Daily Market Report

[FOREX.com]

AUD/JPY nears 17-month high, ASX 200 looks set to bounce: Asian Open Feb 22nd 2024​

AUD/JPY has fast approached a pivotal level to hint that an eventual breakout could be on the cards, even if not immediately. The ASX 200 looks sets to bounce after positive earning from Nvidia lifted Wall Street futures after market hours.

By : Matt Simpson, Market Analyst

Market Summary:​

• FOMC minutes weren’t expected to set the world alight given Fed officials and subsequent CPI data have kept the doves at bay, so it comes as no surprise to see the minutes revealed that most members were concerned about moving too quickly to cut interest rates
• NZD/USD was again the strongest FX major, rising for a sixth day on speculation that the RBNA may not be at the peak of their tightening cycle after all
• This sent AUD/NZD to a 9-day low, and just pips away from tagging a 9-month low
• Wall Street indices fell for a third day and finishing the session near their daily lows, in anticipation of Nvidia earnings that were released after the NY close
• Nvidia (NVDA) Q4 earnings beat estimates by 7%, sending the share price over 15% after hours and lifting Wall Street index futures such as the Nasdaq 100 and S&P 500
• The Biden administration has halted American exports to Huawei’s most advanced factory in response to the company producing a sophisticated Chip for the Huawei Mate 60 phone
• Australia’s wage price index rose to a 15-year high of 4.2% y/y, and surpassed the official rate of inflation for the first time since Q1 2021
• Yet the temporary factors that shot Q3 inflation up to 1.3% receded, with Q4 CPI softening to 0.9% q/q
• It’s not enough to move the needle in either direction for the RBA, but it’s also unlikely to prompt them to remove their tightening bias (even though few expect further hikes)

Events in focus (AEDT):​

• 09:00 – Australian PMIs (manufacturing, services and composite - Judo Bank)
• 10:50 – Japan’s foreign bond investment
• 19:30 – German - (manufacturing, services and composite - S&P Global)
• 20:00 – Euro Area PMIs (manufacturing, services and composite - S&P Global)
• 20:30 – UK PMIs (manufacturing, services and composite - S&P Global)
• 21:00 – Euro Area inflation
• 11:30 – ECB monetary policy meeting accounts
• 00:30 – US jobless claims
• 01:45 – US PMIs (manufacturing, services and composite - S&P Global)

​

ASX 200 technical analysis:​

Weak sentiment for indices heading into Nvidia earnings saw the ASX 200 cash index fall for a second day, yet rebound back above 7600 by the close after a false intraday break beneath it. The fact the Nvidia rallied over 15% from its after-hours low to high suggests there could be some bullish follow-through for the ASX 200 today, as Wall Street index futures tracked the stock higher (to a much lesser degree).

The 1-hour chart shows that Wednesday’s low found support above a 61.8% Fibonacci ratio, a swing low and a volume node (taken from futures pricing). A bullish outside candle also formed at the last hour of trade, which I suspect could mark the low. And even if price action is messy at the open and we see an initial drive beneath this 1-hour low, I would still be looking for long opportunities if prices then regained ground after the open.

7600 could be an initial target for bulls, a break above which brings 7620 into focus, just beneath the 200-bar EMA and resistance zone.

AUD/JPY technical analysis:​

As noted in previous analysis, AUD/JPY has respected a 40-47 day cycle since May and the reasons as to why remain unknown (assuming there are any). Should the cycle hold true, it estimates the next cycle trough to be near the end of March of beginning of April.

The BOJ remain ultra-dovish and as of yet remain quiet on defending the depreciation of the yen. The RBA are not expected to hike, yet the Fed are pushing back on cuts which keeps pressure on other central banks such as the RBA to retain a hawkish bias. And Wall Street (another proxy for risk alongside AUD/JPY) are just off of their record highs. So unless this picture changes, perhaps this rally has more to give.

AUD/JPY has tapped the 2023 high and is just pips away from testing the 2022 high. It’s rally into these highs has been in a relatively straight line, and it made light work of breaking above 98 (a level it had struggled to penetrate since December). On this basis, the bias is for an eventual break above these highs.

However, I doubt it will simply break though these key highs without a catalyst, as such key levels rarely break on their first attempt without good cause. So perhaps we’ll see a pullback towards 98 before its next leg higher. A break beneath 98 assumes something has gone wrong and that we’re in for a deeper pullback (perhaps appetite for risk sours, the BOJ get verbal on their currency or the RBA turn surprisingly dovish). But until then, the bias is to seek bullish setups at lower levels, or wait for a break above these highs to assume bullish continuation.



