AUD/USD hits 0.73 for the first time in six weeks, what's next?

Dollar remains offered as we head towards the US trading session


The aussie is continuing to make strides today pushing forward with further gains as the greenback stays offered. AUD/USD now looks towards cracking the 0.7300 handle as buyers look to build on a break of the 100-day MA (red line) @ 0.7267 earlier.

The improved sentiment in equities is also helping to drive the move higher in the aussie today but I wouldn't give the all clear just yet. As mentioned before, US traders will have their say before any firm break to the upside is justified but currently the technical picture continues to look even better for AUD/USD buyers.

The September high of 0.7315 will be called into question once 0.7300 gives way and that is one of the more important levels to look out for in the pair this year. A break above that would break the bearish pattern of lower highs, lower lows in the pair that has helped to drive the pair lower since the start of the year.

A break above that will no doubt result in a further squeeze to the upside as more shorts will be flushed out. Looking at the run over the past week, the break of these two key technical levels stand out for me:

  • This year's downwards trendline @ ~0.7160

  • 100-day MA @ 0.7267 (not tested since April, not held a break above since March)

The upside run just took out two key levels and is a strong indicator of a bullish run. Despite fundamentals working against the aussie in the bigger picture, positioning squeezes care very little for that and that is not something you'd want to stand in the way of when it happens.



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EUR/USD heads towards a test of the 1.15 handle, can sellers hold on?

A key test lies ahead for EUR/USD buyers


Price now trades to a high of 1.1483 on the day and looks towards extending its recovery following a double-bottom bounce off support near the 1.1300 handle. The 38.2 retracement level @ 1.1498 is also another resistance level to look out for but it's all about offers at the 1.1500 handle.

There is also swing region resistance to come from the May and June lows at around 1.1510 so that will be an area where sellers can lean on too. In short, watch out for key resistance around 1.1500-10.

In terms of significance, the 1.1500 level is more psychological in my view. Break above that and buyers will have more conviction to move towards a test of the 100-day MA (red line) again and it will shift the thinking away from moving back to 1.1300 in the short-term.

I'm still not entirely convinced by the offers seen in the dollar here until US traders confirm it but you can't ignore what's on the charts. The midterm election results have gone as expected so there shouldn't be any real surprises for markets but traders so far are reacting towards the uncertainty of what a Democrat House may offer.

They are still holding a 26 seats majority over Republicans at this stage, and that's still the median outcome which will lead to political gridlock in Congress. There's still 23 seats to be declared so if that number drops, it could limit how much gridlock we could be seeing.

But as I've mentioned before, all this does is help to prevent fiscal stimulus that will be pushed forward by Trump, but it doesn't derail the other factors that have been a driving force for markets this year i.e. trade and the Fed.

Sellers have good reason to hold the 1.1500 level for now but if that gives way, it's going to be a good squeeze towards the upside for the pair.



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EUR/GBP runs into key support level again as pound rallies on Raab's "thumb's up"

EUR/GBP touches a low of 0.8720 on the day


Price touched a low of 0.8720 before bouncing off it now a little. That coincides with the key support region seen from 16 June 2017 low, a level which has helped to limit downside moves in the past on several occasions.

The low today is a five-month low for the pair and breaks the October low of 0.8723. But it's all about the support level mentioned. Right now, it's a tough ask for sellers to push through to break below that as there is also support to come from the 61.8 retracement level @ 0.8693. That is another level that has proven to be a key area for buyers to lean on.

However, if there is any catalyst for the pound to rally further against the euro, a Brexit deal optimism is one that can surely provide the breakthrough. Optimism is back up again on the day following Raab's thumbs up earlier and further backing of a consensus being struck among parliament members will no doubt unleash further gains in the pound.

If that scenario pans out, the year's low @ 0.8621 will also be under threat surely. But let's not get too carried away, there has been plenty of false dawns before on a Brexit deal. Cautious optimism is the still right approach. It's all about headlines now and things can get pretty dicey when we're at this stage of the trading game. Be careful out there.



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Pound slips to session low as DUP lawmaker flags potential no-deal Brexit outcome

GBP/USD touches a low of 1.3021 on the session


Cable falls by about 40 pips on the headline here. The pound has been dragged to lows for the session but in my view, the move here speaks a lot more about market sentiment than it does about the headline itself.

It's not the first time we've seen the DUP flaunt such words as they have been at odds with the EU on the backstop since forever now. And the comments by lawmaker Donaldson is not any different. But with sensitivity heightened this week, talks of a no-deal outcome will start to breed fear and fear breeds selling, which breeds more fear.

The real issue I see here is that it makes it more challenging for Theresa May to find a proposal to present to the EU by the end of the week. Not only does she need to convince her own Cabinet members later today, she also has to contend with satisfying her DUP counterparts on the backstop - in which they don't see eye to eye with European officials, as evident by the headline above.

It feels like she's being stretched too thin and markets will start to feel a little jittery on that. The pound has effectively erased all gains against the dollar today and cable now sits between the swing regions of 1.3000 and 1.3035.

The near-term bias is still more bullish as price sits above the two key hourly moving averages, but if price starts to threaten a move below 1.3000, expect the downside move to pick up traction rather quickly.

It's all headlines now for the pound. Be safe out there.



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Pound slips to session low as DUP lawmaker flags potential no-deal Brexit outcome

GBP/USD touches a low of 1.3021 on the session


Cable falls by about 40 pips on the headline here. The pound has been dragged to lows for the session but in my view, the move here speaks a lot more about market sentiment than it does about the headline itself.

