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The Federal Reserve is showing off its dovish tone again, but the Australian dollar has stopped at 0.66. Where is the end of the rebound?
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Hello everyone, today XM Forex will bring you "[XM Forex]: The Federal Reserve is showing dovetail again, but the Australian dollar has stopped at 0.66. Where is the end of the rebound?". Hope this helps you! The original content is as follows:
During the European session on Thursday (October 9), the Australian dollar consolidated around 0.66 against the US dollar. The day's focus will be on Federal Reserve Chairman Powell's speech at 20:30; on Friday, there will also be preliminary Michigan consumer confidence and inflation expectations in October. The exchange rate's high of 0.6706 has not yet been recovered, while the low of 0.6414 is still far below. The short-term is a typical state of "consolidation-waiting for catalysis".
Fundamentals:
The minutes and dot plot of the Federal Reserve’s September meeting continue the main line of “further interest rate cuts this year.” The minutes show that most members believe that it is appropriate to move closer to a "neutral interest rate" because "the downside risk to employment has increased, while the upside risk to inflation has weakened or not increased." In the vote, almost all members supported an interest rate cut of 25 basis points, with a few favoring a larger rate cut. The latest dot matrix shows that the target level of the federal funds rate at the end of the year is pointed at 3.6%, corresponding to the consensus of two more cuts during the year. Echoing this, CMEFedWatch shows that the probability of another interest rate cut this month is at an "extremely high" level, and the probability of another interest rate cut in December is about 78.6%. These expectations caused the U.S. dollar to retreat in the first period after the minutes were released, but the U.S. dollar index currently rebounded to around 99.00, once again containing Africa and the United States.
On the fiscal side, uncertainty www.xmltrust.comes from the brewing risk of a federal government shutdown. The market is assessing the impact of the shutdown on the release of macro data, the pace of fiscal spending, and employment. The White House has released signals that it may cut projects and announce personnel adjustments in federal agencies in the next four to five days. If uncertainty on the fiscal side intensifies, fluctuations in U.S. bond yields will amplify the short-term direction of the U.S. dollar, thereby amplifying the volatility and false breakthrough risk of the Australian dollar against the U.S. dollar.
AustraliaIn Europe, the Australian dollar's relative "resilience" is based on the fact that bets on further interest rate cuts by the Reserve Bank of Australia this year are being weakened: inflation is still sticky. The latest survey from the University of Melbourne shows that 12-month consumer inflation expectations rose to 4.8% in October from 4.7% in September. Coupled with the previous higher-than-expected core price stickiness, the market tends to believe that the RBA is more willing to choose a "wait-and-see-evaluate" rhythm in the short term rather than continue to be easing. This gives the Australian dollar a slight advantage over similar non-U.S. dollars in relative strength, but with the U.S. dollar rebounding as a hedge, the advantage is difficult to translate into a sustained breakthrough above 0.66.
As far as the path of events is concerned, Powell’s speech will be used to interpret two points: first, the threshold of disturbance of the government shutdown on the policy path and economic outlook; second, when employment demand will return to a "closer to equilibrium" track. If the rhetoric continues the tone of "both growth and inflation - further easing is still needed but depends on the data", the US dollar may retreat in stages, and the AUD/USD test space above the mid-range track will open up. Friday's Michigan data is a quick calibrator of "sentiment-inflation expectations". If inflation expectations fall unexpectedly in October, defensive buying of the dollar will weaken.
Technical aspect:
The daily chart shows that the middle track of the Bollinger Bands is located at 0.6600, the upper track is 0.6678, and the lower track is 0.6521; the exchange rate is now basically close to the middle track, which belongs to the "mean reversion state of ballast on the middle track." From the perspective of the fluctuation structure, the uptrend from August to September formed a stage peak at 0.6706, and then there was a "retracement-retest mid-track" www.xmltrust.combination of three consecutive negative trends and two failed rebounds. During this period, a low shadow signal was issued near 0.6624, but it failed to transform into an effective breakthrough.
In terms of kinetic energy, MACD's DIFF is 0.0008 and DEA is 0.0012. DIFF has slightly crossed the signal line, and the MACD histogram has turned into a green column of -0.0007, showing that the daily momentum has transitioned from "positive deceleration" to "slightly negative", which is consistent with the price moving sideways close to the mid-range. In terms of strength indicators, RSI (14) is 52.3215, which is above the 50 axis but far from overbought, a typical "neutral to slightly bullish" reading.
According to the resonance principle of price-wave band-kinetic energy, the Bollinger mid-track of 0.6600 is the most critical "dynamic pivot" at present. If it continues to stabilize above it, the upper track of 0.6678 and the previous peak of 0.6706 form a continuous resistance band; if it falls back below the middle track, the lower Bollinger track of 0.6521 provides the first dynamic support. Further failure will start a backtest of 0.6414 (the previous low).
In short, the structure has not yet provided a directional "volume and energy breakthrough", but the www.xmltrust.combination of "long and short www.xmltrust.competition in the Bollinger Track + slight weakening of MACD" suggests that the short-term is more inclined to range oscillations and a consolidation market with frequent false breakthroughs. Support/resistance reference: support 0.6521/0.6414; resistance 0.6678/0.6706.
Outlook:
Short-term: The path depends on the collision between Powell and Michigan data.hit. If Powell emphasizes that "slowing growth and employment cooling are emerging," the U.S. dollar may retreat, and the Australian dollar against the U.S. dollar is expected to return to stability above 0.6600 and launch a backtest towards 0.6624/0.6678; if the speech focuses more on "the stickiness of inflation and financial conditions need to be observed," the U.S. dollar's second rebound may continue, bringing the exchange rate closer to 0.6521 again.
The above content is all about "[XM Foreign Exchange]: The Federal Reserve is showing off its dovetail again, but the Australian dollar has stopped at 0.66. Where is the end of the rebound?" It was carefully www.xmltrust.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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