USD Trading Outlook
AUD/USD Europe walked in with the pair hovering just above the July 28 low. Light short covering brought the pair up to the 200-hour MA (0.9402) and it sat nearby as NY got going. Broad based USD strength prevailed in early NY even as US bond yields were soft. This saw AUD/USD sold-off early on and break the o/n low. The pair eventually hit a 0.9374 low as US consumer confidence aided to keep the USD firm. Very little bounce was seen and the pair sat near 0.9380 late in the day. Bears seem to be gaining an edge as frustrated longs may be heading for the exits. Day/week RSIs weigh as do narrowing yield spreads. A test of the 0.9355/60 (daily cloud top, 55-DMA) zone looks likely ahead of key event/data risk due from the US. Should these risks be favorable for the USD and lift US yields, AUD/USD should clear that s-t support zone and run for key sppt near 0.9320/30. A break of 0.9320 opens the door to 0.9190/0.9200 where the 200-DMA and May low sit.
AUD/USD The pair continued to hug the territory surrounding 0.9400 as its magnetic grip persists. Europe saw some recent shorts cover to bring the pair just above the 21-DMA (0.9400) into NY's open. NY pushed a bit higher but couldn't gain much traction as 0.9413 turned out to be the high. With little data to drive the pair over the next session it's likely tight ranges will hold until major event/data risk on Wednesday (Fed, US GDP, ADP). Should that risk result in a firm USD, AUD/USD longs could be in for some pain. CFTC stats show net-long AUD positions have been building since April. Those longs have little to show for their efforts as the pair has basically ranged 0.9200-0.9500. Risks due later in the week that favor the USD may see those longs throw in the towel. We may then see a run for the exits and key supports near 0.9320 and 0.9190/0.9200 (200-DMA, May low) get tested.
AUD/USD Numerous rallies in Europe & NY off the 0.9400 support area stalled near 0.9420/25 resistance. The pair's inability to crack 0.9480/00 and TL resistance off the Oct high earlier in the week had recent bulls frustrated and looking for the exits. NY initially pushed the pair up from the 0.9400 area as June durable goods data beat but May's data saw a big downward revision. The 0.9420 level was breached but the lift faltered again. Risk sentiment was sour as the Ukraine/Russia situation shows no signs of abating. Bonds, USD & JPY were firm while equities were soft for the entire NY session. AUD/USD made a steady descent from the NY high and eventually made a new session low of 0.9393. Bids near the 200-HMA and ahead of the July 23 low slowed bears. Little bounce was seen though as geopolitical risks remains and next week sees a slew of risk that may propel the USD higher. Should next week’s event/data risks be USD positive, AUD/USD is likely to retest the key 0.9320/30 zone. If broken the 200-DMA and May's low come into play.
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