AUD/USD Risk Larger Recovery on Wait-and-See RBA; Sept. High on Tap?

Talking Points:

- AUD/USD to Eye September High (0.7279) on Wait-and-See RBA.

- NZD/USD Mounts Larger Rebound Ahead of Global Dairy Trade Auction.

- USDOLLAR Holds NFP Range Even as ISM Non-Manufacturing Disappoints.

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AUD/USD

Chart - Created Using FXCM Marketscope 2.0

• Even though the Reserve Bank of Australia (RBA) retains the verbal intervention on the local currency, AUD/USD may continue retrace the decline from the previous month should the central bank endorse a wait-and-see approach and signal an end of its easing cycle.
• Will keep a close eye on former support around 0.7220 (23.6% expansion) to 0.7240 (100% expansion) following the failed attempts to push back above the key region in September; may see a more meaningful recover in AUD/USD especially if the Relative Strength Index (RSI) breaks out of the bearish formation carried over from back in May.
• Despite the rebound, DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long AUD/USDsince May 15, but the ratio appears to be approaching recent extremes as it widens to +2.82, with 74% of traders long.

NZD/USD

• NZD/USD looks poised for a larger rebound following the close above the 0.6400 resistance zone, while the RSI threatens the bearish momentum carried over from the previous year.
• Despite the dovish tone held by the Reserve Bank of New Zealand (RBNZ), the Global Dairy Trade auction may prop up the kiwi after the last report showed a 16.5% rise in the price index.
• Need break/close above 65.30 (61.8% retracement) to open up the topside target around 0.6620 (78.6% retracement).

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Read More:

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USDOLLAR(Ticker: USDollar):

Chart - Created Using FXCM Marketscope 2.0

• Even though the Dow Jones-FXCM U.S. Dollar largely holds within the previous day’s range, the recent string of lower-highs may highlight a further decline for the greenback amid the failed attempts to close above 12,082 (61.8% expansion).
• With ISM Non-Manufacturing falling short of market expectations, may see the Federal Open Market Committee (FOMC) come under increased scrutiny to further delay its normalization cycle amid the slowing recovery.
• Ongoing closes below 12,082 (61.8% expansion) raises the risk for a larger pullback, with the Fibonacci overlap around 11,951 (38.2% expansion) to 11,965 (23.6% retracement) in focus.

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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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