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USD Outlook Hinges on NFP- Limited AUD Correction Offers Range Trade

David Song

Talking Points:

- USDOLLAR to Hold Steady Ahead of Non-Farm Payrolls (NFP)

- Australian Dollar Correction Remains Limited- Range in Focus





Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index







Forex_USD_Outlook_Hinges_on_NFP-_Limited_AUD_Correction_Offers_Range_Trade_body_Picture_3.png, USD Outlook Hinges on NFP- Limited AUD Correction Offers Range Trade

Chart - Created Using FXCM Marketscope 2.0

  • Carving String of Higher Lows- Ascending Triangle Taking Shape?
  • Relative Strength Index Clears Bearish Trend- Watch for Confirmation
  • Interim Resistance: 10,753 (23.6 expansion) to 10,759 (61.8 retracement)
  • Interim Support: 10,657 (61.8 extension)- Closing Basis





Challenger Job Cuts YoY (DEC)




Initial Jobless Claims (JAN 4)




Continuing Claims (DEC 28)




Fed’s Esther George Speaks on U.S. Economy


Fed’s Narayana Kocherlakota Speaks on U.S. Economy


The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) pared the advance to 10,721 even after the European Central Bank (ECB) strengthened its forward-guidance for monetary policy, and the dollar may continue to hold a tight range ahead of Non-Farm Payrolls (NFP) as the U.S. economy is expected to add another 197K jobs in December.

In light of the ongoing improvement in the labor market, another better-than-expected NFP print should give the Fed greater scope to further normalize monetary policy over the coming months, and the data may prompt a topside break in the USDOLLAR as it continues to carve a series of higher lows.

Indeed, the shift in the policy outlook should help to limit the downside for the greenback, but a slowdown in wage growth may become a growing concern for the central bank amid the risk for disinflation.

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Forex_USD_Outlook_Hinges_on_NFP-_Limited_AUD_Correction_Offers_Range_Trade_body_ScreenShot214.png, USD Outlook Hinges on NFP- Limited AUD Correction Offers Range Trade


Forex_USD_Outlook_Hinges_on_NFP-_Limited_AUD_Correction_Offers_Range_Trade_body_Picture_1.png, USD Outlook Hinges on NFP- Limited AUD Correction Offers Range Trade
  • Limited Correction to Offer Range Trade- RSI Breaks Out of Bearish Trend
  • Interim Resistance: 0.8980 (38.2 expansion) to 0.9000 (1.618 expansion)
  • Interim Support: 0.8865 (61.8 expansion) to 0.8890 Pivot- Close Basis

In contrast to Wednesday, three of the four components advanced against the greenback, led by a 0.18 percent rally in the Japanese Yen, while the Australian dollar bucked the trend, with the AUDUSD slipping 0.16 percent.

Indeed, the commodity bloc is trading on a weaker tone as market sentiment falters, but the AUDUSD may continue to face range-bound prices over the near-term as the Reserve Bank of Australia (RBA) sticks to its wait-and-see approach.

In turn, we will look to play the support & resistance zones over the near-term, but the bearish sentiment surrounding the higher-yielding currency may gather pace over the coming months as growth and inflation in the $1T economy remains subdued.

--- Written by David Song, Currency Analyst

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

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