News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/lccPTTlvj0
  • GBP/USD’s consolidation could end soon if price breaks out of a symmetrical triangle in play since July. At this time, a downside breakout is likely following the appearance of a death cross. Get your weekly $GBP forecast from @DColmanFX here: https://t.co/WIKdSesfkJ https://t.co/Fx0qr32xgI
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/IRS9MaA7h8
  • The Federal Reserve rate decision is likely to sway the near-term outlook for the price of gold as the central bank appears to be on track to scale back monetary support. Get your weekly gold forecast from @DavidJSong here: https://www.dailyfx.com/forex/fundamental/forecast/weekly/CHF/2021/09/18/Gold-Price-Outlook-Hinges-on-Fed-Rate-Decision-Forward-Guidance.html https://t.co/dWWxtErjK0
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/arxYmtQeUn https://t.co/4qxwiJsV1K
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/stMPuq0VXR
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/v6RGICQvge
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/rws9LHJV3E
  • RT @FxWestwater: Japanese Yen Forecast: JPY Crosses Eye BoJ, CPI as Haven Flows Bolster Yen Strength Link: https://www.dailyfx.com/forex/fundamental/forecast/weekly/jpy/2021/09/18/Japanese-Yen-Forecast-JPY-Crosses-Eye-BoJ-CPI-as-Haven-Flows-Bolster-Yen-Strength.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https:/…
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/FVisZuTP6M
AUD/USD Rate Stages Key Test of 200-Day SMA Amid US-China Trade Deal

AUD/USD Rate Stages Key Test of 200-Day SMA Amid US-China Trade Deal

David Song, Strategist

Australian Dollar Talking Points

AUD/USD extends the advance following the Federal Reserve interest rate decision as the US and China reach a trade deal, but failure to close above the 200-Day SMA (0.6910) may undermine the recent advance in the exchange rate.

AUD/USD Rate Stages Key Test of 200-Day SMA Amid US-China Trade Deal

AUD/USD clears the October high (0.6930) as China, Australia’s largest trading partner, averts the next wave of US tariffs, and easing tensions may keep the exchange rate afloat as it instills an improved outlook for global growth.

The US-China trade deal is likely to keep the Reserve Bank of Australia (RBA) on the sidelines for the foreseeable future, and the central bank may continue to endorse a wait-and-see approach at the next meeting on February 4 as “the Australian economy appears to have reached a gentle turning point.”

At the same time, it seems as though Chairman Jerome Powell and Co. will take a similar approach in 2020 as Fed officials project a more shallow path over the policy horizon.

Image of Federal Reserve interest rate forecast comparison

The Summary of Economic Projections (SEP) shows the federal fund rate staying below 2% in the year ahead, with the dot-plot for 2021 getting more compressed compared to the previous update as “inflation continues to run below our symmetric 2 percent objective.

The adjustment to the forward guidance suggests the Federal Open Market Committee (FOMC) will continue to move away from its rate easing cycle, and the central bank appears to be in no rush to reverse the three rate cuts from earlier this year Fed officials “believe that the current stance of monetary policy will support sustained growth, a strong labor market, and inflation near our symmetric 2 percent objective.”

In turn, the FOMC may merely attempt to buy time at the next interest rate decision on January 29 as the committee “will be monitoring the effects of our recent policy actions, along with other information bearing on the outlook, as we assess the appropriate path of the target range for the federal funds rate.”

Developments coming out of the US appear to be spurring a shift in AUD/USD behavior as it trades above the 200-Day SMA (0.6910) for the first time since April, but lack of momentum to close above the moving average may undermine the recent advance in the exchange rate as the indicator kept Aussie Dollar capped throughout the year.

With that said, the recent appreciation in AUD/USD may prove to be short lived if the exchange rate marks another failed attempt to close above the 200-Day SMA (0.6910).

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

AUD/USD Rate Daily Chart

Image of AUD/USD rate daily chart

Source: Trading View

  • Keep in mind, the AUD/USD rebound following the currency market flash-crash has been capped by the 200-Day SMA (0.6910), with the exchange rate marking another failed attempt to break/close above the moving average in July.
  • A similar scenario may take shape in December if the advance from the monthly low (0.6762) fails to trigger a closing price above the simple moving average.
  • Nevertheless, recent developments in the Relative Strength Index (RSI) offers a bullish signal as the oscillator breaks out of the downward trend carried over from the previous month.
  • In turn, AUD/USD may make a run at the Fibonacci overlap around 0.6950 (61.8% expansion) to 0.6970 (23.6% expansion), but lack of momentum to hold above 0.6910 (38.2% expansion) may spur a move back towards the 0.6830 (23.6% expansion) to 0.6850 (78.6% expansion) region.
  • Need a move below the 0.6780 (38.2% expansion) to 0.6800 (61.8% expansion) region to bring the downside targets back on the radar, with the next area of interest coming in around 0.6720 (78.6% expansion) to 0.6730 (50% expansion).

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES