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A second day of dovish testimony from Fed chief Janet Yellen on Thursday kept the markets in risk-on mode, and US retail sales and CPI data on Friday will be closely examined for anything that could affect the Fed's gradual tightening plans. Attention now swings to the European Central Bank's policy meeting next week.
Short term
Trade view / 21 July 2016 at 23:29 GMT

Short-term recovery anticipated for AUDUSD

Managing Director / Technical Research Limited
New Zealand
Instrument: AUDUSD
Price target:
Market price:
Background

Next Wednesday’s CPI number will be the decider for AUDUSD. Analysts are expecting a quarterly number of 0.4%–0.5% which would see the annual rate dropping to 1.1%, well under the Reserve Bank of Australia’s target of 2-3%. 

As such, a 25 basis point rate cut to 1.5% at the bank’s next policy review on August 2 looks to be a strong possibility. However, that’s already priced in and the CPI number would have to lowball the expectation to see AUDUSD sell off much more from here. More on the RBA’s predicament here: RBA may move goalposts on inflation target.
 
On the other side of the cross, the probability of a rate rise by the US Federal Reserve by year-end continues to creep up: now a bit above 50:50.

Management and risk description

From an Elliott Wave and classical charting perspectives, the Ozzy has good short-term recovery potential (see my hourly and daily charts below) and while holding 0.7480/0.7450 support, looking for rally back toward the 0.7560 – 0.7600 area.

Parameters

Entry: buying Ozzie at market 0.7493.

Stop: 0.7448 until 0.7515 resistance is cleared.

Target: 0.7568.
         
Time horizon: today, a day or two for target to be met.    

AUDUSD hourly chart (click to expand)
jkj
Source: ThomsonReuters  

AUDUSD daily chart (click to expand)
mm
Source: ThomsonReuters  

AUDUSD weekly chart (click to expand)
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Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more 

– Edited by Gayle Bryant

For more on forex click here

Non-independent investment research disclaimer applies. Read more
1y
brian1983 brian1983
u sure aud will hv a rebound? the direction seems unclear.
1y
brian1983 brian1983
now already 0.748
1y
brian1983 brian1983
ya. if 0.747-8 holds rebound may be possible.
1y
Max McKegg Max McKegg
only death and taxes are Certain Brian !
1y
brian1983 brian1983
lol..
1y
Patto Patto
Came perilously close to being stopped out but just hung in there. No luck on this trade Max but I like the way you have tight stops. It suggests you have good money management skills.

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