AUDUSD Gains Limited by 2013 Trendline, 200-Day SMA- Top in Place?

DailyFX

Talking Points:

- Descending Channel at Risk as USDOLLAR Breaks Monthly Opening Range

- AUDUSD Remains Limited by Long-Term Bearish Trendline; Lower High in Place?

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10583.97

10600.42

10564.13

0.17

93.99%

USDOLLAR Daily

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Forex-AUDUSD-Gains-Limited-by-2013-Trendline-200-Day-SMA--Top-in-Place_body_Picture_3.png, AUDUSD Gains Limited by 2013 Trendline, 200-Day SMA- Top in...

Chart - Created Using FXCM Marketscope 2.0

  • Fresh Monthly High Reinforces Bullish RSI Break; Need Close Above 10,590 (50.0 retracement)
  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,470 Pivot

Release

GMT

Expected

Actual

Fed's Bullard Speaks on Brookings Panel on Nominal GDP

15:45

Fed's Fisher Speaks on Forward Guidance in London

17:45

Fed's Kocherlakota Speaks on Monetary Policy in Washington

20:30

Fed's Stein Speaks on Monetary Policy in Washington

22:30

The near-term outlook for the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) remains constructive as the greenback rallied to a fresh monthly high of 10,600, and the reserve currency may continue to retrace the decline from earlier this year amid the shift in the Fed policy outlook.

Even though the USDOLLAR remains stuck in the downward trending channel, an important low appears to be in place following the bullish engulfing candle from earlier this week, and a closing price above the 10,590 (50.0 percent Fibonacci retracement) should pave the way for a more material rebound in the greenback as the bullish break in the Relative Strength Index (RSI) continues to materialize.

With Dallas Fed President Richard Fisher scheduled to speak later today, hawkish comments from the Federal Open Market Committee (FOMC) voting member may prop up the dollar going into the final full week of March, and the greenback may trade on a firmer footing in the month ahead should we see a growing number of central bank officials show a greater willingness to normalize monetary policy sooner rather than later.

Forex-AUDUSD-Gains-Limited-by-2013-Trendline-200-Day-SMA--Top-in-Place_body_ScreenShot249.png, AUDUSD Gains Limited by 2013 Trendline, 200-Day SMA- To...

AUDUSD Daily

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Forex-AUDUSD-Gains-Limited-by-2013-Trendline-200-Day-SMA--Top-in-Place_body_Picture_1.png, AUDUSD Gains Limited by 2013 Trendline, 200-Day SMA- Top in...
  • Remains Capped by Downward Trend from 4/2013; Still Searching for Lower High?
  • Interim Resistance: 0.9200 (100.0% expansion) to 0.9210 (61.8% retracement)
  • Interim Support: 0.8860 (61.8 expansion) to 0.8890 Pivot

Join DailyFX on Demandto Cover Current Australian dollar Trade Setups

Three of the four components strengthened against the greenback, led by a 0.56 percent rally in the Australian dollar, but the AUDUSD remains at risk of carving a lower high as the pair appears to be limited by the downward trend dating back to April 2013.

At the same time, we will also keep a close eye on the 200-Day SMA (0.9146) as the AUDUSD showed a material decline the last time it approached the indicator, and the pair may struggle to retain the ascending channel carried over from the previous month as Reserve Bank of Australia Governor Glenn Stevens continues to favor a lower exchange rate.

Nevertheless, risk sentiment may play larger role in driving AUD price action next week amid the limited developments coming out of the $1T economy, while we may see the RBA toughen its verbal intervention in an effort to further assist with the rebalancing of the real economy.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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