US Dollar Volatility: AUD/USD & NZD/USD Turn to RBA & Jobs Data

US DOLLAR VOLATILITY REPORT: AUD/USD & NZD/USD PRICE ACTION IN FOCUS AHEAD OF RBA DECISION & NZ JOBS DATA

• USD bulls attempt to give the US Dollar a sign of life after weakening sharply last month
• Currency volatility is expected to rise this week amid key event risk and data releases
• AUD/USD and NZD/USD drift into the crosshairs as an RBA decision and NZ jobs data loom

A weak US Dollar has garnered considerable attention last month owing to a sharp 4% slide recorded by the DXY Index for July. Recent declines notched by the USD have not only jeopardized the Greenback’s King Dollar title, but also caused some to question its longstanding status as the world’s reserve currency.

That said, measures of expected currency volatility have churned higher over recent trading sessions. This technical development underscores potential for larger-than-normal swings across major currency pairs and also highlights the likelihood of a broader US Dollar reversal attempt.

USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY & TRADING RANGES (1-WEEK)

Evidence of US Dollar implied volatility readings on the rise is indicated by the latest one-week IV measurements tracking notably above their respective 20-day moving averages. Perhaps this week’s loaded economic calendar has increased perceived uncertainty and contributed to the climb in one-week implied volatility readings just clocked across major currency pairs. This brings AUD/USD and NZD/USD price action into focus headed into Tuesday’s trading session in light of the expected RBA decision and release of New Zealand jobs data.

AUD/USD PRICE CHART: DAILY TIME FRAME (22 APR TO 03 AUG 2020)

AUD/USD price action is expected to fluctuate within a 208-pip trading range this week between 0.7012-0.7220 judging by its one-week implied volatility reading of 10.5%. Statistically speaking, this options-implied trading range of technical support and resistance is estimated to contain spot price action 68% of the time.

NZD/USD PRICE CHART: DAILY TIME FRAME (17 APR TO 03 AUG 2020)

NZD/USD price action is expected to fluctuate within a 190-pip trading range this week between 0.6515-0.6705 judging by its one-week implied volatility reading of 10.3%. Statistically speaking, this options-implied trading range of technical support and resistance is estimated to contain spot price action 68% of the time.

-- Written by Rich Dvorak, Analyst for DailyFX.com

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