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AUD/USD Flirts with Key Resistance- Retail FX Shorts Jump 39%

AUD/USD Flirts with Key Resistance- Retail FX Shorts Jump 39%

David Song,

Talking Points:

- AUD/USD Flirts with Key Resistance Ahead of Australia Sales Report; Retail FX Remains Net-Short.

- USDOLLAR Remains Under Pressure Ahead of U.S. Non-Farm Payrolls (NFP).

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AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • AUD/USD extends the advance from earlier this week as the bullish formation from earlier this year continues to take shape, but the pair has come up against a key juncture following the previous failed attempts to break & close above 0.7380 (50% retracement) to 0.7390 (78.6% expansion).
  • Nevertheless, as market participants forecast Australia Retail Sales to rebound 0.4% in January, a positive development may fuel a near-term breakout in the exchange rate especially as the Reserve Bank of Australia (RBA) continue to endorse a wait-and-see approach.
  • Even though the Relative Strength Index (RSI) fails to preserve the bullish formation from earlier this year, a closing price above key resistance may open up the next topside target around 0.7490 (61.8% retracement) to 0.7500 (61.8% expansion).
  • The DailyFX Speculative Sentiment Index (SSI) shows the retail FX crowd remains net-short AUD/USD since the beginning of the month, with the ratio slipping to fresh extremes in March as it slipped to -2.00.
  • The ratio currently sits at -1.82 as 34% of traders are currently long, with short positions 39.3% higher from the previous week.

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12093.8512149.3812079.34-0.35128.70%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • The USDOLLAR continues to lose ground ahead of the highly anticipated U.S. Non-Farm Payrolls (NFP) report amid the mixed data prints coming out of the world’s largest economy; will continue to watch the downside targets especially as the RSI struggles to retain the bullish formation carried over from the previous month.
  • With the U.S. economy anticipated to add another 195K jobs in February, a further improvement in the labor market accompanied by sticky wage growth may boost the appeal of the greenback as it puts increased pressure on the Federal Open Market Committee (FOMC) to implement higher borrowing-costs in 2016.
  • As the USDOLLAR gives back the rebound from February, next downside region of interest comes in around 12,050 (78.6% & 50% retracement) along with the 200-Day SMA at 12,051.

Read More:

Another Big Test Awaits USD/CAD

DailyFX Technical Focus: Nikkei 225 at Resistance

USD/JPY Technical Analysis: The Core FX Pair In The Risk ParadigmUSDOLLAR: Key Levels to Know Heading into NFPs, March Open

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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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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.