Looking to Open A Long Term Sell AUD/USD Signal

Since July, the Australian dollar has been on a retreat, sometimes accelerating the decline and sometimes slowing down, as commodity dollars have decreased due to a stronger USD, as well as China’s economy showing considerable deterioration in various sectors. Early last week AUD/USD resumed the decline, after another slowdown in the Chinese Caixin services and manufacturing, which sent this pair below 0.63, reaching a low of 0.6285.

However, commodity dollars have shown some tenacity in recent days as the US has retreated, following a really strong period. After the decline of the first two days which sent the price below the range, we saw a swift reversal which sent the price closing the week 100 pips higher.

AUD/USD set a fresh high on Friday just above 0.6400 after catching a broad-market risk appetite bid that dragged the US Dollar (USD) down throughout the forex market, as market risk appetite turned risk-on to end the week. Although buyers ran into the 20 SMA (gray) on the daily chart, which acted as resistance and stopped the climb that day.

Although we continue to remain bearish on this forex pair, since the Aussie is still down nearly 11% against the USD for the year to date despite Friday’s much-needed reprieve. The market sentiment turned positive in the second part of last week, but the attention will turn to US inflationary pressures by the middle of this week, with US Producer Price Index (PPI) numbers and the Federal Reserve’s (Fed) latest meeting minutes scheduled for next Wednesday, followed by the latest US Consumer Price Index (CPI) inflation report on Thursday.

Last month crude Oil surged higher, reaching $95 by the end of September, which will have some upward impact on inflation figures. So it is likely that we will see a jump in consumer inflation this week, which will give the USD another boost, as markets expect the FED to remain hawkish. So, we’re preparing to open a long term sell AUD/USD signal.

AUD/USD