68c is the next line in the sand on AUD/USD
The Aussie has seen an impressive short-covering rally over the last couple of weeks, where large speculators were had their most bearish net-exposure since September. Another ‘surprise’ RBA hike (to some…), calls for a Fed pause, stimulus from China and higher have helped it recoup losses sustained since the May high. And our attention now shifts to the FOMC meeting and tomorrow’s Australian employment report to see where it will go next.
The fact the rally has stalled around 68c makes sense, as this is the area it has struggled to hold above since the RBA paused their tightening cycle back in July. We have seen four failed attempts to close above 68c on the daily chart, and nine failed attempts to close above 0.6782 since that meeting – which makes this a pivotal zone for traders to focus on.
It’s not impossible to expect the Fed will be more hawkish than some anticipated despite weaker inflation, given there’s no appetite to deliver a dovish punchline with inflation still at historically high levels. But that could help AUD/USD break beneath yesterday’s bearish hammer and head towards the 0.6700 / 0.67100 zone, especially if Australia’s employment report comes in soft tomorrow (which reduced pressure on the RBA to hike).
But if the Fed surprise with a dovish pause and AU employment is strong, then a break (and daily close) above 68c seems feasible as bears ‘caught short’ continue to capitulate and bulls bet on another RBA hike.
The fact the rally has stalled around 68c makes sense, as this is the area it has struggled to hold above since the RBA paused their tightening cycle back in July. We have seen four failed attempts to close above 68c on the daily chart, and nine failed attempts to close above 0.6782 since that meeting – which makes this a pivotal zone for traders to focus on.
It’s not impossible to expect the Fed will be more hawkish than some anticipated despite weaker inflation, given there’s no appetite to deliver a dovish punchline with inflation still at historically high levels. But that could help AUD/USD break beneath yesterday’s bearish hammer and head towards the 0.6700 / 0.67100 zone, especially if Australia’s employment report comes in soft tomorrow (which reduced pressure on the RBA to hike).
But if the Fed surprise with a dovish pause and AU employment is strong, then a break (and daily close) above 68c seems feasible as bears ‘caught short’ continue to capitulate and bulls bet on another RBA hike.
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