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AUD/USD Range Vulnerable to Less-Dovish RBA Minutes, RSI Trigger

AUD/USD Range Vulnerable to Less-Dovish RBA Minutes, RSI Trigger

David Song, Strategist

Talking Points:

- AUD/USD Range Vulnerable to Less-Dovish RBA Minutes; RSI Trigger in Focus.

- USDOLLAR Risks Further Losses on Dovish Yellen Testimony.

Avoid the pitfalls of trading by steering clear of classic mistakes. Review these principles in the "Traits of Successful Traders" series.


AUD/USD Daily Chart

Chart - Created by David Song

  • With AUD/USD gapping higher to start the week, the pair may continue to retrace the decline from the April high (0.7834) as the pair fails to preserve the downward trend; watching the Relative Strength Index (RSI) for confirmation/conviction following the failed attempt earlier this month to breakout of the bearish formation carried over from March.
  • The Reserve Bank of Australia (RBA) Minutes may heighten the appeal of the aussie as Governor Glenn Stevens and Co. revert back to a wait-and-see approach following the rate-cut in May; may see the fresh comments foster a larger advance in AUD/USD should the central bank show a greater willingness to move away from its easing cycle.
  • Waiting on a close above the Fibonacci overlap around 0.7490 (61.8% retracement) to 0.7500 (61.8% expansion) to favor a larger advance in AUD/USD, with the next topside region of interest coming in around 0.7580 (50% retracement) to 0.7600 (23.6% retracement).
  • The DailyFX Speculative Sentiment Index (SSI) shows the retail FX crowd remains net-long AUD/USD on June 9, with the ratio hitting an extreme reading in May as it climbed to +2.25.
  • The ratio currently sits at +1.28 as 56% of traders are long, with short positions narrowing 22.9% from the previous week, while open interest stands 19.9% 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)
US Dollar Index11757.9211806.7911752.89-0.6199.40%
USDOLLAR Daily Chart

Chart - Created by David Song

  • The USDOLLAR may continue to give back the advance from the May low (11,672) as it carve a near-term series of lower highs & lows; may see the downward trending channel continue to take shape as market participants push out bets for higher borrowing-costs, with Fed Funds Futures highlighting a less than 20% probability for a rate-hike in July.
  • The semi-annual Humphrey-Hawkins testimony with Fed Chair Janet Yellen may produce near-term headwinds for the greenback should the central bank head endorse a dovish outlook for monetary policy and show a greater willingness to further delay the normalization cycle.
  • With the USDOLLAR extending the decline from the previous week, a break/close below the Fibonacci overlap around 11,745 (50% retracement) to 11,759 (23.6% retracement) may open up the next downside area of interest coming in around 11,623 (100% expansion) to 11,646 (61.8% retracement).
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Read More:

S&P 500: Crosses Important Short-term Resistance on Global Rally in Risk

USD/JPY Technical Analysis: A Return To USD/JPY Of 2008-2011?

EUR/USD Timing Compares Favorably with Early 2000s Base

EUR/USD: Breach of Weekly High to Fuel Reversal From Monthly Open

--- 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.