Australian Dollar Talking Points
AUD/USD climbs to uninformed monthly highs as a Federal Reserve’s drops a hawkish forward-guidance for financial policy, and new cost movement raises a risk for a incomparable flash-crash miscarry as a Relative Strength Index (RSI) breaks out of a bearish arrangement from late-2018.
AUD/USD Flash-Crash Rebound Eyes December-High Ahead of RBA
AUD/USD appears to be on lane to exam a December-high (0.7394) forward of a Reserve Bank of Australia’s (RBA) initial assembly for 2019 as a Federal Open Market Committee (FOMC) seductiveness rate preference triggers a selloff in a U.S. dollar.
Like a Fed, a RBA is widely approaching to keep a stream process on Feb 5 amid a doubt surrounding a tellurian economy, and some-more of a same from Governor Philip Lowe Co. might clap a aussie-dollar sell rate as a executive bank appears to in no rush to lift a executive money rate (OCR) off of a record-low.
In fact, a stickiness in Australia’s Consumer Price Index (CPI) might do small to pierce a RBA amid a mangle opinion for tellurian growth, and a executive bank might eventually uncover a incomparable eagerness to keep a record-low seductiveness rate via 2019 as ‘the low turn of seductiveness rates is stability to support a Australian economy.’ With that said, comments from a RBA might furnish headwinds for a Australian dollar as a executive bank tames bets for an approaching rate-hike, though a flash-cash miscarry appears to be spurring a change in sell seductiveness as a throng flips net-short for a initial time given November.
The IG Client Sentiment Report shows 47.4% of traders a now net-long AUD/USD compared to 52.6% on Janary 14, with a ratio of traders short to prolonged during 1.11 to 1. The commission of traders net-long is now a lowest given November 26 when AUD/USD traded nearby the 0.7220 area. The array of traders net-long is 12.5% reduce than yesterday and 26.8% reduce from final week, while a array of traders net-short is 4.8% reduce than yesterday and 25.0% aloft from final week.
The decrease in net-long seductiveness persists appears to be a law-breaker of profit-taking behavior, though a ongoing accumulation in net-short position warns of a broader change in sell view as a throng fades a flash-crash miscarry in AUD/USD. Keep in mind, a mangle of a monthly operation instills a constructive outlook, with a new array of aloft highs lows lifting a risk for a incomparable improvement generally as a Relative Strength Index (RSI) breaks out of a bearish arrangement carried over from November. Sign adult and join DailyFX Currency Analyst David Song LIVE for an event to plead intensity trade setups.
AUD/USD Daily Chart
- Topside targets are still on a radar for AUD/USD as a RSI flashes a bullish signal, with a break/close above a 0.7320 (50% expansion) to 0.7340 (61.8% retracement) segment lifting a risk for a run during a December-high (0.7394), that lines adult with a 0.7400 (38.2% expansion) hurdle.
- Next segment of seductiveness comes in around 0.7460 (23.6% retracement) followed by a Fibonacci overlie around 0.7500 (50% retracement) to 0.7510 (23.6% expansion).
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— Written by David Song, Currency Analyst
Follow me on Twitter during @DavidJSong.