Video: Trend Potential Behind Abrupt Dollar Rally, Aussie Plunge?
- The Dollar posted its biggest rally since November, but the recovery finds few technical or fundamental cues
- An RBA rate cut was seen as a 50/50 possibility by the market, and a move to 1.75% certainly surprised Aussie bulls
- Dollar event risk is the most concentrated ahead, but serious movement will likely be relegated to themes
The Dollar has posted its biggest daily rally in six months, but does this look like a convincing recovery for the battered currency? We have seen moves of this magnitude signal both the beginning and end of bullish legs for the Greenback over the past 12 months. This particular updraft occurs at an unusual time. Compared to the previous year's swells, the momentum is distinctly behind the bears. Initiating from a fresh 11-month low and without the drive of definable fundamental support - either data or theme. That has lead to remarkable technical conditions for the likes of EUR/USD, USD/JPY and USD/CAD. For the Aussie Dollar, an RBA rate cut is a tangible lever for the sudden currency drop. AUD/USD cleared support and AUD/JPY has been driven to the floor of its 2016 range. Yet, here too, follow through likely requires more than what we have in offer. We take a stock of the FX market after a surge of volatility in today's Trading Video.
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