Technical Analysis

AUDUSD moves toward recent swing highs

AUDUSD has had an up down and back up day

Today, the AUDUSD moved higher in the late Asian session after the RBA said they would stay the course with their QE plans. The fear was that they would increase the stimulus to counteract the closures from Covid.  

That move higher, however, saw the price return to the 38.2% retracement of the move down from the July high to the July low. That retracement level comes in at 0.74072 – precisely where the price rise stalled today.

In the early North American session, the pair started to move back to the downside as stocks erased gains and the factory orders data came in better than expectations leading to some dollar buying.  

The move to the downside saw the  AUDUSD move back toward the earlier session lows, and in the process cracked below the converged 100 and 200 hour moving averages yet again (blue and green lines).

True to the up-and-down characteristics of the market of late, that move did not last long as well, and the price climbed back higher. Up-and-down and back up again.

Since then, the pair has moved back toward the 0.7400 level.  A move above that natural resistance target would have traders looking toward the 38.2% retracement again at 0.74072.  Above that and the swing high from last week at 0.7413 would be another level to get above (and stay above).  Move above that level and its open road ahead.

The AUDUSD is mired in a up and down trading range.

Over the last nine trading days, the price of the AUDUSD has traded between a low of 0.73165 and a high of 0.74130. That’s less than 100 pips over the near two week time period.   Needless to say, the buyers and sellers have been battling it out in a relatively narrow trading range as they work out which way is the “next way” for the pair. 

It might be that the market is simply awaiting a key event from the US.  

Tomorrow Fed Governor Clarida is speaking and that is being touted as an important event to gauge another voting member. Feds Bullard, Kaplan and Weller seem to be ready to start the taper as soon as possible.  

Of course the Friday employment report will be another key release.  

Ahead of that report, will be the ADP job estimate which will be released tomorrow at 8:15 AM ET.  The estimate is for a 700K gain after last months 692K gain.  

The ADP and the Non Farm reports have not necessarily been in synch (NFP rose 850K vs the 692K from ADP last month). However, the market can still react.   Be prepared. 

Most traders and analysts are expecting job gains to start to show above trend gains as workers reenter the workforce as emergency unemployment benefits start to be phased out. Over 50% of states have already stopped the emergency payments. The others will be phased out at the start of September.

Another influence might be the end of the moratorium on evictions.  Landlords have not been able to evict residents to have not paid rent, but those measures stopped on August 1.  Being required to pay rent again, should encourage some to look a bit harder for jobs.  

Time will tell. The AUDUSD seems to be waiting for the next shove.  The buyers are more in control now, but the 38.2% retracement level still needs to be broken.  

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