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.

Free Trading Guides
EUR/USD
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
GBP/USD
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
USD/JPY
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
Gold
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
Oil - US Crude
Mixed
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
Bitcoin
Bullish
More View more
Real Time News
  • The #Euro has broken four-month support guiding a recovery against the US Dollar to suggest that the long-term downtrend has been re-engaged. Get your EUR/USD market update from @IlyaSpivak here: https://t.co/FHiGQZ6zvV https://t.co/0ulmLWaZxK
  • The US Dollar may be on the verge of upside breakouts against #ASEAN currencies such as the Singapore Dollar and Malaysian Ringgit after Wuhan virus fears boosted $USDSGD and $USDMYR #SGD #USD - https://www.dailyfx.com/forex/technical/article/special_report/2020/01/29/Dollar-Technical-Outlook-May-Turn-Bullish-as-USDSGD-USDMYR-Rise.html?CHID=9&QPID=917702 https://t.co/1M1GTIo79r
  • $AUDJPY technical positioning hints prices may be on cusp of turning lower after a late-2019 bounce, recoupling with a dovish RBA policy outlook. Get your market update from @IlyaSpivak here: https://t.co/z84Y0V0ZtH https://t.co/e30wIlAkbF
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.45% Gold: -0.20% Silver: -0.42% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/SP0lbABAbq
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.13% 🇨🇦CAD: -0.05% 🇪🇺EUR: -0.06% 🇯🇵JPY: -0.07% 🇨🇭CHF: -0.12% 🇳🇿NZD: -0.17% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/3lgUbBP3XF
  • #EURGBP Outlook Bullish Ahead of #Brexit, BoE Rate Decision - https://www.dailyfx.com/forex/technical/home/analysis/eur-gbp/2020/01/29/EURGBP-Outlook-Bullish-Ahead-of-Brexit-BoE-Rate-Decision.html
  • My trading video for today: "Dow, Risk Attempt Recovery Amid Competing Theme: #Coronavirus, #Fed and #Earnings' https://www.dailyfx.com/forex/video/daily_news_report/2020/01/29/Dow-Risk-Attempt-Recovery-Amid-Competing-Theme-Coronavirus-Fed-and-Earnings.html?ref-author=Kicklighter?CHID=9&QPID=917719 https://t.co/VVmYBjVy63
  • #AUD has been fairly mute following AU CPI data aside vs #NZD. $AUDNZD tends to act as a "risk-neutral" pair (see article below), focusing on relative #RBA to #RBNZ shifts. #RBC and #JPMorgan pushed back on #RBA rate cut bets. RSI divergence hints bottom - https://www.dailyfx.com/forex/fundamental/article/special_report/2018/11/23/AUDNZD-Nets-Out-Market-Mood-Swings-Focus-On-RBA-RBNZ-Policy.html?CHID=9&QPID=917702 https://t.co/c30ePn9wEs
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.46%, while traders in US 500 are at opposite extremes with 71.50%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/CVurL5Fv0L
  • Silver prices suffered their biggest one-day decline since September 2019. Called it: "Silver and Gold Prices Ripe for Retreat Ahead #FOMC Outlook?" https://www.dailyfx.com/forex/market_alert/2020/01/28/Silver-and-Gold-Prices-Ripe-for-Retreat-Ahead-FOMC-Outlook.html https://t.co/25CpcxXtDj
AUD/USD Rate Outlook Mired by Textbook RSI Sell Signal

AUD/USD Rate Outlook Mired by Textbook RSI Sell Signal

2020-01-06 06:00:00
David Song, Currency Strategist
Share:

Australian Dollar Talking Points

The opening range for 2020 is in focus for AUD/USD as the exchange rate snaps the series of higher highs and lows from the end of December, while the Relative Strength Index (RSI) falls back from overbought territory.

AUD/USD Rate Outlook Mired by Textbook RSI Sell Signal

There appeared to be a shift in AUD/USD behavior as it closed above the 200-Day SMA (0.6899) for the first time since 2018, but the near-term correction appears to have stalled ahead of the July high (0.7082) even though the US and China, Australia’s largest trading partner, pledge to sign the Phase One trade deal over the coming days.

The narrowing threat of a US-China trade war may influence the near-term outlook for AUD/USD as the Trump administration plans to sign the phase one deal on January 15, withPresident Donald Trump preparing to visit Beijing at a later date “where talks will begin on Phase Two.”

A US-China trade deal may spark a bullish reaction in AUD/USD as it instills an improved outlook for the Asia/Pacific region, and the Reserve Bank of Australia (RBA) may stick to the sidelines at its first meeting for 2020 as “the Australian economy appears to have reached a gentle turning point.

Image of RBA interest rate decisions

In turn, Governor Philip Lowe and Co. may strike an improved outlook and tame speculation for lower interest rates on February 4 as officials “assess the evidence of how the easing in monetary policy was affecting the economy.”

However, the RBA may emphasize that the board has “the ability to provide further stimulus” amid the weakening outlook for global growth, and the dovish forward guidance may produce headwind for the Australian Dollar especially as the International Monetary Fund (IMF) warns that “unconventional monetary policy measures such as quantitative easing may become necessary.”

With that said, the diverging paths for monetary policy may rattle the Australian Dollar as the Federal Reserve moves way from its rate easing cycle, and the recent shift in AUD/USD behavior may turn out to be a mere correction in the exchange rate as the advance from the advance from the 2019 low (0.6671) sputters ahead of the July high (0.7082).

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

  • AUD/USD has been capped by the 200-Day SMA (0.6900) for most of 2019, but the recent break/close above the moving average signals a potential shift in market behavior especially as the Relative Strength Index (RSI) pushes into overbought territory for the first time since 2018.
  • However, the bullish momentum appears to be abating as the RSI flashes a textbook sell signal and breaks the upward trend from December.
  • At the same time, AUD/USD has snapped the series of higher highs and lows from late December after failing to close above the 0.7020 (50% expansion) region, with the lack of momentum to test the July high (0.7082) raising the risk for a further decline in the exchange rate.
  • A break/close below 0.6910 (38.2% expansion) may open up the Fibonacci overlap around 0.6830 (23.6% expansion) to 0.6850 (78.6% expansion), with the next area of interest coming in around 0.6780 (38.2% expansion) to 0.6800 (61.8% 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 2020.

--- 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

News & Analysis at your fingertips.