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Flowing with the major driving themes for today’s watchlist with a light calendar ahead, we see a potential setup on AUD/USD that has a good chance of pulling in some pips!

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 13113.62 -0.80%
FTSE: 7577.30 -0.59%
S&P 500: 3229.94 -0.15%
DJIA: 28512.47 -0.43%
US 10-yr 1.785% -0.003
Bund 10-YR -0.296% -0.013
UK 10-YR: 0.754% +0.014
JPN 10-YR: -0.031% -0.011
Oil: 63.47 +0.67%
Gold: 1568.90 +1.06%
Bitcoin: 7531.29 +2.42%
Etherium: 140.73 +4.21%

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

  • Australian Job advertisements at 12:30 am GMT (Jan. 7)
  • Japan Services PMI  at 12:30 am GMT (Jan. 7)

What to Watch: AUD/USD

AUD/USD 1-Hour Forex Chart
AUD/USD 1-Hour Forex Chart

We don’t have much in the way of economic catalysts on the upcoming forex calendar, so we’re looking at the themes driving the current price action for short-term volatility. That continues to be the tensions between the U.S. and Iran sparking risk-off behavior in the global markets, and with think there’s extra action in Australia (the terrible brush fires ravaging the country) that could be adding to Aussie pressure. And we just got fresh business sentiment data from the U.S. pointing to positive business activity at the end of 2019.

This lines up with the price action on AUD/USD, and on the one hour chart above, we can see the pair has been in a recent downtrend, mostly driven by the risk-off behavior that typically benefits the dollar over the Aussie. The pair does seem to be finding support once again at a previous area of interest (around 0.6930), so the situation to watch out for today is a break below that area and sellers to add momentum to the downside move. Or we you wait for a break-and-retest scenario in which the market bounces higher after the break to the 0.6930 area and resistance forms before considering a short position in AUD/USD.

For the bulls, if the support holds and we see a significant turn in the U.S.-Iran tensions (a very low probability scenario at the moment), then a strong bounce is likely to occur, which may gain some support with a positive read on Australian job ads data later on. Don’t forget that the U.S.-China trade story is still live, albeit on the back burner at the moment, and any positive notes there could support AUD/USD in the short-term.