Talking Points:
- AUD/USD Weighed by RBA Verbal Intervention; Retail Crowd Remains Net-Short.
- USDOLLAR Remains Capped Despite Strong CPI- Fed Speeches in Focus.
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Chart - Created Using FXCM Marketscope 2.0
- AUD/USD looks poised to retain the range-bound price action going into the last full-week of February as it pares the overnight decline and looks poised to mark another close above near-term support around 0.7080 (38.2% expansion) to 0.7090 (78.6% retracement).
- Nevertheless, the Australian dollar stand at risk of facing increased headwinds over the coming months as the Reserve Bank of Australia (RBA) toughens the verbal intervention on the local currency and favors the exchange rate closer to the 0.6500 handle.
- With the Relative Strength Index (RSI) struggling to retain the bullish formation from earlier this year, the pair stands at risk for a further decline following the failed run at the monthly high (0.7242), with the next key downside region of interest coming around 0.6950 (161.8% expansion) to 0.6970 (50% expansion).
- The DailyFX Speculative Sentiment Index (SSI) shows a continued shift in retail positioning as the FX crowd flips net-short AUD/USD ahead of the weekend.
- In light of the range-bound price action, the ratio has slipped to -1.13, with 47% of traders now long.
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 12069.26 | 12118.91 | 12064.31 | -0.10 | 84.68% |
Chart - Created Using FXCM Marketscope 2.0
- Even though the U.S. Consumer Price Index (CPI) exceeds market expectations, the USDOLLAR struggles to hold its ground, with the greenback at risk for a larger pullback as the Relative Strength Index (RSI) preserves the bearish formation from earlier this year.
- Even though Cleveland Fed President Loretta Mester argues that the Federal Open Market Committee (FOMC) remains on course to further normalize monetary policy, will keep a close eye on fresh comments from Fed Vice-Chair Stanley Fisher, Governor Jerome Powell and Governor Lael Brainard especially as the preliminary 4Q Gross Domestic Product (GDP) report is anticipated to show a downward revision in the growth rate.
- Will keep a close eye on the monthly rate as the USDOLLAR consolidates ahead of the last full-week of February, with the next downside region of interest coming in around 11,986 (61.8% retracement).
Read More:
EUR/USD – Breakout Hangs in the Balance
USD/JPY Technical Analysis: Best 2-Week Run For JPY Since 1998
Crude Oil Turn in the Pipeline?
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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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