Abstract: The US CPI is about to be released this week, and signs of slowing inflation may help the Fed adjust the way it fights inflation; in this context, the AUD/USD is expected to test the monthly test after a series of higher highs and lows High (0.6492), if it can stand above the November opening range, it may challenge the October high (0.6547) again.
AUD/USD extends a series of higher highs and lows from the monthly low (0.6272) on the back of a weaker US dollar; the US consumer price index (CPI) report for October is due on Thursday , which is expected to show a slowdown in inflation, and the latest developments in these inflation data could trigger currency swings in the coming sessions.
Analysts expect the annual rate of both headline and core CPI in the US to fall in October, which may support AUD/USD; signs of easing price pressures as the Fed tries to promote a soft landing in the economy may encourage the Fed to adjust its efforts to fight inflation The way.
Therefore, if the performance of the US CPI strengthens the market’s bets for a small rate hike by the Fed in December, then AUD/USD may launch another shock to the October high (0.6547).
AUD/USD IG client sentiment shows that nearly 61.37% of clients are net long, and the ratio of net longs to net shorts is 1.59:1. Net longs rose 3.29% from yesterday and fell 10.91% from last week. The number of net short positions increased by 16.82% from yesterday and by 31.57% from last week. The IG Sentiment Index is often used as a contrarian indicator, with most retail investors being net long suggesting that AUD/USD may fall. However, net-long positions are down from yesterday and last week, and the latest position change warns that AUD/USD may reverse its upward trend, although most retail investors are currently net-long.
However, if AUD/USD struggles to break out of the November opening range, the pair is likely to continue to follow the 50-day SMA (currently 0.6513).
AUD/USD daily chart
AUD/USD recorded a series of higher highs and lows, looking to test the monthly high (0.6492), a further break above the October high (0.6547) would open the door to the 0.6650 (50% extension) area .
The next area of interest is around 0.6760 (50% retracement) to 0.6770 (100% extension).
On the other hand, a failure to get above the November opening range could continue to follow the 50-day SMA (currently at 0.6513).
If it fails to stand above the 0.6460 (61.8% retracement level) to 0.6530 (61.8% extension level) area, the exchange rate may remain within the October range; if it falls below 0.6370 (78.6% extension level), then 0.6290 (161.8% extension level) ) area will regain focus.
Once the monthly low (0.6272) is broken, further declines towards the October low (0.6170) are possible, a break/close below the 0.6120 (78.6% retracement) to 0.6160 (100% extension) area will open the way to 0.6020 ( 50% extension) to the gate of the 0.6040 (78.6% retracement) area.
(by David Song)
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