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Kicking off the new week with huge risk-off vibes stemming from Asia, which puts the strong momentum in AUD/USD at the top of the watchlist to potentially catch short-term pips.

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 13241.53 -2.47%
FTSE: 7417.17 -2.23%
S&P 500: 3245.43 -1.52%
DJIA: 28558.82 -1.49%
US 10-yr 1.617% -0.062
Bund 10-YR -0.379% -0.049
UK 10-YR: 0.398% -0.024
JPN 10-YR: -0.043% -0.03
Oil: 53.29 -1.66%
Gold: 1579.60 +0.49%
Bitcoin: 8765.71 +1.07%
Etherium: 170.14 +0.70%

Fresh Market Headlines & Economic Data:.

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

  • Japan Services Producer prices index at 11:50 pm GMT
  • Australia NAB Business confidence at 12:30 am GMT (Jan. 28)
  • Bank of Japan Core CPI  at 5:00 am GMT (Jan. 28)

What to Watch: AUD/USD

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

In case you haven’t caught up yet, traders are in big time risk aversion mode as more bad news on the Coronavirus outbreak continues to hit the wires. Most notable that seems to have traders running to safe havens was the story of how 5 million people left the epicenter before travel restrictions were imposed,  obviously raising speculation this outbreak is much more widespread than reported.

Safe havens like the Greenback have already benefited on session, while risk currencies like the the Aussie (and the major currency most likely affected by this outbreak given Australia’s strong economic ties with China) have fallen off quickly, which could still be the case through the rest of the Monday session & Asia session given the lack of schedule major catalysts ahead.

With that said, we’re watch AUD/USD today, which has already made more than a full daily ATR move lower since the week open (0.6814) before bottoming out around 0.6765. This area is one of minor significance given that it was a Nov. 2019 low before a big rally higher, and if it breaks lower, it could draw in more momentum traders to target the next support area around 0.6725.

If this area holds and the market bounces, shorting up to the 0.6800 major psychological area is a valid entry strategy if the current themes hold, and one for the more prudent traders who like to go after higher risk-to-reward returns.