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Three consecutive yin forms to build the top? Beware of the increased risk of Australian dollar pullback
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Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: Three consecutive negative patterns build the top? Beware of the intensified risk of the Australian dollar pullback." Hope it will be helpful to you! The original content is as follows:
On Monday (July 28), the Australian dollar against the US dollar fluctuated and fell for the third consecutive day, and the market's short-term sentiment turned cautious. However, the Australian dollar rebounded briefly after the United States reached a new trade agreement with the EU.
This week, the market will focus on Australia's second-quarter CPI data (to be released on Wednesday), which will become an important basis for judgment for the next interest rate meeting of the Australian Federal Reserve. Earlier, RBA Chairman Michele Bullock reiterated his firm policy stance to curb inflation, emphasizing that the current global economy is still full of uncertainty. The market generally expects that if inflation data performs strongly, the RBA may further delay the pace of interest rate cuts.
In terms of the Federal Reserve, internal discrepancies remain. San Francisco Fed Chairman Mary Daly believes that expectations of two rate cuts this year are "more reasonable", but Fed Director Christopher Waller advocates that interest rate cuts can be cut in July. Meanwhile, the labor market remains strong, with the number of initial unemployment claims in the United States falling for the sixth consecutive week, with the latest data showing 217,000, showing economic resilience.
The initial value of the US Markit www.xmserving.comprehensive PMI rose to 54.6 in July, a seven-month high, with the service industry PMI performing particularly outstandingly, reaching 55.2, higher than market expectations. However, the manufacturing PMI fell below the boom-bust line to 49.5, reflecting that there are still hidden worries on the manufacturing side. This pattern of "strong service and weak manufacturing" may put some pressure on the US dollar index, thus providing an opportunity for rebound for the Australian dollar.
Technical:
From the current daily chart of the Australian dollar against the US dollar, the exchange rate showed obvious adjustments after hitting the high of 0.6624, forming a negative line arrangement for three consecutive days, and a short-term pullbackCan be enhanced. The Bollinger Band indicator shows that the exchange rate is blocked and falls back on the upper track (0.6614), and is currently retracing to near the middle track (0.6540); the analysis believes that the support level below is focused on the 0.6466 line.
In terms of MACD indicators, the fast and slow lines (DIFF, DEA) are bonded horizontally, the red column is shortened, the MACD column value is slightly negative (-0.0002), and the short-term kinetic energy is weakened.
The RSI indicator is currently at 49.5615, close to the neutral zone, implying that the exchange rate has not yet formed an overbought or oversold signal; if the RSI falls below 45 in the short term, you need to be vigilant about further release of downward risks.
To sum up, from a technical perspective, it is believed that the Australian dollar is currently in a pullback stage in the upward trend. If the 0.6540 line cannot be maintained in the future, it may further test the support of the 0.6454~0.6466 range below; on the contrary, if the exchange rate re-strips above 0.6600, the trend is expected to continue.
Prevention of market sentiment:
The current market sentiment presents a typical "long-short game" pattern. On the one hand, the U.S.-EU trade agreement has boosted risk appetite; on the other hand, market concerns about Australia's CPI data are still heating up, leading to intensifying funding differences.
From the risk aversion sentiment, the US service industry performed strongly and the employment data was stable, but the manufacturing industry weakened and the overall economic recovery was "moderate and unstable." This has caused the market to have differences on the Fed's policy path, with short-term volatility amplified, and traders generally tend to wait for key data to further guide the direction.
In Australia, the RBA continues to convey a dovish tone, but whether or not a real interest rate cut still depends on the process of inflation falling. If the CPI remains high or the easing schedule is delayed, the market will reprice the RBA policy path. Therefore, although the short-term market sentiment is a little cautious, it has not turned www.xmserving.completely short and is still in the "waiting and watching-game" stage.
Future Outlook:
Short-term Outlook:
Looking in the short term, the exchange rate faces pressure of a technical pullback, especially after being blocked near the high point of 0.6624, demand for a pullback has increased. Analysts believe that if the exchange rate cannot maintain the 0.6540 line, it will further test the support of Bollinger's lower track;
But if the Australian CPI data rises unexpectedly, the exchange rate may usher in a technical rebound and challenge the 0.6600 mark again; the short-term trend may maintain a high-level oscillation structure, with the range referenced between 0.6466-0.6624.
Medium- and long-term outlook:
Analysis from the trend perspective, the trend of the Australian dollar's medium- and long-term direction still needs to be observed in the trend of the US dollar index and the global economic trend. Analysts believe that if the US economy continues to slow down in the future and the Federal Reserve clearly releases the path to cut interest rates, the expectation of a weakening US dollar in the medium term will boost the Australian dollar. On the contrary, if the US dollar maintains a strong cycle, the upward space of the Australian dollar will be limited;
On the domestic side of Australia, if inflation continues to ease and push the RBA to start an easing cycle, the Australian dollar may face the risk of medium-term adjustment; but if inflation is stubborn and forces the RBA toMaintaining high interest rates will provide long-term support for the Australian dollar.
The above content is all about "[XM official website]: Three consecutive negative forms to build the top? Beware of the intensified risk of the Australian dollar pullback". It was carefully www.xmserving.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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