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
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
- 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):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11821.91 | 11839.59 | 11807.63 | -0.03 | 45.41% |
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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| Release | GMT | Expected | Actual |
|---|---|---|---|
| Labor Market Conditions Index (JAN) | 15:00 | -- | 4.9 |
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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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