Talking Points:
- USD/JPY at Risk for Larger Pullback as RSI Divergence Takes Shape.
- AUD/USD Holds 2014 Low (0.8659) Even as Australia Retail Sales Disappoints.
- USDOLLAR Weighed by Weak ISM Manufacturing; RSI Remains Capped.
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USD/JPY
- Despite the fresh 2014 high (110.08) in USD/JPY, the divergence in the Relative Strength Index (RSI) raises the risk for a larger correction should the oscillator fail to preserve the bullish momentum.
- Series of failed attempts to close above 109.60-70 (100% expansion) may also provide additional confirmation/conviction for a further decline in the exchange rate.
- Even though the DailyFX Speculative Sentiment Index (SSI) continues to show net-short dollar positioning, the ratio for USD/JPY has narrowed as it currently sits at -1.19.
AUD/USD
- AUD/USD may face a bottoming process ahead of the Reserve Bank of Australia’s (RBA) October 7 meeting as it holds the January low (0.8659) & continues to close above the 0.8700 handle.
- Would like to see the RSI come back from oversold territory & breakout of the bearish momentum to adopt a more bullish outlook for AUD/USD.
- Australia’s economic docket may generate a more meaningful rebound over the next 24-hours as the trade deficit is expected to narrow to AU$800M from AU$1359M in July.
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Read More:
Price & Time: Greenback Still Shines
Scalping the AUDCHF Reversal- 8360 Resistance in Focus
USDOLLAR(Ticker: USDollar):
Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
DJ-FXCM Dollar Index | 11064.99 | 11083.37 | 11034.68 | 0.16 | 93.31% |
Chart - Created Using FXCM Marketscope 2.0
- Despite the 213K rise in the ADP Employment report, the Dow Jones-FXCM U.S. Dollar Index falls back from a fresh monthly high (11,083) as ISM Manufacturing disappoints, with the employment component narrowing to 54.6 58.1 in August.
- Despite the series of higher-highs & lows in price, the RSI may highlight a more meaningful correction in the greenback should the oscillator remain capped around the 83 region.
- Will continue to watch 11,120 (1.618% expansion) to 11,138 (61.8% expansion) ahead of the highly anticipated Non-Farm Payrolls (NFP) report, which currently shows expectations for a 217K rise.
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Release | GMT | Expected | Actual |
MBA Mortgage Applications (SEP 26) | 11:00 | -- | -0.2% |
ADP Employment Change (SEP) | 12:15 | 205K | 213K |
Markit US Manufacturing PMI (SEP F) | 13:45 | 57.9 | 56.6 |
ISM Manufacturing (SEP) | 14:00 | 58.5 | 56.6 |
ISM Prices Paid (SEP) | 14:00 | 57.0 | 59.5 |
Construction Spending (MoM) (AUG) | 14:00 | 0.5% | -0.8% |
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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