Talking Points:
- NZD/USD Bearish Formation Continues to Take Shape- Retail FX Sentiment at Extremes.
- AUD/USD Rebound at Risk on Dovish Reserve Bank of Australia (RBA) Minutes.
- USDOLLAR Weakness to Persist on Dovish Fed- Updated Projections in Focus.
For more updates, sign up for David's e-mail distribution list.
Chart - Created Using FXCM Marketscope 2.0
- NZD/USD remains at risk for a further decline despite a near-term divergence with the Relative Strength Index (RSI) as the pair continues to search for support: favor the approach to sell-bounces in kiwi-dollar as the Reserve Bank of New Zealand (RBNZ) reverts back to its easing cycle.
- With the break of 0.6950 (38.2% retracement), next downside target comes in around the 0.6900 (100% expansion) handle, followed by 0.6865 (50% retracement).
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long NZD/USD despite the RBNZ rate cut, with the ratio approaching extremes as it currently sits at +3.40.
AUD/USD
- AUD/USD may face a larger rebound over the near-term following the failed test of key support around 0.7570 (50% expansion) to 0.7590 (100% expansion); need to see a break of the bearish RSI momentum to favor a larger correction.
- May see the Reserve Bank of Australia (RBA) Minutes drag on the exchange rate should the central bank keep the door open to further reduce the cash rate.
- In light of the narrowing range, need a break/close above former support around 0.7820 (38.2% retracement) to favor a larger advance in AUD/USD.
Join DailyFX on Demand for Real-Time SSI Updates Across the Majors!
Read More:
EURNZD Threatens Key Resistance Ahead of RBNZ- Longs at Risk Sub 1.59
The Weekly Volume Report: USD/JPY Declines, but Volume Steady
USDOLLAR(Ticker: USDollar):
Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
---|---|---|---|---|---|
DJ-FXCM Dollar Index | 11860.57 | 11916.11 | 11844.02 | -0.05 | 98.27% |
Chart - Created Using FXCM Marketscope 2.0
- Failure to retail the triangle/wedge formation raises the risk for a further decline in the Dow Jones-FXCM U.S. Dollar as it struggles to push back above former support around 11,898 (50% retracement) to 11,901 (78.6% expansion).
- The fresh updates coming out at the Federal Open Market Committee’s (FOMC) June 17 interest rate decision is likely to heavily impact the greenback as market participants speculate a September rate hike; will keep a close eye on the rate dot-plot to gauge the pace of the normalization cycle.
- Break/close below the Fibonacci overlap around 11,826 (61.8% expansion) to 11,843 (38.2 retracement) to open up the next downside targets around 11,745 (50% retracement) to 11,759 (23.6% retracement).
Join DailyFX on Demand for Real-Time SSI Updates!
Click Here for the DailyFX Calendar
--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
To be added to David's e-mail distribution list, please follow this link.
Trade Alongsidethe DailyFX Team on DailyFX on Demand
Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.
New to FX? Watch this Video
Join us to discuss the outlook for the major currencies on the DailyFXForums