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AUD/USD Retail Crowd Remains Short Even as RBA Concludes Easing Cycle

AUD/USD Retail Crowd Remains Short Even as RBA Concludes Easing Cycle

David Song, Strategist

Talking Points:

- AUD/USD Retail Crowd Remains Short Even as RBA Sees End of Easing Cycle.

- NZD/USD Fails to Retain Bullish Formation Ahead of NZ Employment Report.

- USDOLLAR Struggles at Former Support; Continues to Carve Bearish Formation.

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AUD/USD

AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • AUD/USD snaps back following the 25bp rate cut as the Reserve Bank of Australia (RBA) signs an end to easing cycle and closes the door for lower borrowing-costs; ongoing closes above 0.7820 (38.2% retracement) paired with the bullish RSI momentum raises the risk for a further advance.
  • Key region of interest stands at former support zone around 0.8000 (61.8% retracement) to 0.8020 (38.2% expansion).
  • Despite the bullish aussie-dollar reaction to the RBA, DailyFX Speculative Sentiment Index (SSI) shows the retail crow remains net-short AUD/USD following the interest rate decision, with the ratio holding at -1.24.

NZD/USD

NZD/USD Daily Chart
  • NZD/USD looks poised to resume the long-term downward trend as price & the RSI fail to retain the bullish formations carried over from March.
  • With New Zealand 1Q Employment report expected to show slower rate of job growth, dismal results may dampen the appeal of the kiwi as market participants increase bets for a rate cut from the Reserve Bank of New Zealand (RBNZ).
  • Close below 0.7525 (50% retracement) to expose the next downside region of interest around 0.7430 (61.8% retracement) to 0.7440 (38.2% retracement)

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Read More:

Price & Time: Downside Revival in the Kiwi?

May Forex Seasonality Foresees Dollar Rebound After April Selloff

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11835.94

11899.15

11827.86

-0.41

98.13%

AUD/USD Retail Crowd Remains Short Even as RBA Concludes Easing CycleUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar at risk for a further decline as it comes off of former support & carves bearish outside-day (engulfing); downside targets remain favored as the bearish RSI momentum remains in play.
  • Despite the better-than-expected ISM Non-Manufacturing survey, the ongoing slack in the U.S. economy raises the risk of seeing a larger correction in the greenback as it raises the Fed’s scope to further delay the normalization cycle.
  • As the monthly opening range takes shape, may see another run at the February low (11,736) as the USDOLLAR appears to be carving a near-term top during the first full-week of May.

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DailyFX

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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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