Jump to content

Market update: battle continues for AUD/USD and AUD/NZD

Recommended Posts

The Australian dollar is caught in global crosswinds for now and markets have been buying risk assets elsewhere but not AUD/USD.


original-size.webpSource: Bloomberg


Daniel McCarthy | Strategist, | Publication date: Monday 18 September 2023 05:26

Australian dollar forecast: neutral

The Australian dollar is caught in global crosswinds for now; markets have been buying risk assets elsewhere but not AUD/USD and volatility is low. The Australian dollar eased into the weekend after firming earlier in the week. Overall, the US dollar made larger gains against most other major currencies last week.

Interest rate markets have been paring back expectations of rate hikes at this week’s Federal Open Market Committee (FOMC) meeting on Wednesday.

Interest rate markets are not expecting any change but ascribe around a 50/50 chance of a 25 basis-point hike by the end of the year before an easing in the middle of 2024.

Interest rate market pricing of FOMC meetings


original-size.webpSource: Bloomberg, tastytrade

Appetite grows for risk-related assets

Last Thursday the European Central Bank (ECB) hiked its target rate again by 25 basis points to 4.00%. The commentary in the aftermath was less optimistic about the growth outlook for the Euro Zone. Consequently, the markets perceive a potentially less hawkish ECB going forward.

A feature of the market of late has been the decrease in volatility in many asset classes. The widely watched VIX index continues to trade close to its lowest level since February 2020, just prior to the pandemic. Although on Friday it did tick up slightly. The VIX and growth-orientated assets, such as the Aussie, often display a negative correlation.

The recent rally of equity indices such as the Nasdaq reflects a healthy appetite for risk-related assets of late. In such an environment, the demand for insurance, seen through the price of volatility, is less. By historical standards, the Aussie is underperforming relative to where the VIX index is trading.

AUD/USD and VIX chart


original-size.webpSource: TradingView

Most new jobs in Australia are part-time

Last week saw Australia’s unemployment rate came in at 3.7% in August as anticipated and previously. Some 65,000 Australian jobs were added in the month, which was notably above forecasts of 25,000. Unfortunately, 62,000 of the jobs added were part-time rather than full-time. The participation rate picked to 67.0% from 66.7%.

Looking ahead, the Reserve Bak of Australia (RBA) meeting minutes for its meeting from earlier this month will be released on Tuesday. The key event for markets though will be the FOMC meeting on Wednesday. Looking at the weekly AUD/USD chart, the price has dipped below a long-term ascending trend line that is part of a Symmetrical Triangle.

On Friday, it closed above the ascending trend line but had closed below it in the week prior. This may indicate that there is some uncertainty for direction in AUD/USD for now. A clean break below it might see bearish momentum evolve.

AUD/USD weekly chart


original-size.webpSource: TradingView

AUD/USD technical analysis

AUD/USD remains in a shorter-term descending trend channel after rallying last week to retreat back into the recent range.

It briefly traded above a historical breakpoint at 0.6458 but was unable to sustain the move and it may offer resistance. The 34-day simple moving average (SMA) is also in the vicinity and might assist in offering resistance.

The price remains below the 34-, 55- and 100-day SMA and they have negative gradients, which may suggest that bearish momentum is intact for now.

Resistance could be at the recent high near 0.6520. Further up, the 0.6600 - 0.6620 area might be a notable resistance zone with several breakpoints and prior peaks there, as well as the 100-day SMA.

On the downside, support may lie at the breakpoints and previous lows near 0.6360, 0.6270 and 0.6170. The latter might also be supported at 161.8% Fibonacci Extension level at 0.6186.

AUD/USD daily chart


original-size.webpSource: TadingView

AUD/NZD technical analysis

AUD/NZD is range bound for now and this is typified by the clustering of the 10, 21, 34-, 55-, 100-, 200- and 260-day SMAs. They all lie in the narrow window of 1.0810 – 1.0860. Historically, this bunching typically only lasts a month, or two before directional price action unfolds. It should be noted though that past performance is not indicative of future results.

Friday’s rally saw the price move above all the SMAs and might be the start of a bullish run. A move below any SMA in the near term would negate that perspective. Friday’s peak of 1.0918 was just shy of the July high of 1.0926 and a move above the potential resistance there may encourage AUD/NZD bulls.

Further up, resistance might be at the breakpoint and prior peaks near 1.1050 and 1.1090. On the downside, if the price is able to break below all the daily SMAs, support may lie at the recent lows of 1.0780, 1.0732 and 1.0725.

