Forex Technical Update

Previous: Confirmed Bearish Continuation Targets 0.9660 (5/30)

The AUD/USD established a range after the 6/1 Non-Farm Payroll release, which came out to a dismal 69K, missing forecast of 150K. Although the release was a risk-averse one, it centered around the US, and increases the chance of further QE by the Fed. This means, the dynamic of risk-off, which is USD-positive was fighting QE expectation, which is USD-negative. Fundamentally, AUD is dragged by soft manufacturing data from China.

AUD/USD 1H Chart 6/3/2012 9:13 PM EDT


The 1H chart shows the range between 0.9723 and 0.9582. To start the week, we see a failure to break above the 0.9723 pivot. A break above the 0.9730 handle this can open up the 0.98 level and suggest a correction rally to start the week. If the RSI (the oscillator below the chart) also breaks above 60, it would signal a lost of bearish momentum. Tagging 70 would confirm very short-term bullish momentum and strengthen or accompany the case for a corrective rally.

However, a break below 0.9580 handle extends the current downtrend, and opens up some lower support pivots.

The weekly chart below shows that the next support pivots are 0.9536 and 0.9387.


RBA decision vs. Fed Watch

From the Aussie side, an important risk event on Tuesday should be monitored. It is the RBA interest rate decision. The previous meeting resulted in a 50-bps cut, more than the 25-bps cut forecast.

Bernanke testifies on Thursday and should drop clues on how necessary or not monetary stimulus is after a series of poor employment data.

Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of rex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.