-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD falters at the 200-day MA, ASX 200 eyes record high. Feb 23rd 2024​

AUD/USD rose for a seventh day yet left a prominent reversal candle at the 200-day EMA. Positive sentiment for the stock market could see the ASX 200 retest or even break to a new record high.

By : Matt Simpson, Market Analyst

Market Summary:​

• Nvidia fever sent stock market indices to record highs on Thursday after it reported another strong set of earnings
• Nvidia’s stock gapped over 11% higher, finished the day up over 15% and added $250 billion to its market cap
• The global stock market rally began in Asia after the after-hours Nvidia report, with the Nikkei 225 breaking above its previous record high set in 1989, DAX hitting an all-time high ahead of the European open and the S&P 500, Nasdaq 100 and Dow Jones quickly following their lead
• AUD/JPY broke to a 7-year high during the risk-on session, although prices pulled back to the key level heading into the NY close
• US initial jobless claims was lower than estimated at 201k (2017k consensus) to underscore a strong economy and further reduce bets of Fed cuts
• The US dollar index reversed earlier losses and recovered back above its 200-day EMA, closing the day flat with an elongated bullish pinbar
• Similar reversal patterns were seen on EUR/USD, GBP/USD, AUD/USD, USD/CAD and USD/CHF
• The New Zealand dollar was again the strongest FX major and rose for a seventh day, presumably on short-covering ahead of next week’s RBNZ meeting

Events in focus (AEDT):​

• 08:45 – New Zealand retail sales
• 09:00 – Fed Governor Cook Speaks, FOMC Member Kashkari Speaks
• 11:01 – UK consumer confidence (GfK)
• 11:35 – Fed Waller Speaks
• 12:30 – China house prices
• 16:00 – Singapore CPI
• 18:00 – German GDP
• 19:30 – SNB Vice Chairman Schlegel Speaks
• 20:00 – German business sentiment (Ifo)
• 20:20 – ECB’s Schnabel Speaks
• 20:30 - ECB's Supervisory Board Member Jochnick Speaks

ASX 200 at a glance:​

The risk-on rally across on Thursday helped the ASX 200 extend its gains overnight. The 4-hour chart shows a strong rally from the 200-day EMA and 61.8% Fibonacci level, although a small shooting star candle formed alongside an RSI divergence (after it has reached overbought). This is nothing major and could simply mean a small retracement or period of consolidation.

Ultimately any dips towards the 50-bar EMA or 7624.7 support level could be favourable for bears, but if prices simply extend their lead at the open then a move for 7700 could be on the cards. At which point we’ll find out whether it has the momentum to break to a new record high or retreat once more from that pivotal level.

AUD/USD technical analysis:​

The weaker US dollar has allowed AUD/USD to rise for a seventh day, although a series of upper wicks over the past three days suggests bears are losing steam. A bearish pinbar also formed on Thursday after a false break of the 100 and 200-day EMAs. RSI (2) is overbought, and RSI (15) is around the neutral level of 50 – so if prices turn lower from here, it will revert to bearish mode below 50.

Bears could seek to fade into retracements within Thursday’s range with a stop above its high, or the 38.2% Fibonacci level. 0.6500 make a viable initial target, a break beneath which brings the lows around 0.6450 into focus.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD outlook: RBNZ, US and AU CPI to drive the Australian dollar. Feb 26th 2024​

It could be an interesting week for the Australian dollar if caught between the crossfire of the RBNZ meeting, Fed talk and US inflation data. We also have an Australian inflation report to throw into the mix for good measure.

By : Matt Simpson, Market Analyst

It could be an interesting week for the Australian dollar if caught between the crossfire of the RBNZ meeting, Fed talk and US inflation data. We also have an Australian inflation report to throw into the mix for good measure. On one hand the RBNZ may provide a more hawkish statement given the pickup of economic data and underlying inflationary forces, and on the other traders also have to keep an eye on a key US inflation report and several Fed members hitting the wires.

Economic events for AUD/USD traders​

When there are so many competing forces, the odds of choppy trading conditions, false moves and sharp reversals tend to increase. Unless the incoming headlines are stacked in such a way that favours a trend based on a divergent theme between those competing forces. Yet with expectations of the RBNZ upping their hawkish undertones, Fed members pushing back on rate cuts and the potential for a firmer US PCE inflation report, we likely require a soft set of CPI figures for Australia for it to provide a convincingly bearish as it limps towards the weekend.

Wednesday could be a volatility hotspot for AUD/USD​

Australian inflation data and the RBNZ’s cash-rate decision will be released within 30 minutes of each other on Wednesday, with an RBNZ press conference one hour later.

