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Talking Points:

  • AUD/USD Technical Strategy: Flat
  • Aussie Dollar sinks to lowest in over 3 months following soft Q3 CPI data
  • Risk/reward parameters, longer-term positioning argue against short trade

The Australian Dollar dropped to the lowest level in over three months against its US counterpart, hinting the down trend started in early September is regaining momentum. The selloff followed disappointing third-quarter CPI data that drove a dovish shift in RBA monetary policy expectations.

From here, a daily close below the 50% Fibonacci expansion at 0.7702 opens the door for a challenge of the 61.8% level at 0.7655. Alternatively, move back above the 38.2% Fib at 0.7748, now recast as resistance, paves the way for a retest of the 0.7805-8 area (23.6% Fib, August 15 low).

Entering short when prices are sitting squarely at support looks unattractive from a risk/reward perspective. Furthermore, longer-term positioning casts doubt on the case for downside follow-through. With that in mind, it seems most prudent to stand aside for now until a more compelling setup presents itself.

What do retail traders’ buy/sell decisions hint about coming AUD/USD moves? Find out here!

AUD/USD Technical Analysis: Aussie Hits 3-Month Low. Now What?