a risk for a larger correction.
  • Nevertheless, long-term outlook remains bullish as the pickup in job/wage growth fuels expectations of seeing a Fed rate hike in mid-2015.
  • Former resistance zones remain in focus with the first area of interest coming around 11,721 (38.2% expansion).

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Labor Market Conditions Index (JAN)15:00--4.9

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--- Written by David Song, Currency Analyst

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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.