AUD/NZD daily chart


original-size.webpSource: TradingView




This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Wheat Elliott Wave Analysis Function - Trend Mode - Trend Structure -Impulse wave Position - Wave A of (B) Direction - Wave A of (B) is still in play Details -  Wheat daily and H4 have been adjusted due to how fast and deep decline from 720’4 has emerged. The long-term forecast on the daily chart shows that the surge to 720’4 is part of the impulse wave from March 2022. We are now in wave (5) which is expected to emerge into a 3-wave structure. Price now appears to be in wave A after which it will correct upside for B before returning downside. Overview: Since late May, grain prices have been falling sharply, with Wheat shedding over 20% since May 28th, 2024. This decline is about to erase the gains made from mid-April to late May. The nearly one-month sell-off adds to the long-term decline from March 2022, when Wheat traded at 1364’4. Currently trading at 571’4, Wheat is likely to fall further toward 500 in the coming weeks.   Daily Chart Analysis: The decline from March 2022 is forming a bearish impulse wave structure in the primary degree. The 5th wave is completing a diagonal structure, which has been the most time-consuming among the actionary waves, lasting nearly 21 months. The price is currently in wave (5) of 5 (circled), which will likely evolve into a 3-wave structure targeting the 500 major psychological level.   H4 Chart Analysis: The H4 chart shows the sub-waves of wave (5), which is now close to completing its first leg - wave A of (5). A corrective bounce is expected to follow for wave B before the price turns downside for wave C of (5) toward 500, provided the 720’4 pivot is not breached. Wheat and other grains are overwhelmingly bearish and may continue in this direction for the next several weeks before major bullish corrections begin.   In conclusion, Wheat prices remain bearish with potential for further declines, targeting the 500 psychological level, contingent on the completion of the current corrective wave B and the subsequent wave C of (5). Technical Analyst : Sanmi Adeagbo Source : Tradinglounge.com get trial here!  
    • Dear @Naren12166, Thank you for the post. Please note that we don't have a definite date but the product team is in the testing phase, a few countries should have Trading View soon. Thanks, KoketsoIG
    • TXN Elliott Wave Analysis Trading Lounge Daily Chart, Texas Instruments Inc., (TXN) Daily Chart TXN Elliott Wave Technical Analysis FUNCTION: Counter Trend MODE: Corrective STRUCTURE: Triangle POSITION: Wave {iv}. DIRECTION: Bottom in wave {iv}.   DETAILS: Looking for a triangle in wave {iv} of 3 as we have found resistance on TL2 at 200$.     TXN Elliott Wave Analysis Trading Lounge 4Hr Chart, Texas Instruments Inc., ( TXN) 4Hr Chart TXN Elliott Wave Technical Analysis FUNCTION: Counter Trend MODE: Corrective STRUCTURE: Triangle POSITION: Wave (e) of {iv}. DIRECTION: Bottom in (e).   DETAILS: Looking for wave (e) to be near completion to then resume higher and find support on top of 200$.   Welcome to our latest Elliott Wave analysis for Texas Instruments Inc. (TXN). This analysis provides an in-depth look at TXN's price movements using the Elliott Wave Theory, helping traders identify potential opportunities based on current trends and market structure. We will cover insights from both the daily and 4-hour charts to offer a comprehensive perspective on TXN's market behavior.   * TXN Elliott Wave Technical Analysis – Daily Chart* In our Elliott Wave analysis of Texas Instruments Inc. (TXN), we observe a counter-trend corrective pattern characterized by a triangle structure. TXN is currently positioned in wave {iv} of 3, suggesting a bottoming process in wave {iv}. The recent price action indicates that TXN has encountered resistance around the TL2 trendline at $200. This resistance could imply the formation of a triangle in wave {iv}, setting the stage for a potential resumption of the upward trend once the triangle completes. Traders should monitor the $200 level for signs of a breakout or further consolidation within the triangle.   *TXN Elliott Wave Technical Analysis – 4Hr Chart* On the 4-hour chart, TXN is following a counter-trend corrective mode within a triangle structure, specifically in wave (e) of {iv}. The current analysis suggests that wave (e) is nearing completion, which could signal the end of the triangle and the beginning of a move higher. The completion of wave (e) should ideally find support above the $200 level, aligning with the daily chart's indication of a possible upward resumption post-triangle. Traders should watch for the termination of wave (e) and the subsequent price action to confirm a bullish continuation.   Technical Analyst : Alessio Barretta Source : Tradinglounge.com get trial here!  
  • Create New...