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AUD/USD Hit by S&P Warning Shot- Retail FX Remains Long

AUD/USD Hit by S&P Warning Shot- Retail FX Remains Long

David Song,

Talking Points:

- AUD/USD Slips to Fresh 2015 Low as S&P Fires Warning-Shots; Retail Crowd Remains Net-Long.

- British Pound Outlook Hinges on 2Q Gross Domestic Product (GDP) Report.

- USDOLLAR Falls Back From Fresh Monthly High as New Home Sales Disappoint.

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AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • AUD/USD tumbles to a fresh 2015 low of 0.7259 as Standard & Poor’s warns of a credit-ratings cut if ‘Australia’s budgetary performance does not improve broadly;’ may put increased pressure on the Reserve Bank of Australia (RBA) to further support the real economy especially with the ongoing slowdown in China – the region’s largest trading partner.
  • The aussie-dollar looks poised for a further decline as the bearish RSI momentum pushes the oscillator into oversold territory, with the next downside region of interest coming in around 0.7240 (100% expansion).
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long AUD/USD since May 15, with the ratio push back towards extremes as it climbs to +3.45 as 78% of traders are long.


GBP/USD Daily Chart
  • GBP/USD appears to be finding near-term support around 1.5450 (61.8% retracement) to 1.5460 (23.6% expansion), but the failed attempts to close above 1.5630 (50% retracement) to 1.5650 (38.2% expansion) may spur a further consolidation in the exchange rate.
  • With the advance U.K. Gross Domestic Product (GDP) report anticipated to show a 0.7% expansion in the second-quarter, signs of a stronger recovery may heighten the appeal of the British Pound & highlight a tightening race with the Federal Reserve as the Bank of England (BoE) adopts a more hawkish outlook for monetary policy.
  • Failure to hold the near-term support region may bring up the July low (1.5329) along with the Fibonacci overlap around 1.5330 (78.6% retracement) to 1.5350 (50% retracement).

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Read More:

GBPUSD Outside Day Reversal Clears Range- Short Scalps Favored

The Weekly Volume Report: Sharp Move Lower in GBP OBV

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12041.2112063.4112017.540.1787.92%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar falls back from a fresh monthly high of 12,063 following the unexpected decline in U.S. New Home Sales; another failed attempt to close above 12,049 (78.6% retracement) may generate a larger pullback during the last full-week of July amid the mixed data prints coming out of the world’s largest economy.
  • May see the bullish dollar sentiment gather pace as the 2Q GDP report is expected to show a 2.6% rebound in the growth rate, but the fresh commentary coming out of the Fed’s July 29 interest rate decision may have the greatest impact on the greenback as market participants look for a September liftoff.
  • Larger pullback may bring back former-resistance around 11,898 (50% retracement) to 11,901 (78.6% expansion) back on the radar.

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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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