- A plunge lower for the US Dollar last week after very negative US ISM Manufacturing and Non-Manufacturing data highlighted that the global slowdown is significantly impacting the US economy.
- A respite for the US$ after Friday’s firm US Employment report with a USD rebound, but the US Dollar’s negative tone has started to resurface into this week.
- Although financial markets have shifted to “risk off” mode in October, the perception of a more dovish Fed has seen many major currencies actually higher versus the US currency.
- The Australian Dollar, therefore, usually seen as a “risk” currency (doing better in a “risk on” scenario) has actually performed well this month against the US Dollar, with AUDUSD looking solid in the very short-term.
AUDUSD: Looking for a rebound
Again, a dip Tuesday minimally below .6720 to then post a minor bounce from .6719, but whilst holding here we cling to positive pressures from the early October, firm advance through various resistances and the down trend line from September, to keep the bias higher Wednesday.
The early October plunge through .6685 set an intermediate-term bear trend, BUT with risk for a push above .6806/09 for a shift back to an intermediate-term range theme.
- We see an upside bias for .6757; break here aims for .6774/81, maybe key .6806/09.
- But below .6725/20 opens risk down to .6699 and .6668.
Intermediate-term Outlook – Downside Risks: We see a downside risk for .6500.
- Lower targets would be .6281 and .6009/00.
- What Changes This? Above .6809 shifts the intermediate-term outlook back to neutral; above .6895 is needed for an intermediate-term bull theme.
4 Hour AUDUSD Chart