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.

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
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
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Mixed
GBP/USD
Bearish
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
  • The US Dollar is moving higher after a blowout NFP report bolstered confidence in the US economic recovery. Markets will now turn attention to next week’s US inflation data which could boost the Greenback. Get your market alert from @FxWestwater here: https://t.co/Ud62r3hKRF https://t.co/dvvDCJvlbP
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/7g9pB8D9xK
  • 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/OCLzmXaDCu
  • Technical analysis of charts aims to identify patterns and market trends by utilising differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/UZela9nSIm
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Learn about the importance of the ISM manufacturing index here: https://t.co/Xr3xtoFpZy https://t.co/7oqC3ykBbU
  • 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/IgUIG55MbH
  • Supply constraints, rebounding global demand and rising inflation expectations may drive crude oil prices higher in the near term. Get your market update from @DanielGMoss here: https://t.co/ezPoAwcJt7 https://t.co/NMfk1cYSvE
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/OiRiBVeuzL
  • Crude Oil Prices Aiming Higher on OPEC Surprise, Inflation Expectations - https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2021/03/06/Crude-Oil-Prices-Aiming-Higher-on-OPEC-Surprise-Inflation-Expectations.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Moss&utm_campaign=twr $CL #Crudeoil #OOTT #OPEC https://t.co/AKvXWX9DLQ
  • Given the size of the rally in the eleven months preceding the beginning of the current decline a broader sell-off looks warranted. Get your market update from @PaulRobinsonFX here: https://t.co/UxZiSulpwB https://t.co/raXvlzkGbV
AUD/USD Rate Outlook Hinges on Looming RSI Signal

AUD/USD Rate Outlook Hinges on Looming RSI Signal

David Song, Strategist

Australian Dollar Talking Points

AUD/USD consolidates after trading to a fresh yearly high (0.7454) earlier this week, and looming developments in the Relative Strength Index (RSI) may show the bullish momentum gathering pace as the indicator flirts with overbought territory for the first time since September.

Advertisement

AUD/USD Rate Outlook Hinges on Looming RSI Signal

AUD/USD trades to fresh 2020 highs in December as the US Dollar broadly reflects an inverse relationship with investor confidence, with the correction from the September high (0.7414) providing to be an exhaustion in the bullish trend rather than a change in behavior as the Reserve Bank of Australia (RBA) moves to the sidelines ahead of 2021.

Recent remarks by RBA Governor Philip Lowe suggest the board will endorse a wait-and-see approach over the coming months as “the economic news has, on balance, been better than we were expecting,” with the central bank head going onto say that the focus is now on actual outcomes for inflation and unemployment, rather than forecast outcomes” while testifying in front of the House of Representatives Standing Committee on Economics.

Lowe insist that the RBA remains “prepared to do more, if that is required” even though the central bank plans to purchase $100 billion of Australian government bonds over the next 6 months, but it seems as though the board is in no rush to deploy more unconventional tools as “we are still of the view that a negative policy interest rate in Australia is extraordinarily unlikely, with any benefits being outweighed by the costs.

In turn, key market trends may continue to influence AUD/USD ahead of the next RBA meeting on February 1 as Governor Lowe and Co. acknowledge that “the improvement in risk sentiment has also been associated with a depreciation of the US dollar and an appreciation of the Australian dollar, and tilt in retail sentiment also looks poised to persist as the crowding behavior from earlier this year reappears.

Image of IG Client Sentiment for AUD/USD rate

The IG Client Sentiment report shows 35.93% of traders are net-long with the ratio of traders short to long at 1.78 to 1. The number of traders net-long is 19.83% higher than yesterday and 7.34% higher from last week, while the number of traders net-short is 3.19% lower than yesterday and 3.94% lower from last week.

The decline in net-short position comes as AUD/USD tags a fresh yearly high (0.7454) earlier this week, while the rise in net-long interest has helped to alleviate the tilt in retail sentiment as only 32.11% of traders were net-long the pair at the start of December.

With that said, key market trends may continue to influence AUD/USD as the US Dollar broadly reflects an inverse relationship with investor confidence, and looming developments in the Relative Strength Index (RSI) may show the bullish momentum gathering pace as the indicator flirts with overbought territory for the first time since September.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by David Song
Learn More About the IG Client Sentiment Report
Get My Guide

AUD/USD Rate Daily Chart

Image of AUD/USD rate daily chart

Source: Trading View

  • Keep in mind, the advance from the 2020 low (0.5506) gathered pace as AUD/USD broke out of the April range, with the exchange rate clearing the January high (0.7016) in June as the Relative Strength Index (RSI) pushed into overbought territory.
  • AUD/USD managed to clear the June high (0.7064) in July even though the RSI failed to retain the upward trend from earlier this year, with the exchange rate pushing to fresh yearly highs in August and September to trade at its highest level since 2018.
  • The RSI instilled a bullish outlook for AUD/USD during the same period as it threatened the downward trend from earlier this year to push into overbought territory for the fourth time in 2020, but a textbook sell-signal emerged as the indicator quickly slipped back below 70.
  • The RSI established a downward trend in September as the indicator fell to its lowest level since April, but the bearish momentum has abated as the indicator failed to push into oversold territory to reflect the extreme readings seen in March.
  • As a result, the correction from the September high (0.7414) proved to be an exhaustion in the bullish trend rather than a change in behavior as AUD/USD cleared the October high (0.7243) in November, with the exchange rate trading to fresh yearly highs in December.
  • Looming developments in the RSI may show the bullish momentum gathering pace as the indicator flirts with overbought territory for the first time since September, with a break above 70 likely to be accompanied by a further appreciation in AUD/USD like the behavior seen earlier this year.
  • Still need a close above the 0.7440 (23.6% expansion) to 0.7480 (50% expansion) region to open up the Fibonacci overlap around 0.7560 (50% expansion) to 0.7580 (61.8% expansion).
  • However, lack of momentum to hold above the 0.7370 (38.2% expansion) to 0.7390 (38.2% expansion) area may bring the 0.7270 (23.6% expansion) region back on the radar, and the RSI may warn of a larger pullback in AUD/USD if the oscillator fails to retain the upward trend carried over from November.
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

https://www.tradingview.com/symbols/AUDUSD/

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

DISCLOSURES