AUD/USD falls below 0.71 as the dollar extends gains

AUD/USD falls to a low of 0.7093 on the day

The dollar is flexing its muscles across the board and is now the best performing major currency on the day. Even cable has all but erased earlier gains and is now trading flat on the day. As for AUD/USD, testing the 200-hour MA (blue line) is proving to be one step too far for buyers at the moment.

And with price moving past bids at 0.7100, the 100-hour MA (red line) @ 0.7076 will be the next key level to watch out for. Break below that and near-term price bias turns more bearish.

The story of AUD/USD for the majority of the year has been a case of taking one step forward, then two steps back. The aussie just can't seem to get off the floor no matter what the circumstances are and failing a firm break above 0.7100 here is another example of that.

Aside from stretched positioning, I'm still finding it hard to argue a case for going long in the aussie for the time being. But a drop towards 0.7000 will certainly start to ring some alarm bells as sellers are likely to eye that level to take profits. But anywhere close to 0.7000 will also be levels that may interest them to do so as well fearing any retracement or bounce once the big figure hits.

Anyway, as price holds below 0.7000, the near-term bias is a little bit more bearish but key support lies in the 100-hour MA @ 0.7076. Beyond that, there is the year's low at 0.7041 to break below before the 0.7000 level is called upon.

As for upside potential, buyers will have to hold above 0.7100 and aim for a break above the 200-hour MA @ 0.7133. That may prove to be a tough ask considering the fundamentals but as I've mentioned many times, you can't ignore what's happening on the charts too as they work to define and limit risk for your trades.

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EUR/USD slips to session low as dollar catches a bid

The dollar is advancing across the board as a hint of risk off hits markets

A mildly sharp move lower across risk assets is helping to lead to some bids in the greenback and the yen on the day, but more so for the former. EUR/USD now falls to a low of 1.1483 on the day while the dollar also erases earlier losses against the aussie, kiwi and loonie too.

The move coincides with a minor dip in US equity futures and oil prices. E-minis fell by about 0.2% while WTI crude fell from $74.80 to $74.60 in a quick move.

Of note, European equities have also turned into the red on the day and is nearing session lows at the moment. Concerns about Italy is starting to weigh again as Italian bond yields are now inching back up on the day. 10-year yields started the session around 3.51% but is now up by 8 bps to 3.59%.

As for EUR/USD, price appears to be making a break back below the 100-hour MA (red line) @ 1.1499 and that would signal that near-term bias is turning more bearish. Support is next seen at the 1.1465 level followed by overnight lows close to 1.1430.

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EURUSD makes a move back higher. Still down on day.

Moves toward 100 hour MA

The EURUSD is making a move back higher but is still lower on the day.  Not sure the catalyst except to say yields are lower after trading to multi-year highs earlier in the day. The 10 year is down -1.7 bps at 3.2177%. The high extended to 3.2594%.

The pair is moving back toward the 100 hour MA at 1.14969. The NA high reached 1.1485 in the move. The price moved back above the lows from last week at 1.14627 and the low from yesterday at 1.14595. That area will be eyed as a bias level. Stay above and the intraday bulls are in control. Move below and the buyers seen will become discouraged. 

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GBPUSD survives the test of a key cluster of support.

High today stalled near the 100 day MA too

The GBPUSD is trading the technical ranges today:

  • On the topside, the 100 day MA at 1.31007 did a good job of stalling the rally. The high for the day did move above the level, but only by about 5 pips (the high reached 1.31055.

  • On the downside, the 100 and 200 hour MA and 50% midpoint of the range since September 20th all at 1.3038 (give or take a pip) stalled the fall. Like the 100 day MA, the price did dip a few bips below, but buyers did stall the fall.

We currently trade at 1.3050 after moving toward mid range of the days range and finding sellers.  

The traders are trading with the technical support and technical resistance defining the range.  The stall near the midpoint, being lower on the day, gives the sellers a little more of the advantage.  A move below the aforementioned 1.3038 level will also need to get below a swing area at 1.30239-29 (see yellow area). There has been a number of swing levels in that area. 

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EURUSD continues to stall near 100 hour MA.

Trades above and below 50% midpoint 

The EURUSD has moved to a new low since August 20 today at 1.14314. 

The fall has taken the price below the 50% retracement of the move up from the January 2017 low to the February 2017 high. That level comes in at 1.14472. We are trading right around that midpoint level as I type (see weekly chart below).  The EURUSD is also trading below the 100 week MA at 1.15056. Last week, that MA was broken but closed above the level.  We are moving away from the level in trading this week and it remains a risk level for shorts (stay below is more bearish).   On more weakness, the 200 week MA comes in at 1.13214.  In August, the 2018 lows traded below that MA line (green line in the chart above), but failed. 

Drilling to the hourly chart, the bearish bias has been supported by the price staying below the 100 hour MA (blue line in the chart below).  Last Friday, the price did venture above the line briefly but failed quickly. Yesterday, sellers leaned against the level, and today, the price approached the line (blue line in the chart below) but found anxious sellers.  

The underside of a broken trend line comes in at 1,1413 (and moving lower).  Keep that line in mind for a level for a stall.  That line stalled the fall yesterday.  

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EUR/USD falls to six-week low as dollar extends gains

EUR/USD dips to a low of 1.1449 on the day

That's the lowest level the pair has traded since 20 August. It's all about risk off sentiment in markets once again as the dollar and yen are pulling ahead of the rest of the major currencies bloc.