What to look out for on Wednesday:

• Whether the monthly AU CPI prints will continue to soften (dovish implications for the RBA)
• If service-related components are given a greater weighing in the CPI basket (hawkish implications for the RBA)
• Whether the RBNZ reintroduce a tightening bias in their statement or press conference

Australian inflation, CPI basket revised:​

I expect that most would like to see AU inflation continue to soften next week. The weekly CPI numbers are heading towards the RBA’s 2-3% target band, and the faster it approaches it the better it becomes of RBA-cut bets (to the detriment of AUD bulls. Q4 inflation was softer than expected, and whilst wages reached a 15-year high of 4.2% y/y, the quarterly read slowed to 0.9% q/q to suggest peak wages may be near, if not here already.



However, note that the ABS (Australian Bureau of Statistic) will revise the weightings of their CPI basket, and as my colleague David Scutt pointed out, it “might make things slightly sticker as I gather there'll be more services weighting in this round given that's where spending was being directed. Less goods, more experiences”. If he is right, then CPI may well decline at a slower pace. It may not be enough to warrant further hikes, but it likely pushes back bets of cuts.

Source: Refinitiv

RBNZ meeting, press conference:​

The RBNZ are almost certain to hold rate steady at 5.5%, but stronger economic data has seen the 3-month OIS price in a 25bp hike with a ~60% probability. So we may find that the RBNZ reintroduce a tightening bias, whether via their statement, press conference or revised economic forecasts. Their prior monetary policy statement forecast rates to remain at 5.5% this year, so that is an obvious place to look on Wednesday to see if it has been upwardly revised, or cuts have been pushed further back into 2025. Either way, a hawkish RBNZ has hawkish implications for the RBA, although AUD/NZD is likely to suffer given the -1.15bp RBA-RBNZ spread could widen in future.

Source: Refinitiv

AUD/NZD technical analysis (weekly chart):​

The yield differential between RBA-RBNZ cash rates continues to favour the New Zealand dollar. And that could widen next week and provide further pressure on the AUD/NZD cross. The weekly chart shows that the cross touched a 9-month low this week, and is on track for a bearish engulfing candle at the time of writing. A break of the 2023 low brings 1.05 into a focus, a break beneath which will being the 2022 low into focus for bears.

Source: TradingView

US PCE inflation​

Inflation data – particularly from the US – remains the favoured data set for traders to decipher the Fed’s monetary policy. And that has a direct impact on AUD/USD, indices and global sentiment in general. We’re on guard for a firmer set of PCE figures, given headline CPI was hotter than expected last week. And if we have already seen a softer CPI report from Australia, a firmer PCE inflation report could surely spell trouble for the Australian dollar.

​

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD snaps 8-day rally, ASX remains rangebound near its highs. Feb 27th 2024​

Momentum finally turned lower on AUD/USD after its 8-day rally met resistance at the 200-day EMA.

By : Matt Simpson, Market Analyst

Market Summary:​

• The US dollar began the week on another soft note, which allowed EUR/USD to rise for a second day and GBP/USD drift higher for a fifth, although volatility was on the low side due to a lack of market-driving news
• We may also be in for another quiet day looking at the calendar, ahead of RBNZ’s monetary policy meeting on Wednesday and US PCE inflation on Thursday
• Wall Street indices closed slightly lower for a second consecutive day, but once against daily ranges were on the low side and these markets remain just off of their all-time highs
• The Nikkei 225 reached a new record high on Monday just after the open before retracing and handing back around half of the weekend gap higher
• If prices gap lower today it will leave prominent bearish reversal pattern at is all-time high called an Island gap reversal
• NZD/USD and AUD/USD were the weakest FX majors on Monday ahead of tomorrow’s RBNZ monetary policy decision.
• It seems bets of a hike have been scaled back to weaken the Kiwi dollar and inadvertently weigh on the Australia dollar, and I stick with my bias that a tightening bias will be added but the central bank will stop short of an actual hike

Events in focus (AEDT):​

• 10:30 – Japan’s inflation report
• 18:00 – German consumer climate (Gfk)
• 23:30 – Canadian corporate profits
• 00:30 – US core durables
• 00:40 – MPC Member Ramsden Speaks
• 02:00 – CB Consumer Confidence

ASX 200 at a glance:​

• The ASX 200 is on track to form a hanging man reversal candle on the monthly chart. Which would snap its 3-month rally at its own record high
• Six sectors have risen in February (led by Info tech and industrials) whilst five are trading lower (led by energy and materials are the weakest), which doesn’t provide much confidence of an imminent breakout to a new record high
• The SPI 200 saw a false break of the 7597 low on Monday, and as I’m expecting another range-bound day then any dips towards the 7595 – 7600 level could pique my interest for another rebound towards the January high.
• I’m not overly confident that the market has enough juice to simply head for new highs so bulls way want to be cautious around the January highs

AUD/USD technical analysis:​

The rally on the daily chart lasted an impressive eight days, even if the apparent bullish momentum which took it back to its 200-day EMA lacked conviction in recent days. Friday’s bullish inside day which also coupled as a shooting star candle acted as a warning that AUD/USD could be topping out, and yesterday we saw AUD/USD retrace lower to finally snaps its 8-day rally. Note that RSI (2) and RSI (14) has both tapped their respective oversold zones on Friday ahead of Monday’s selloff.

