USD Traders Eye Upward Revision to 2Q GDP- AUD Correction Over

(MENAFN- DailyFX)

Talking Points:

- USDOLLAR Retains Range-Bound Price Action Ahead of Final 2Q GDP

- Australian Dollar Continues to Underperform; Fails to Preserve Bullish Trend

USDOLLAR Daily

Chart - Created Using FXCM Marketscope 2.0

• USDOLLAR Propped Up by Ongoing Talks of Taper
• Interim Resistance: 10,582 (23.6 expansion) to 10,589 (50.0 retracement)
• Soft Support: 10,469 (June low)
• Relative Strength Index Breakout Highlights Bullish Outlook

It looks as though the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) will retain the range-bound price action ahead of the final 2Q GDP report, which is expected to show an upward revision in the growth rate to 2.6 percent from 2.5 percent, and a positive development may ultimately trigger a topside break on the greenback as it raises the Fed’s scope to taper its asset-purchase program at the October 29-30 meeting.

Indeed, the limited market reaction to the slew of U.S. data from earlier this week suggests FX traders are waiting to move on a larger fundamental catalyst, and we will also need to keep a close eye on the news wires as we still have a group of Fed officials scheduled to speak in the coming days.

The fresh batch of central bank rhetoric may also prop up the reserve currency amid the ongoing discussion at the Federal Reserve to implement the exit strategy later this year, and the dollar may continue to coil up for a move higher as the central bank remains largely on track to move away from its easing cycle.

AUDUSD Daily

• AUDUSD Breaks Out of Bullish Trend; Lower High in Place
• Bearish RSI Momentum Taking Shape; Foreshadows Further Weakness
• Interim Resistance: 0.9500 (38.2 retracement) to 0.9510 (1.618 expansion)
• Interim Support: 0.9270 (100.0 expansion) to 0.9290 Pivot

Three of the four components advanced against the greenback, led by a 0.39 percent rally in the British Pound, while the Australian dollar continued to underperform against its major counterparts, with the AUDUSD breaking out of the bullish trend carried over from the previous month.

The downside break in the Relative Strength Index reinforced our bearish outlook for the higher-yielding currency, and it looks as though the near-term correction in the AUDUSD has come to an end as a new downward trend appears to be taking shape. In turn, we will look for opportunities to ‘sell rallies’ in the AUDUSD, with our initial target coming in around the 0.9290 pivot.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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