Technical Sentiment: Bullish

Key Takeaways

• Durable Goods Orders m/m decreased well below expectations: -1.3% vs. consensus 0.4%;
• CB Consumer Confidence is up next (with bullish expectations) and might temper dollar bears;
• AUD/USD finally broke above a triangle consolidation, changing bias to bullish.

After a couple of soft releases on Monday, U.S. Dollar bulls found themselves in dire need of positive data today. Unfortunately for them, Durable Goods decreased again this month, pushing the greenback lower against all major counterparts.

Technical Analysis

After four long weeks of choppy price action behavior within an increasingly tighter range, Aussie appears ready to correct some of the losses incurred throughout September against the U.S. Dollar. Today’s rally broke above several lower highs formed in October, triggering a stop avalanche as AUD/USD short positions were shaken out of the market.

Spot is currently trading around 0.8865 as the 28^th/10 European trading session draws to an end. Since AUD/USD is above 200 Simple Moving Average on 4H timeframe, traders will now systematically target the largest resistance levels in this area. First resistance is located close by at 0.8890 – 0.8900, marked by 9^th October high and a proven pivot zone. If price breaks above this line, round psychological level of 0.9000 will follow soon afterwards.

The preferred strategy is to buy dips and bullish breakouts above resistance levels, as AUD/USD should maintain a bullish swing configuration of Higher Highs and Higher Lows for the time being. Immediate dips should be capped at 0.8820/30, where stop losses from long positions are likely to begin accumulating.

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Prepared by Alex, Currency Strategist at Capital Trust Markets