From there the bias remains for an initial move to 0.6500. Bears could consider fading into retracements within yesterday’s range.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD, NZD in focus for AU CPI and RBNZ meeting: Asian Open Feb 28th 2024​

Data finally begins to pick up for the week with an AU CPI report and RBNZ meeting, which places NZD/USD and AUD/NZD into focus.

By : Matt Simpson, Market Analyst

Market Summary:​

• The Japanese yen was the strongest forex major on Wednesday on bolstered bets on BOJ tightening following Japan’s slightly hotter CPI data, and safe-haven flows ahead of key economic data
• USD/JPY initially broke to a 3-day low before finding support above 150, and after recouping two thirds of the earlier losses closed the day with a hanging man reversal candle
• AUD/JPY retraced for a second day after a bearish reversal candle formed at the 99 handle on Monday, suggesting a corrective phase is now underway
• Headlines that OPEC+ are considering extending output cuts saw WTI crude oil rise for a second day and probe the January high
• Wall Street indices seem to be holding their breath ahead of the key US PCE inflation report later this week, with the S&P 500, Nasdaq and Dow Jones trading in tight ranges just off of their record highs
• Improved consumer sentiment for Germany saw the DAX hit a fresh record high and stop just shy of 17,600
• Business investment in the US appears soft according to the US durables orders report, with goods orders slumping -6.1% - its fastest pace on data going bac to the early 90s.

Events in focus (AEDT):​

• 11:30 – AU monthly CPI report, construction work done
• 12:00 – RBNZ interest rate decision, statement, economic outlook
• 13:00 – RNBZ press conference
• 16:00 – Japan leading and coincident indicator
• 21:00 – Eurozone economic sentiment index (ESI)
• 00:30 – US Q4 GDP (preliminary), corporate profits, PCE prices, retail inventories
• 00:30 – Canada average weekly earnings
• 01:00 – ECB McCaul speaks
• 02:30 – BOE/MPC member Mann speaks
• 04:00 – FOMC member Bostic speaks
• 04:15 – FOMC member Collins speaks
• 04:45 – FOMC member Williams speaks

NZD/USD technical analysis:​

The Kiwi dollar formed a double bottom above 60c earlier this moth before rising 2.7%. Prices have since retraced around 38.2% of that rally, and its 2-day bearish sequence closed with a doji to show the pullback is losing steam on the daily chart. Prices also found support at the 10-day EMA, so perhaps the corrective low is in already.

The 1-day implied volatility band implies with a 68% confidence that prices will close between 0.6123 – 0.6211. A hawkish RBNZ meeting could help momentum revert to its bullish rally towards 62c. It really depends on how the RBNZ are relative to expectations as to whether it can simply head for (and break above) the cycle highs.

Of course, a downside risk or NZD/USD is if the RBNZ surprise without adding a hawkish bias to their meeting today. And that could see it breaking lower – with further downside potential ahead should US inflation come in hot later this week.

AUD/NZD technical analysis:​

The daily chart shows that AUD/NZD remains in a downtrend, although it found some stability above the 2023 low which prompted a 3-day pullback. Prices remain trapped in a small range between key levels, and a divergence of monetary policy implications between AU CPI and the RBNZ meeting are likely required to break it convincingly out of range.

• Should AU inflation data come in soft ahead of a hawkish RBNZ meeting, a break beneath the 2023 low / 1.0550 handle opens up a run for 1.0500 or even the 2022 low.
• The most bullish scenario today for AUD/NZD is if we see hotter inflation figures from Australia, before RBNZ surprise without adding a hawkish bias to their meeting
• The least interesting scenarios for direction are if we see hot AU CPI coupled with a hawkish RBNZ, or soft inflation figures alongside a relatively dovish RBNZ

View the full economic calendar


-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/JPY hints at market top, ASX 200 ready for lift off? Asian Open March 1st 2024​

With yen futures at a sentiment extreme, hawkish comments from the BOJ hint at a top for USD/JPY. And with ASX 200 futures hitting a record high ahead of the NY close, a break above 7700 is now in focus.

