Talking Points:
– AUD/USD Downside Targets in Focus Ahead of RBA September Rate Decision.
– SPX500 Continues to Carve Bearish Pattern- Global Response on Tap?
– USDOLLAR Tests Former-Support Ahead of 2Q GDP, Fed Economic Symposium.
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AUD/USD
Chart – Created Using FXCM Marketscope 2.0
AUD/USD remains at risk for a further decline as the Relative Strength Index (RSI) pushes deeper into oversold territory; close below 0.7090 (78.6% retracement) may spur a more meaningful run at 0.6950 (161.8% expansion).
Even though the Reserve Bank of Australia (RBA) is expected to keep the cash rate on hold at the September 1 policy meeting, recent comments from Governor Glenn Stevens suggests the central bank is becoming increasingly concerned amid the weakening outlook for global growth.
DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long AUD/USD since May 15, with the ratio approaching recent extremes as it climbs to +2.52 as 74% of traders are long.
SPX500
Despite the recent efforts by China to restore market confidence, the ongoing series of lower-highs in SPX500 suggests sentiment remains fragile; need the RSI to push back above 30 to favor a larger rebound.
With key interest rate decisions coming up in September, a global response from the major central banks may be needed to fuel risk appetite amid the weakening outlook for the world economy.
As the RSI holds in oversold territory, a close below 1834 (61.8% retracement) may open up the next downside target at 1816 (38.2% expansion).
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Read More:
Price & Time: Will Aussie Respect the Confluence?
No, the Euro has not Suddenly Become a Safe-Haven Currency
USDOLLAR(Ticker: USDollar):
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
11901.52
11906.38
11838.65
0.57
113.07%
Chart – Created Using FXCM Marketscope 2.0
Despite the limited reaction to the better-than-expected U.S. Durable Goods Orders report, the Dow Jones-FXCM U.S. Dollar extends the rebound from the previous day to test former support around 11,951 (38.2% expansion) to 11,965 (23.6% retracement); closing price above the key region may highlight a larger recovery.
Despite expectations for an upward revision in the preliminary 2Q Gross Domestic Product (GDP) report, the commentary coming out of the Fed’s Economic Symposium in Jackson Hole, Wyoming may have a larger impact on the greenback as New York Fed President William Dudley sees a ‘less compelling’ case for a September liftoff.
Waiting on a close below 11,826 (61.8% expansion) to 11,843 (38.2% retracement) to open up the next downside target around 11,745 (50% retracement) to 11,759 (23.6% retracement).
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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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Source: Daily fx