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
EUR/USD
Mixed
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
Wall Street
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
Gold
Mixed
GBP/USD
Bullish
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
Bullish
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
  • 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/sR7HqpK8BI https://t.co/Q6WGzHhudp
  • Implementing a trading checklist is a vital part of the trading process because it helps traders to stay disciplined, stick to the trading plan, and builds confidence. Learn how to stick to the plan, stay disciplined, and use a checklist here: https://t.co/2MCG036HGH https://t.co/CbnRsuyRwi
  • #Gold saw its worst performance the past 5 days in 5 months as longer-dated government bond yields in developed countries rose Could this be the beginning of a turning point in #XAUUSD? https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/08/15/Gold-Price-Outlook-Will-XAUUSD-Brush-off-Worst-Week-in-5-Months.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/x2Indk3b7P
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/PT09ZsIOCa
  • The US #Dollar may rise, buoyed by haven demand as fiscal stimulus talks stagnate and swelling tensions between Washington and Beijing sink trade talks. Get your #currencies update from @DanielGMoss here: https://t.co/Wcw9PDUr67 https://t.co/gnYZYl6aLV
  • Upside in #CrudeOil struggling ahead of #OPEC meeting. Cartel likely to maintain wait and see approach. Get your #commodities update from @JMcQueenFX here: https://t.co/gNHHKoTUzm https://t.co/eF40DRIBJ5
  • #Gold had some big moves last week, and while vol is expected to die down a bit, it will be important to see if gold can hold its ground in the coming days/weeks. Get your #metals update from @PaulRobinsonFX here: https://t.co/N8a84hRnHN https://t.co/3fjodPHTDm
  • The S&P 500's refusal to hit a record and Dollar's anchor to range this past week is sign of summer liquidity conditions, but the quiet is not insurmountable. 'S&P 500 Record and Dollar Break Look to Stimulus and Trade to Override Seasonality' https://www.dailyfx.com/forex/video/daily_news_report/2020/08/15/SP-500-Record-and-Dollar-Break-Look-to-Stimulus-and-Trade-to-Override-Seasonality-.html https://t.co/mbvPkdQfYl
  • Get your snapshot update of the of relative currency strength and exchange status from around the globe here: https://t.co/DmhBkcMZBK https://t.co/kFk6ccU3Sk
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/aXSB0bG3y0
Australian Dollar Forecast: RSI Flops Ahead of Overbought Territory

Australian Dollar Forecast: RSI Flops Ahead of Overbought Territory

2020-07-08 00:05:00
David Song, Strategist
Share:

Australian Dollar Talking Points

AUD/USD snaps six consecutive days of advances following the limited reaction to the Reserve Bank of Australia (RBA) interest rate decision, and the exchange rate may consolidate over the coming days as the Relative Strength Index (RSI) appears to be reversing course ahead of overbought territory.

Australian Dollar Forecast: RSI Flops Ahead of Overbought Territory

AUD/USD seems to have marked a failed attempt to test the 2020 high (0.7064) even though the RBA keeps the official cash rate (OCR) at the record low of 0.25% in July, and the bullish momentum may continue to abate as the RSI pulls back ahead of 70.

The RSI may reflect a potential shift in AUD/USD behavior as the oscillator fails to preserve the positive slope from earlier this month, and the Australian Dollar may face headwinds over the near-term as Victoria reinstates stage 3 lockdown in response to the renewed COVID-19 cases.

Looking ahead, the RBA may come under pressure to further support the Australian economy as programs like the Jobkeeper Paymentis set to expire on September 27, and the central bank may find it difficult to justify a wait-and-see approach for monetary policy as the government shows little interest in extending the fiscal stimulus.

Image of RBA interest rate decisions

Source: RBA

In turn, RBA board member Ian Harper insists that fiscal authorities should set up a “tapering arrangement” amid the uncertainty surrounding the economic outlook, but current conditions may force the central bank to act especially as Standard and Poor’s and Fitch Ratings cut Australia’s credit rating outlook to ‘negative’ from ‘stable.

It remains to be seen if the RBA will revert back to a dovish forward guidance as Governor Philip Lowe and Co. reveal that “the Bank has not purchased government bonds for some time,” and the central bank may stick to the same script at the next meeting on August 4 as the officials pledge to “not increase the cash rate target until progress is being made towards full employment.”

Until then, the resilience in the Australian Dollar may poised to persist as the RBA scales back its bond purchases, but lack of momentum to test the 2020 high (0.7064) may generate a near-term correction in the exchange rate as the RSI appears to be reversing course ahead of overbought territory.

Forex for Beginners
Forex for Beginners
Recommended by David Song
Forex for Beginners
Get My Guide

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 monthly opening range was a key dynamic for AUD/USD in the fourth quarter of 2019 as the exchange rate carved a major low on October 2, with the high for November occurring during the first full week of the month, while the low for December materialized on the first day of the month.
  • The opening range for 2020 showed a similar scenario as AUD/USD marked the high of the month on January 2, with the exchange rate carving the February high during the first week of the month.
  • However, the opening range for March was less relevant, with the high of the month occurring on the 9th, the same day as the flash crash.
  • Nevertheless, the advance from the yearly low (0.5506) gathered pace as AUD/USD broke out of the April range, with the exchange rate clearing the February high (0.6774) as the Relative Strength Index (RSI) pushed into overbought territory.
  • AUD/USD appears to be stuck in a narrow range after trading to a fresh 2020 high (0.7064) in June, and the exchange rate may continue to consolidate in July as the RSI fails to retain the bullish trend from earlier this year and appears to be reversing course ahead of overbought territory.
  • The string of failed attempts to close above the 0.6970 (23.6% expansion) to 0.6980 (23.6% expansion) region keeps the Fibonacci overlap around 0.6720 (78.6% expansion) to 0.6800 (61.8% expansion) on the radar as AUD/USD trades within the June range.
  • Need a break/close above the 0.6970 (23.6% expansion) to 0.6980 (23.6% expansion) region to open up the 2020 high (0.7064), with the next area of interest coming in around 0.7090 (78.6% retracement), which largely lines up with the July 2019 high (0.7082).
  • At the same time, a break/close below Fibonacci overlap around 0.6720 (78.6% expansion) to 0.6800 (61.8% expansion) opens up the downside targets, with the first area of interest coming in around 0.6600 (50% expansion) to 0.6650 (61.8% expansion), which largely lines up with the June low (0.66480).
  • Next area of interest comes in around 0.6520 (38.2% expansion) 0.6540 (78.6% expansion) followed by the overlap around 0.6380 (50% expansion) to 0.6450 (38.2% expansion).
Traits of Successful Traders
Traits of Successful Traders
Recommended by David Song
Traits of Successful Traders
Get My Guide

--- 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.

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.