By : Matt Simpson, Market Analyst

Market Summary:​

• US core PCE inflation rose to an 11-month of 0.4% m/m, although this was in line with expectations, as was PCE inflation at 0.3% m/m
• The annual rate of inflation also hit consensus estimates with PCE at 2.4% y/y and core PCE at 2.8% y/y
• A surge in services costs such as finance and housing was the main driver of core PCE in January, but with the annual rate of PCE falling to a 3-year low bets are still on for the Fed’s first cut to arrive in June
• Fed fund futures imply a 52.8% chance of a June cut, which is in line with some economists such as those from ING. A second 25bp cut has a 41.1% probability in September, according to Fed funds
• The US dollar index formed a bullish outside day after finding support at the 200-day EMA, EUR/USD closed on its 200-day EMA and USD/CAD looks like it wants to break above its 200-day EMA, AUD/USD is trying to recover back above 0.6500 yet remains anchored to Wednesday’s low
• The yen was the strongest forex major on Thursday following comments from BOJ member Takada, renewing expectations that the BOJ will finally ditch negative rates in the coming weeks or months
• 2% inflation in now in sight according to Takada, and that it is now necessary for the BOJ to consider their exit strategy from their ultra-loose monetary policy
• Wall Street indices turned higher and look set to retest their record highs if Thursday’s bullish momentum carries over to Friday, which paints a positive picture for APAC stocks today – and the ASX 200 futures contract has already reached a record high ahead of New York close
• Australian retail sales failed to recoup the -2.1% loss in December by rising just 1.1% in January, which was also beneath 1.6% expected. Whilst it does not spelling impending doom, it is yet more evidence of sluggish growth the Australian economy
• RBNZ governor Orr reiterated the central bank’s statement that the current cash rate of 5.5% is restricting domestic demand, and the outlook for inflation remains balance to pour cold water on expectations of another hike. The RBNZ’s chief economist also noted that softer government spending as a % of GDP is also helpful

Events in focus (AEDT):​

• 08:45 – New Zealand building consents
• 09:00 – Fed Goolsbee speaks
• 09:00 – Australian manufacturing PMI (AIG)
• 10:30 – Japan’s unemployment rate, jobs/applications ratio
• 11:05 – RBNZ Gov Orr speaks
• 11:30 – Japan’s manufacturing
• 12:10 – FOMC member Williams speaks
• 12:30 – China PMIs (manufacturing, services, compositeNBS)
• 12:45 – China manufacturing PMI (Caixin)
• 21:00 – Eurozone CPI
• 01:45 – US manufacturing PMI (final – S&P Global)
• 02:00 – ISM manufacturing, US consumer sentiment (University of Michigan)

Click the website link below to get our exclusive Guide to USD/JPY trading in 2024.

https://www.forex.com/en-us/market-outlook/

ASX 200 futures technical analysis:​

The ASX 200 breached a record high ahead of Thursday’s close, and SPI 200 futures have extended that lead slightly ahead of the US market close. The daily chart shows that ASX futures respected a bullish trendline, two intraday spikes aside. What has caught my eye is the inverted head and shoulders pattern on the daily chart, which is a bullish continuation pattern in an uptrend. The inverted H&S projects a target around the 7900 handle, and a 100% projection of the prior leg sits around 7800.

First however, we may need to see a break or daily close above 7700 before becoming confident that the next leg higher is truly underway. Bulls could either seek the actual break, or see if prices retrace and respect the 7765 – 770 area as support before considering longs.

USD/JPY technical analysis:​

The Japanese yen surged during the Asian session following hawkish comments from the BOJ, which saw USD/JPY initially fall over 1% and seemed on track for its worst day of the year ahead of the European open. Even though USD/JPY recouped just under half of the day’s losses, the prominent bearish engulfing candle brings the potential that the pair may have topped – or is very close to.

As noted in one of my prior COT reports, the Japanese yen futures appear to be near a sentiment extreme which could pave the way for a stronger yen. With the potential for the BOJ to ditch negative rates once again on the horizon and markets still looking for any reason for the Fed to cut, maybe USD/JPY has finally topped. But what their pair really needs to a sharp drop is for the Fed to actually signal cuts. Patience may still be required with shorting USD/JPY.

For now, bears could seek to fade into retracements towards 151 with a stop above and initially target the 148.8 – 149.2 support zone, a break of which assumes the larger move south has begun.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

US dollar holds support, gold reaches new ATH ahead of key ISM report. March 5th 2024​

Gold surged to a fresh ATH high for a second day, but if the ISM services report knocks out some strong numbers then gold may struggle to extend its lead.

