AUD Looks for Recovery

The Australian Dollar (AUD) slipped against the US Dollar (USD) on Thursday, even though the Reserve Bank of Australia (RBA) has been signaling a solid policy stance. The AUDUSD pair gained a bit as the US Dollar weakened slightly due to a slight drop in US Treasury yields. The AUD might still benefit from the RBA's confidence in Australia’s economic outlook.

Earlier this week, RBA Deputy Governor Andrew Hauser pointed out Australia’s high labor participation rate and noted that while the RBA looks at data, it doesn’t rely on it too heavily.

The US Dollar, meanwhile, has strengthened as traders believe the Federal Reserve will not lower interest rates as aggressively as previously expected. There's also rising speculation about former President Donald Trump possibly winning a second term in next year's election. Today, traders were focused on US Durable Goods Orders and the Michigan Consumer Sentiment Index. At an event in Las Vegas, Trump expressed his commitment to building an economy that benefits all Americans, highlighting various communities.

EURAUD – H4 Timeframe

The price action on the 4-hour timeframe chart of EURAUD slipped below a significant low at the highlighted horizontal arrow, indicating the existence of a rally-base-drop supply zone at the peak of the movement. At the moment, price is approaching the said supply zone and is expected to give off a bearish reaction from the supply zone since it overlaps the 88% of the Fibonacci retracement from the top to the base of the bearish impulse.

Analyst’s Expectations: 

Direction: Bearish

Target:1.61317

Invalidation:1.64500

GBPAUD – H4 Timeframe

GBPAUD is currently trading within a rising wedge as it inches closer to the supply zone at the peak of the previous bearish impulse. Since liquidity seems to have already been swept from the equal highs within the internal structure, I expect to see an apparent bearish reaction from the rally-base-drop supply zone.

Analyst’s Expectations: 

Direction: Bearish

Target:1.92894

Invalidation: 1.97389

CONCLUSION

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