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AUD/USD Tags Former Resistance Ahead of RBA Minutes, Labor Report

AUD/USD Tags Former Resistance Ahead of RBA Minutes, Labor Report

David Song, Strategist

Talking Points:

- AUD/USD to Pare Losses on Less Cautious RBA Minutes, Upbeat Employment Report.

- USDOLLAR Approaches Fibonacci Overlap, Channel Resistance on Upbeat U.S. Data.

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AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • AUD/USD is coming up against a key area of interest as it comes up against former resistance around ; will keep a close eye on the Relative Strength Index (RSI) as it hovers above oversold territory.
  • Even though the Reserve Bank of Australia (RBA) cut the benchmark interest rate to a fresh record-low of 1.75%, the policy meeting minutes may dampen expectations for additional monetary support should Governor Glenn Stevens and Co. largely endorse a wait-and-see approach over the foreseeable future, while the Employment report is anticipated to show another 12.0K rise in job growth.
  • A break/close below 0.7240 (100% expansion) to 0.7270 (38.2% retracement), which coincides with the 200-Day SMA (0.7258) may open up the next downside target around 0.7180 (61.8% retracement).
  • The DailyFX Speculative Sentiment Index (SSI) shows the retail FX crowd remains net-long AUD/USD since May 3, with the ratio hitting a near-term extreme earlier this month as it approaches +2.00.
  • The ratio currently sits at +1.82 as 65% of traders are long, with long positions 11.7% higher from the previous week, while open interest stands 3.7% below the monthly average.

Why and how do we use the SSI in trading? View our video and download the free indicator here

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11945.8811959.6911901.250.3799.86%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • The USDOLLAR has come up against a key Fibonacci overlap after closing above 11,898 (50% retracement); will also keep a close eye on the downward trend from earlier this year as the greenback approaches channel resistance.
  • Despite the slew of positive U.S. data prints, Fed Funds Futures continue to show a less than 10% probability for a Federal Reserve rate hike at the next quarterly policy meeting in June.
  • Need a break/close above 11,951 (38.2% expansion) to 11,965 (23.6% retracement) to favor a larger recovery in the USDOLLAR.
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Read More:

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AUD/CAD Into Key Support- Monthly Opening Range In Focus

US Dollar Bear Trap within an Even Bigger Bull Trap?!

USD/JPY Technical Analysis: Has It Bottomed?

--- 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.