By : Matt Simpson, Market Analyst

Market Summary:​

• Gold prices extended their record high on Monday and traded above $2100 for the first time ever, on bets that inflation will continue to cool and force central banks to cut interest rates sooner
• Gold rose another 1.6%, taking its two-day total to over 3.5% since weak ISM manufacturing data on Friday spurred bets of Fed easing, despite higher US yields
• XAU/AUD (gold against the Australian dollar) now trades at the record high of 3251
• The US dollar index retreated for a second day although it has found support at its 200-day EMA, which limited gains on EUR/USD to 1.0860
• Still, if US data continues to soften this week then a USD index break beneath the 20-day EMA seems inevitable – but then o does a rally from this key technical level if economic data perks up
• Wall Street touched intraday record highs on Monday before pulling back into the top quarter of Friday’s range
• WTI crude oil continues to provide trick trading conditions, by handing back most of Friday’s gains and falling back below $80 – reminding us that it is a day-trader’s market for the foreseeable future
• Australian building approvals fell -1% in January, and December’s was revised from -9.5% to -10% to appease the minority calling for RBA cuts
• AUD/USD handed back ~50% of Friday’s gains, and if the US dollar regains some ground above the 200-day EMA then a retest and potential break of last week’s low is on the radar
• Given the RBA retained their hawkish bias in their February statement, cuts remain in the distant futures as they’ll need to drop this bias before even considering providing markets with the ‘dovish pivot’ they crave

Click the website link below to get our exclusive Guide to gold trading in 2024.

https://www.forex.com/en-us/market-outlook/

Events in focus (AEDT):​

There’s a host of economic data for traders to chew on today, but the three standout events are Tokyo CPI, BOJ governor Ueda speaking and US services PMI. Tokyo inflation provides a three-week lead on Japan’s national CPI, as the two move very much in tandem. And anyone who hopes the BOJ will tighten may want to see Tokyo’s CPI to come in hotter than expected today. And it is worth paying attention to comments from Ueda to see if he supports hawkish comments made by Tanaka last week. As any such developments could help send USD/JPY lower in line with my bias – on the assumption that it doesn’t tag 151 first.



ISM services PMI is a data point which could burn bearish bets on the US dollar. The prices paid index rose sharply higher in January, new orders and employment expanded. And if these patterns persist, it overpowers the case for multiple Fed rate cuts and could knock gold from its highs, support the US dollar and yields and generally unwind some of the dovish-Fed bets seen over the past two days of trading.

• 09:00 – Australian services PMI
• 10:30 – Tokyo CPI
• 11:30 – Australian current account, net-export contribution
• 11:30 – Japan’s services PMI
• 12:45 – China services PMI (Caixin)
• 15:00 – BOJ Ueda speaks
• 21:00 – Eurozone PPI
• 01:45 – US final PMIs (S&P Global)
• 02:00 – US services PMI
• 04:00 – Fed Vice Chair for Supervision Barr Speaks

US dollar index technical analysis:​

The USD index formed a bearish outside day on Friday which could also be part of a lower high. Yet Monday’s bearish follow-through was sorely lacking, as it closed with a spinning top doji around Friday’s low. Prices are also holding above the 100 and 200-day EMAs, so it remains unclear which direction the dollar’s next big move will be. But we have more than enough events lined up to see volatility return.


Ultimately, should prices continue to show evidence of support above the 100 and 200-day EMAs, then a rally to trend resistance could be on the cards. And a hawkish Powell testimony and strong US data could send it above the technical resistance level. But if the incoming events are skewed to the dovish side for Fed policy, a break beneath the 100 and 200-day EMAs seems inevitable, which brings the 103 handle into view near the high-volume node of the current rally.

Gold technical analysis:​

I’ll admit to being caught by surprise with the rally on gold. Yes, gold prices surged on weak ISM manufacturing data – but to extend that rally and print another record high or similar magnitude raises questions as to whether something else is at play. I’ll let others answer that question after the fact.

For now what I see is a strong rally into record highs ahead of a busy week of economic events. As mentioned above, ISM manufacturing could knock some wind out of gold’s rally should it come in strong again, as could any hawkish comments from Jerome Powell’s testimony to the House Committee on Wednesday and Thursday, or strong data from Friday’s NFP report.

Ultimately the sceptic in me doubts gold can maintain its current trajectory for the week, which is why I simply including implied volatility bands to show expectations of volatility from options traders over the daily, weekly and 1-month timeframe.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

Japanese yen favoured as bitcoin triggers bout of risk off. March 6th 2024​

Bitcoin momentarily touched a record high before reversing lower in spectacular fashion, weigh in risk and sending the Japanese yen broadly higher.

