Talking Points:
- USD/JPY Continues to Carve Higher Highs & Lows to Threaten Triangle/Wedge Formation.
- AUD/USD Outlook Mired by Bearish Formation, Growing Bets for Reserve Bank of Australia (RBA) Rate Cut.
- USDOLLAR Stalls at Former-Support; Fed Rhetoric in Focus.
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Chart - Created Using FXCM Marketscope 2.0
- May see a continuation of the series of higher highs & lows in USD/JPY as the pair appears to be breaking out of the triangle/wedge formation, while the RSI threatens the bearish momentum carried over from back in December.
- Near-term breakout may spur a resumption of the long-term bullish trend; need a break/close above 120.55 (23.6% retracement) to 120.60 (61.8% retracement) for conviction/confirmation for a further advance in USD/JPY.
- Despite the growing risk for a breakout in USD/JPY, DailyFX Speculative Sentiment Index (SSI) shows the ratio coming off extremes and narrowing to +1.82 as the retail crowd appears to be fading the near-term advance in the exchange rate.
AUD/USD
- Near-term outlook for AUD/USD favors the downside targets as the pair continues to carve a series of lower highs & lows ahead of the Reserve Bank of Australia (RBA) interest rate decision.
- Seeing increased bets for a 25bp RBA rate cut as market participants price a 75% probability for a further reduction in the cash rate according to Credit Suisse overnight index swaps (OIS).
- Still waiting for a close below 0.7820 (38.2% retracement) to open up the next downside target at 0.7710 (23.6% retracement).
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11878.49 | 11897.25 | 11858.65 | 0.09 | 52.97% |
Chart - Created Using FXCM Marketscope 2.0
- Dow Jones-FXCM U.S. Dollar continues to trade on a firmer footing despite the mixed data prints coming out of the world’s largest economy; still waiting for a break of the bearish RSI momentum to favor a resumption of the long-term bullish trend.
- Will keep a close eye on the fresh batch of central bank rhetoric coming out ahead of the highly anticipated U.S. Non-Farm Payrolls (NFP) report as 2015-voting members Charles Evans and John Williams are scheduled to speak later today.
- Break/close above 11,901 (78.6% expansion) to favor a further advance in USDOLLAR, with the next topside objective coming in around 11,951 (38.2% expansion) to 11,965 (23.6% retracement).
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| Release | GMT | Expected | Actual |
|---|---|---|---|
| Fed’s Daniel Tarullo Speaks on U.S. Economy | 13:00 | ||
| ISM New York (APR) | 13:45 | -- | 58.1 |
| Factory Orders (MAR) | 14:00 | 2.0% | 2.1% |
| Factory Orders ex Transports (MAR) | 14:00 | -- | 0.0% |
| Fed’s Charles Evans Speaks on U.S. Economy | 16:25 | ||
| Fed’s John Williams Speaks on U.S. Economy | 19:10 |
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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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