It's not the first time we've seen the DUP flaunt such words as they have been at odds with the EU on the backstop since forever now. And the comments by lawmaker Donaldson is not any different. But with sensitivity heightened this week, talks of a no-deal outcome will start to breed fear and fear breeds selling, which breeds more fear.

The real issue I see here is that it makes it more challenging for Theresa May to find a proposal to present to the EU by the end of the week. Not only does she need to convince her own Cabinet members later today, she also has to contend with satisfying her DUP counterparts on the backstop - in which they don't see eye to eye with European officials, as evident by the headline above.

It feels like she's being stretched too thin and markets will start to feel a little jittery on that. The pound has effectively erased all gains against the dollar today and cable now sits between the swing regions of 1.3000 and 1.3035.

The near-term bias is still more bullish as price sits above the two key hourly moving averages, but if price starts to threaten a move below 1.3000, expect the downside move to pick up traction rather quickly.

It's all headlines now for the pound. Be safe out there.



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AUD/JPY looks towards a bullish breakout

AUD/JPY touches a one-month high and closes in on the 200-day MA


The aussie continues to perk up after a slight setback on Friday on hopes of a US-China trade resolution being dashed. But the currency is continuing its good run and today we're seeing potentially a key technical breakout in AUD/JPY.

The pair has rebounded after a double-bottom pattern being formed at the end of last month and has now broken above yesterday's high of 81.94 and also threatens a break of the trendline resistance since July.

What's more interesting in the chart is a potential test of the 200-day MA (blue line). That currently sits at 82.17 and if tested, it will be the first time since February since buyers have been able to trade at that key technical level.

While all is looking good for risk now, there's still a tricky day to navigate through. The US midterm elections promises to be a defining near-term landmine for risk assets and AUD/JPY - the epitome of risk in the currencies space - will be a part of that.

But as mentioned earlier, any result that doesn't end up in a 50-50 or the Democrats winning both the House and Senate will eventually bode well for equities and risk in my view. In getting election risks out of the way, it paves the way for a potential break higher in AUD/JPY once buyers are able to clear the 200-day MA as well.



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USDCAD back below the 200 hour MA after staying below 100 hour MA

Price lower on the day

The USDCAD has moved into the red after being up modestly earlier in the day.  The price action today stalled the rally just under the 100 hour MA (sellers were leaning against the MA level). The price decline from the peak, has now moved below the 200 hour MA (green line) at 1.30993. 

 

The sellers are trying to take more control, with the price below both the 100 hour MA AND the 200 hour MA.

If the price can keep under those MAs (close risk for shorts being the 200 hour MA), the 100 day MA at 1.3072 and the 100 bar MA on the 4-hour chart down at 1.30690-72 becomes the next key targets.  

In last week's trading, those MAs were both broken on Friday, but that break failed after the better than expected employment report in the US.  On a test, I would expect buyers. 

If the price cannot keep under the MAs, the sellers turn to buyers back above the 100 hour MA.  



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EUR/USD threatens a break to retest the year's lows

EUR/USD looks for a break below the 100-hour MA


The euro continues to look sluggish on the day failing to stick around 1.1400 against the dollar and has now moved to a session low of 1.1366. In doing so, price has broken below the 200-hour MA (blue line) and now threatens a break of the 100-hour MA (red line) as well.

By holding a break below those two levels, sellers will effectively shift the near-term bias from more bullish to more bearish instead. The break of the 100-hour MA is key in my view and that paves the way for a retest of the year's low at 1.1301. Barrier options still sit at 1.1300 so bids around that level will be key to watch once again.

There is minor resistance residing from last week's daily lows around 1.1361 and 1.1336 but a more bearish break in near-term bias will surely build conviction towards a retest of the low seen last week. Now, watch out for the hourly close and whether or not the 100-hour MA holds.



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AUD/USD: Buyers still poised but 100-day moving average may be one step too far

AUD/USD quietly climbs back above 0.7200


Buyers continue to hold near-term control in the pair and defended support level around 0.7180 as the 38.2 retracement level@ 0.7186 helped to limit downside movement since Friday. The aussie got hit by the fact that Trump's reported trade deal offer was nothing but speculation and that hurt risk as we rounded off the week.

The aussie has been trading tepidly today but is slowly climbing back up now against the dollar making its way back above 0.7200. It shows that buyers are still poised for a move higher but can they deliver?


The daily chart shows that price came close to a test of the 100-day MA (red line) on Friday before encountering some setbacks. Technically, breaking above the downwards trendline this year is a good sign but the key test remains if buyers can break above the 100-day MA and put an end to the bearish momentum/bias in the pair.

I'm all for a correction/retracement based on short positioning being squeezed, but seeing as how markets are starting to calm down again, focus may start to shift back towards the many factors that have been driving down AUD/USD this year again.

More so after the US jobs report last week which showed that annual wage growth is at its fastest pace since April 2009. That will only put more attention on the Fed as they seek to raise rates further and that will result in further monetary policy and rates divergence between the US and Australia.

Should the pair fail to sustain a move above the 100-day MA as the US midterm elections clear, I would expect the downside move to resume and a break back below the downwards trendline (now at 0.7150) will be confirmation of a move to test the lows near 0.7000 once again.



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AUD/USD just below 0.7200: How can you ignore this chart?

What a turnaround

Double bottom with a false breakdown. Really impressive turnaround today. We should probably wait until the close to say anything definitive but that's an impressive-looking candle.

At the moment, there's an epic battle going on at 0.7199, where it's sat for the past 15 minutes and is just chewing through orders.



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