Channel Breakout to Keep Bulls in Control?

AUD/USD PRICE, CHARTS AND ANALYSIS:

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AUSTRALIAN DOLLAR FUNDAMENTAL BACKDROP

The Australian Greenback has held onto its beneficial properties from the previous couple of weeks regardless of a slight restoration from the US Greenback index on the again finish of final week. The Australian Greenback has been on a gentle transfer increased because the RBA raised charges on the November assembly.

The Australian Greenback has since been on an uptrend as this coincided with the US Greenback weak point and the Federal Reserve Assembly final week. The Australian economic system has been exhibiting indicators of a slowdown with each providers and composite metrics in contractionary territory.

If that is the height price for the RBA it nonetheless places the Australian Greenback within the driving seat given the feedback by Fed Chair Powell. The Fed predict 75bps of cuts in 2024 whereas the RBA are but to strike such a dovish tone. The RBA might stay hawkish for a bit longer earlier than we see some dovish repricing which might halt the Australian Greenback rally.

Will probably be an attention-grabbing finish to the yr and much more attention-grabbing in 2024 as we see how Central Banks navigate their means towards potential price cuts.

THE WEEK AHEAD

The remainder of the week nonetheless brings in a variety of knowledge releases from the US specifically. These releases might see small alterations within the Fed Funds price expectations for the Federal Reserve. That is more likely to persist heading into 2024 as knowledge continues to be launched.

Proper now, nevertheless, any knowledge releases are unlikely to have any lasting impression and is more likely to solely lead to quick time period adjustments. Earlier this night we additionally heard feedback from Fed Policymaker Mary Daly who confirmed that 3 price cuts would seemingly be wanted to keep away from overtightening. Daly additionally mentioned that this could seemingly rely upon inflation, one other signal that it isn’t a given. The current rise in tensions within the Center East has the potential to prop inflation up as soon as extra and result in a world financial slowdown as properly. Fascinating instances forward certainly.

For all market-moving financial releases and occasions, see theDailyFX Calendar

PRICE ACTION AND POTENTIAL SETUPS

AUDUSD

AUDUSD had lastly broke out of the channel which had been in play since March 2023. The breakout occurred final week Thursday and since AUDUSD has stalled. Taking a look at basic construction we’ve got simply printed a contemporary increased excessive which often happens earlier than a pullback. The {Dollars} resurgence on Friday didn’t push AUDUSD decrease and thus i’m skeptical that the retracement i’m searching for will come to fruition.

If it does nevertheless, i can be paying shut consideration to the ascending trendline which might come into play, however earlier than that there’s assist on the 0.6690 and 0.6590 deal with which might show to be cussed.

Alternatively, ought to AUDUSD proceed its transfer increased from right here then instant resistance rests at 0.6790 and 0.6890 respectively.

Key Ranges to Hold an Eye On:

Assist ranges:

Resistance ranges:

0.67900.68900.7000 (psychological degree)

AUD/USD Every day Chart

Supply: TradingView, ready by Zain Vawda

IG CLIENT SENTIMENT

IG Shopper Sentiment knowledge tells us that 51% of Merchants are presently holding SHORT positions. Given the contrarian view to shopper sentiment adopted right here at DailyFX, does this backup my assumption {that a} retracement could also be incoming?

For ideas and methods relating to the usage of shopper sentiment knowledge, obtain the free information under.

— Written by Zain Vawda for DailyFX.com

Contact and observe Zain on Twitter: @zvawda