AUD/USD Daily Chart
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Retail AUD/USD Positioning Shifts- Outlook Turns Increasing Bearish

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Talking Points:

- AUD/USD Outlook Turns Increasing Bearish Ahead of Australia Employment Report.

- USDOLLAR Stages Larger Recover Ahead of Retail Sales; Opening Monthly Range in Focus.

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AUD/USD

Chart - Cre ated Using FXCM Marketscope 2.0

  • Even though Australia Employment is projected to increase another 15.0K in August, the broader outlook for AUD/USD is turning increasingly bearish as it fails to preserve the upward trend carried over from May, while a double-top formation appears to be taking shape following the failed test of the July high (0.7759).
  • After cutting the benchmark interest rate to a fresh record-low of 1.50% in August, the Reserve Bank of Australia (RBA) may continue to endorse a wait-and-see approach at the next interest rate decision on October 4 as Philip Lowe takes over the helm, but the central bank may keep the door open to further embark on its easing cycle as the board anticipates the low-inflation environment to ' remain the case for some time ;' may see market participants put increased emphasis on the 3Q Consumer Price Index (CPI), which is due out on October 26.
  • A closing price below 0.7450 (38.2% retracement) may open up the next downside target around 0.7380 (50% retracement) to 0.7390 (78.6% expansion), which sits just below the 200-Day SMA (0.7394).

  • In light of the recent decline in the exchange rate, the DailyFX Speculative Sentiment Index (SSI) shows the retail FX crowd has flipped net-long AUD/USD on September 9, with the ratio marking a 2016 extreme in January as it climbed to +2.50.
  • The ratio currently sits at +1.35 as 58% of traders are long, with long positions 23.9% higher from the previous week, while open interest stands a marginal 0.6% above the monthly average.
  • May see a further shift in retail positioning as AUD/USD appears to have carved a near-term top, with the pair at risk carving a bearish trend over the days ahead.

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USDOLLAR (Ticker: USDollar ) :

Index Last High Low Daily Change (%) Daily Range (% of ATR)
DJ-FXCM Dollar Index 11978.47 11996.55 11969.6 -0.02 49.07%

Retail AUD/USD Positioning Shifts- Outlook Turns Increasing Bearish
USDOLLAR Daily Chart

Chart - Cre ated Using FXCM Marketscope 2.0

  • With the USDOLLAR pushing to a fresh weekly high, will keep close eye on the Relative Strength Index (RSI) as it approaches trendline resistance; a bullish break in the oscillator may foreshadow a larger advance for the greenback especially following the close above the Fibonacci overlap around 11,951 (38.2% retracement) to 11,965 (23.6% retracement) .
  • However, a marked slowdown in U.S. Advance Retail Sales may produce near-term headwinds for the greenback as Fed Funds Futures currently highlight a 15% probability for a September rate-hike; may see the Federal Open Market Committee (FOMC) follow a similar path to 2015 as the central bank struggles to achieve its 2% target for inflation.
  • Failure to break/close above the 200-Day SMA (11.997) may ultimately turn out to be an unsuccessful test of the September high (12,013), which may spur a similar reaction to earlier this month, with the USDOLLAR at a risk for a further consolidation.
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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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original source

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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