By : Matt Simpson, Market Analyst

Market Summary:​

I had thought that the ISM services index would take the lead for market action, yet Bitcoin had other ideas. The classic-flavoured crypto market momentarily reached a record high before doing a sharp reversal lower then proceeded to fall nearly 15% over the next three hours. Bitcoin is now flat for the week and on track for a a doji, although the risk of volatility around prior cycle highs was noted last week – so if history is anything to go by, we may have just entered a period of elevated volatility and shakeouts

• Wall Street indices gapped lower and sent the S&P 500 and Nasdaq to a 4-day low, the Dow Jones fell to a 2-week low
• The Japanese yen was the go-to safe-haven of choice for forex traders, rising across all of its FX major peers and sending USD/JPY below 149
• The Canadian dollar lost the most ground against the yen, with CAD/JPY looking like it may want to break beneath Thursday’s low and below 110
• Gold also faltered at its highs and pulled back from its intraday record high, yet remain on track to close to a record weekly high
• Tokyo’s inflation came in hotter than expected, which raises the prospect of if a BOJ hike sooner than later and supports a higher yen thesis
• Super Tuesday has kicked off in the US where former-President Trump aims to knock his main rival – Nikki Haley – out of the running for the Republican nominee. Whilst Trump cannot technically win outright with the 15 States voting today, he could win by a far enough margin to bolster his chances going forward
• ISM services PMI revealed further weakness in the US economy, with the headline index and prices paid expanding at a softer pace and employment contracting.
• The US dollar index closed lower for a third day, although it remains above its 200-day EMA heading towards a key testimony from Jerome Powell on Wednesday to the House Committee

Click the website link below to get our exclusive Guide to USD/JPY trading in 2024.

https://www.forex.com/en-us/market-outlook/

Events in focus (AEDT):​

• 09:00 – Australian construction, manufacturing indices (AIG)
• 11:30 - Australian GDP capex, final consumption
• 18:00 – German exports
• 01:15 – US ADP employment
• 01:45 – BOC interest rate decision, rate statement
• 02:00 – Fed Powell testifies to the House Committee
• 02:00 – US JOLTS job openings, small business optimism, wholesale inventories
• 02:00 – Canada PMI (Ivey)
• 02:30 – BOC press conference

USD/JPY technical analysis

​

I have been quite vocal about a potential bearish reversal on USD/JPY in recent weeks, given the extreme bearish positioning on Japanese yen futures and more recently hawkish comments from a BOJ member, If US data continues to soften, the case for a lower USD/JPY builds. Especially if this weekly bearish reversal on USD/CNH continues to play out.


A 2-bar bearish reversal formed on USD/JPY following its bearish outside day on Tuesday, which might form part of a lower high within the ‘fade zone’ I mentioned last week. Bears could seek shorts within Tuesday’s range with a stop above this week’s high (or the 151 handle for a more conservative approach). This is anticipation of a move to and below the 149.20 low.


Of course, an upside risk for the pair is if Jerome Powell delivers a hawkish speech during his testimony to the House committee, and Bitcoin bulls come back in force despite the ugly shakeout at its record high.

CAD/JPY technical analysis:​

If I had to short a yen pair today, my preference would be CAD/JPY. It was the weakest major-yen pair on Tuesday, but the cross has also broken trend support and printed a 3-bar bearish reversal pattern (evening star formation). And if the BOC add a dovish tone to today’s meeting, it could send CAD/JPY below 110.


A 100% projection of the initial leg lower lands around 109.30, and the 109 handle sits near a 38.2% Fibonacci retracement level – both of which seem viable downside targets for bears.



-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

US dollar extends losses on dovish Powell comments: Asian Open. March 7th 2024​

Jerome Powell said what traders wanted to hear during his testimony to the House Committee; rate cuts are coming.

By : Matt Simpson, Market Analyst

Market Summary:​

• Jerome Powell said what traders wanted to hear during his testimony to the House Committee; rate cuts are coming
• This sent the US dollar broadly lower on renewed optimism that the Fed’s dovish pivot is finally here, although ignored the part where he said cuts would only arrive if further evidence warranted easing
• USD/JPY closed at a 3-week low, EUR/USD rose to a 5-week high and looks set to break above 1.09
• As for the elections, Powell said the Fed would “keep our heads down”, meaning they would not bae their policy to appease any party
• And on that note, Nikki Haly withdrew from the race to the Whitehouse to ensure Trump will be the Republican nominee for the Whitehouse
• The Bank of Canada held rates at 5%, and pushed back against doves by saying that they do not expect to get back to 2% inflation this year and the “clear consensus inside governing council” called for rates to stay at 5%
• Gold closed at another record high on renewed bets of Fed easing
• WTI crude prices rallied over 3.5% by the intraday high as US inventories rose less than expected

Events in focus (AEDT):​

• 10:00 – Japan’s wages data
• 10:50 – Japan’s foreign investment in bonds, stocks
• 11:30 – Australia’s trade balance
• 12:30 – BoJ Board Member Nakagawa Speaks
• 14:00 – China’s trade balance
• 23:30 – US job cuts
• 00:30 – US jobless claims, trade balance

ASX 200 technical analysis:​

The bullish bias for the ASX 200 is playing out well. An inverted head and shoulders pattern (bullish continuation during an uptrend) projects a target around 7900. A bull flag also projects a target around 7825, and the 100% projection of the prior rally sits on 7800. Momentum clearly favours bulls thanks to renewed bets of RBA easing, therefore we prefer to buy dips on intraday timeframes and target 7800 and hopefully beyond.

