Australian dollar hotspots
AUD / USD extended after advance payment Australian Central Bank (RBA) interest rate decision celebrate the first three-day rally after June, and the exchange rate could lead to a greater recovery in US non-economic wage calculations (NFP) as it extends the series of highs and lows from the beginning of the week.
AUD / USD will remain intact before the US NFP report after the recovery of the RBA
AUD/USD trades close to its weekly high (0.7425) as the ADP employment report shows an increase of 330 thousand in July compared to the forecast of 695 thousand enlargement, and the exchange rate may continue to follow last month’s decline if the updated NFP figures also reflect slower-than-expected job growth.
Incomplete data output from the US economy may continue to drag on US dollar as it encourages the Federal Reserve to maintain its current monetary policy stance and the central bank may continue to wait for the chairman Jerome Powell and Co. prepare for a temporary rise in inflation.
In the meantime, Greenback may face headwinds Governor Lael Brainard, permanent member with voting rights Federal Open Market Committee (FOMC) acknowledges this “Employment is still a long way offHowever, a further recovery in AUD / USD could lead to a change in retail sentiment, as at the beginning of this year.
IG customer feelings report shows 55.99% of traders are now net length AUD / USD, traders with a long and short relationship standing 1.27 to 1 p.m.
The number of traders in net length is 7.19% lower than yesterday and 6.17% lower than last week, while the number of traders in the short term is 5.70% higher than yesterday and 9.35% higher than last week. The decline in net long-term interest rates has eased foreclosure behavior, with 61.73% of traders having net long AUD / USD last week, while the rise in the short net position is due to the exchange rate prolonging the start of the week.
That being said, the decline from the February peak (0.8007) may turn out to be a change in a broader trend such as AUD / USD slipped to the lowest level in July (0.7410), but Recent developments in the Relative Strength Index (RSI) point to a larger recovery in the exchange rate as the oscillator breaks the downward trend earlier this year.
Daily schedule of AUD / USD exchange rate
Source: Trading View
- Keep in mind that head and shoulder formation developed earlier this year as AUD / USD reached its lowest level in April 2021 (0.7532), but the exchange rate turned the key reversal into a negative one. pattern after unsuccessful attempts under the neck to close about 0.7560 (50% expansion) to 0.7570 (78.6% retracement).
- However, there seems to be a shift in the broader trend as AUD / USD falls below the 200-day SMA (0.7596) for the first time in a year, the depreciation of the exchange rate Relative Strength Index (RSI) for the first time since March 2020.
- However, recent developments in the RSI show a stronger recovery in the AUD / USD, as it breaks out of the downward trend carried over from the beginning of this year, with recent series of rising and falling exchange rates Fibonacci overlap about 0.7440 (23.6% expansion) to 0.7500 (50% retracement) on the radar.
- The next area of interest comes around 0.7560 (50% expansion) to 0.7570 (78.6% retracement), together move higher 200-day SMA (0.7596)open up 0.7620 (38.2% retracement) to 0.7640 (38.2% retracement) range.
– Written by David Song, currency strategist
Follow me on Twitter at @DavidJSong