Italy's bond yields are making fresh multi-year highs once again and that is starting to weigh on European equities in general as well. Add to the fact that US equity futures are also on the back foot as US Treasury yields continue to rise, it's making for yet another sour day for risk.

EUR/USD looks on course for a revisit towards the 1.1400 handle at this point and a breach of that will call into question the year's lows at around 1.1300.

At the same time, the fresh bid in the dollar and yen is leading to other currencies falling quickly on the day too. GBP/USD is now at a low of 1.3035 while AUD/USD and NZD/USD have both fallen to lows of 0.7062 and 0.6431 respectively.

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USD/JPY comes under pressure, falls to session low ahead of US trading

USD/JPY dips to a low of 114.07

For much of September and up until yesterday, the pair has been underpinned by higher Treasury yields. And when yields are breaking out today, yet the pair is falling. So, what gives?

There are a couple of things working against a move higher in USD/JPY today. Firstly, it's that higher yields have sparked worries in the equities market and fears/losses in that space has translated into a stronger yen. E-minis are down by 0.4% ahead of the cash equity market open at the moment.

Secondly, USD/JPY also ran into a key technical resistance level at around 114.50 where the level previously halted the upside momentum on three previous occasions in 2017.

But the third factor that is surreptitiously weighing on the pair is the fact that the BOJ is seen to be comfortable with Japanese bond yields rising further. It's not something quantifiable by any metrics but the very notion of it is enough to help alleviate some pressure off the yen as investors/insurers will mull over shifting funds back into Japan if yields start climbing high enough.

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EUR/USD extends recovery, closes in on 1.15

EUR/USD rises to a session high of 1.1499

Of note in trading this session the euro and pound are holding up well paring some of the losses sustained in overnight trading as a result of a stronger dollar on the back of higher yields and better economic data. EUR/USD now closes in on the 1.1500 handle while GBP/USD has risen to a high of 1.2978 on the day as well.

There doesn't seem to be much else apart from rising yields across the Eurozone helping to underpin the single currency as well but the giving back of gains once again looks to be another opportunity for sellers to come back in again as long as price continues to hold below the key hourly moving averages.

Right now, the 1.1500 handle will be the first key test to the upside but any failure to sustain a break towards a move to test the 100-hour MA (red line) @ 1.1561 will be met by further selling in the session ahead surely.

As long as price holds below the 100-hour MA, then near-term price bias still remains more bearish. Unless there is a strong catalyst for a push towards the 100-hour MA, it's tough to see the narrative change for the euro as long as Italy's budget worries continue to be a long drawn issue for this month.

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USDJPY longs for the trade of the day

To 115.00 and beyond ?

I posted on the good outlook for the USD yesterday as we head into NFP day tomorrow. See here.  There was a brief pullback to the 50EMA yesterday on the 15minute chart which I got into and there has been a brief pullback overnight to the 100EMA on the 15 minute chart. The technical and fundamental picture is remaining bullish for the USDJPY and a clear bias is to take USDJPY longs. 

The fundamental picture is continuing to look rosy now for the USD. Yesterday's ISM non-manufacturing PMI confirmed this picture and came in with a  decent beat at 61.6 vs 58.0. It was the best reading since 1997, and it is not a flash in the pan reading either. See Adam's report on it here. On top of this the ADP jobs report was good too, and the cherry on the cake was the Fed's chair, Jerome Powell, staying that rates may well need to go beyond neutral. Tomorrow is NFP day and a confirmation from that number will strongly confirm this strengthening USD outlook.

So, technically look to go long USDJPY. There are a few ideas here for you below. 

1. Go long at market now (0637BST). Stops under 50EMA. Tight stop, good potential 
2. Go long on a retest of the 50 or 100 EMA on the fifteen minute chart. Looks good to try as of 0647BST
3. Go long with stops below latest swing on the 1 hr chart at 114.37 There is a hidden bullish divergence setting up on the 1 hr chart with my indicator. I am not going to post it because it is a nearly hidden bullish divergence and works a charm, but is not 100% technically correct. 

I favour the entries above since if the fundamental analysis is correct I am expecting USDJPY to fly. If it doesn't then I don't want to be sitting in drawdown and those places to enter allow for low risk, high reward entries.

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AUD/USD gets no reprieve from higher Australian yields, falls to lowest level since February 2016

AUD/USD breaks the September low and falls to its lowest levels in 2.5 years

A painful week for the aussie just got even worse. The currency continues to be weighed down by a myriad of factors but the key one at play over the last two days have been that of yields. Or more specifically, the yields spread between Australian and US bonds.

As Treasury yields continue to soar higher, it has inadvertently also helped yields in Australia (and Japan) rise as well today. Australian 5-year bond yields are up by 4 bps while 10-year bond yields are up by 7 bps on the day.

But put into context, when I wrote about the yields spread between Australia and US bonds yesterday it was sitting at 43 bps in favour of Treasuries. Today, it is at 50 bps:

It's off the lows seen yesterday at 54 bps but still, there's no arguing with the trend. And with rising Treasury yields also exacerbating fears and risk off tones in equities, souring risk sentiment isn't going to help provide any relief to the aussie as well.

At this juncture, sellers will be eyeing a move towards the 0.7000 handle for AUD/USD. And with Treasury yields looking to rise further, it will help to provide a tailwind for the dollar to advance against the aussie for the time being. Aside from stretched positioning in aussie shorts, I can't argue for any other reason why AUD/USD should move higher at this point in time.

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