AUD/USD Outlook Clouded by RSI Divergence Ahead of Australia GDP

Talking Points:

USD/JPY Negates Inverse HS; Nikkei Continues to Lag Behind.

AUD/USD Outlook Clouded by RSI Divergence Ahead of Australia GDP Report.

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USD/JPY Daily Chart

Chart – Created Using Trading View

  • USD/JPY might continue to prune a miscarry from progressing this month as it extends a array of reduce highs lows from progressing this week, with a tighten subsequent 112.40 (61.8% retracement) to 112.50 (38.2% retracement) mostly negating a risk for an inverse head-and-shoulders formation; longer-term opinion for a dollar-yen stays constructive as it continues to work within a bull-flag carried over from late-2016, with Fed Fund Futures still highlighting a larger than 60% luck for a Jun rate-hike.
  • With a Federal Open Market Committee (FOMC) mostly approaching to keep a stream process during a subsequent seductiveness rate preference on Mar 15, risk trends might continue to change a dollar-yen sell rate over a near-term as a Nikkei 225 appears to be stranded in a identical holding pattern; keep in mind a benchmark index for Japanese bonds have lagged behind a vital counterparts, with a DAX as good as a SP500 dire uninformed 2017-highs going into a finish of a month.
  • Failure to reason above a Fibonacci overlie around 112.40 (61.8% retracement) to 112.50 (38.2% retracement) might coax a pierce behind towards 111.60 (38.2% retracement), though a break/close subsequent a near-term support section opens adult a subsequent downside aim around 110.20 (50% retracement).


AUD/USD Daily Chart

Chart – Created Using Trading View

  • Fresh monthly highs in AUD/USD might worsen a seductiveness of a higher-yielding banking as a sell rate appears to be coiling within a wedge/triangle formation, with a span during risk for a fist aloft as cost approaches a peak of a delay pattern; in spin aussie-dollar might make a some-more suggestive run during a 2016 high (0.7778) as prolonged as a span binds above a 0.7650 (38.2% retracement) region.
  • However, a near-term opinion stays dark with churned signals as a Relative Strength Index (RSI) continues to deviating with cost and struggles to pull into overbought territory; a bearish arrangement in a oscillator suggests a 2017 convene is removing tired forward of a pivotal insurgency section around 0.7730 (61.8% retracement) to 0.7770 (61.8% expansion), with a span during risk highlighting identical dynamics seen behind in November.
  • In turn, Australia’s 4Q Gross Domestic Product (GDP) news might lean a near-term opinion for AUD/USD as a economy is approaching to grow 0.7% following a 0.5% contraction during a final three-months of 2016; a noted miscarry in a enlargement rate might inspire a Reserve Bank of Australia (RBA) change a balance as ‘headline acceleration is approaching to be behind above 2 percent after this year, increased by higher prices for petrol and tobacco,’ and Governor Philip Lowe might uncover a larger eagerness to gradually mislay a accommodative process position as ‘there are reasonable prospects for acceleration to arise towards a center of a aim over time.’
  • With that said, topside targets sojourn on a radar forward of March, with a break/close above 0.7730 (61.8% retracement) to 0.7770 (61.8% expansion) opening adult a subsequent topside area of seductiveness around 0.7850 (23.6% retracement) to 0.7860 (61.8% expansion).

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— Written by David Song, Currency Analyst

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