US dollar index technical analysis:​

The US dollar index broke convincingly below the cluster of moving averages, but bears could not quite drive it down to 103. There is a high volume node around 103 which makes it a likely support level. And as I suspect traders have placed too much emphasis on Powell’s supposedly dovish comments, I do not expect 103 to simply give way. And that leaves the potential for a bounce from current levels. Bulls could enter long with a stop below 103 and a target around the MA cluster, and allow incoming data to dictate its potential to rally further or eventually break below 103.



-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD: Breaking key levels with momentum ahead of non-farm payrolls. March 8th 2024​

AUD/USD has surged to a technical level where it’s done plenty of work around in the past, providing an opportunity for traders to establish trades with excellent risk-reward potential. With declining US bond yields suffocating the US dollar rally, directional risks appear slanted to the upside.

By : David Scutt, Market Analyst

• AUD/USD has ample upside momentum right now
• Just as higher bond yields helped power the USD rally this year, lower yields are deflating bullish dollar bets
• US 10-year bond futures and DXY have broken key moving averages this week
• US non-farm payrolls is the largest known event risk on Friday

AUD/USD has surged to a technical level where it’s done plenty of work around in the past, providing an opportunity for traders to establish trades with excellent risk-reward potential. With declining US bond yields suffocating the US dollar rally, directional risks appear slanted to the upside unless we get another hot nonfarm payrolls report later in the session.

AUD/USD rebound gathers speed​

On the charts, AUD/USD has been respectful of support and resistance levels during the week, testing uptrend support on Wednesday following another soft Australian GDP report and disappointment over the details of fiscal spending provided at China National People’s Congress before rebounding to prior resistance at .6530. From there, the daily candles have been big and bullish, sending AUD/USD back above its 50 and 200-day moving averages for the first time since early December.

As things stand, AUD/USD is testing horizontal support at .6620, a level which successfully capped rallies back in December and February. The price tried to break through on Thursday only to be knocked back lower, suggesting near-term action may determine which direction the price heads.

Caution ahead of US nonfarm payrolls could explain the reluctance to go on with the explosive move, although some noteworthy developments earlier this week in US markets suggests the AUD/USD may continue its upward thrust.

US bond futures break key level​

The first was US 10-year Treasury futures breaking cleanly though the 200-day moving average, an outcome that looms as significant given prior breaks have regularly led to prolonged directional changes. If that’s the case on this occasion, that points to the potential for lower US yields.

Source; Refinitiv

DXY breaks down​

Secondly, with the US yield advantage over the rest of the world starting to compress again, its seen capital move from the big dollar to other currencies, sending the broader US dollar index (DXY) through the 200-day moving average, too.

AUD/USD trade ideas​

While the domestic Australian economic picture is hardly looking stellar right now, sitting at historically low levels with most commodity prices enjoying tailwinds from a softer USD, technicals and fundamentals have been working in the AUD/USD’s favour recently.

Depending on how the price evolves, the proximity of resistance at .6620 allows traders to use that level for protection.

For those considering longs, which is my favoured play, buying a clean break of .6620 allows for a stop loss to be placed below for protection. With only minor resistance located at .6650, an initial upside target could be .6730, where the price did plenty of work either side over the turn of the calendar year.

With MACD and RSI trending higher, momentum remains to the upside right now, especially after the break of the two moving averages earlier in the week.

However, should the price be unable to break .6620, establishing shorts below the level with a stop loss above also offers decent risk-reward for those targeting a reversal to the 50 and potentially 200DMA.

Non-farm payrolls loom​

Nonfarm payrolls is the largest known risk event on Friday by some distance. Based on what we’ve seen over recent days, price action suggests markets are expecting a far cooler outcome than the large increase in hiring and wages growth reported in January, so another hot outcome is the risk. But alterative labour market indicators received prior to the report signal continued gradual cooling in overall conditions.

Click the website link below to get our exclusive Guide to AUD/USD trading in 2024.

https://www.forex.com/en-us/market-outlook/

-- Written by David Scutt

Follow David on Twitter @scutty


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.