AUD/USD drops to key support as US dollar rebounds ahead of NFP
Fawad Razaqzada December 7, 2017 4:18 PM
The US dollar is up for the second consecutive week against a basket of foreign currencies, owing to decent macro data from the world’s largest economy and progress on the tax reform bill. The greenback had already been rising sharply against the likes of the Australian and New Zealand dollars, but now it has also managed to catch a bid against the likes of the Canadian dollar, Japanese yen, British pound, Swiss franc and the euro. The dollar’s mini revival has weighed heavily on both precious and base metal prices, while buck-denominated crude oil has also suffered, albeit to a lesser degree. So, as we approach year-end, is the dollar finally about to make a more meaningful comeback? While that may be the case, Friday’s US jobs report is the key risk event which could derail the rally in the event the data comes out significantly weaker than expected. It is also possible that there may be more delays in passing the tax reforms.
If the US dollar were to fall back then the AUD/USD may finally catch a bid after its spectacular drop since September. The AUD/USD was actually testing a key long-term support area around the 0.7500-0.7515 area. As can be seen, this is where the long-term bullish trend line converges with previous resistance. While a bounce is possible here, we wouldn’t call it a bottom until there is a clear break in market structure of short-term lower lows and lower highs. Still, given the long-term rising trend of higher lows and higher highs, we would be watching for a potential sign of reversal to emerge here. Short-term resistance comes in around 0.7555 – a daily close above this level may well be the bullish trigger that we are waiting for. All bets would be off, however, if the long-term bullish trend breaks down first.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.