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Up ahead, we’ve got a top-tier event from Australia and central bank speeches from the U.S. that could keep the pick up  in AUD/USD volatility going.

Intermarket Snapshot

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DAX: 12651.78 +2.75%
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S&P 500: 3292.35 +0.65%
DJIA: 26601.40 +0.65%
US 10-YR: 0.556% +0.02
Bund 10-YR: -0.521% +0.012
UK 10-YR: 0.097% -0.009
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Oil: 40.77 +1.24%
Gold: 1,989.80 +0.0196
Bitcoin: 11,331.49 +2.38%
Ethereum: 395.81 +5.96%

Fresh Market Headlines & Economic Data:

ISM Manufacturing PMI for July: 54.2 vs. 52.6 in June

U.S. manufacturing operating conditions improve for the first time since February – IHS Markit

Final Eurozone Manufacturing PMI at 51.8 in July (Flash: 51.1, June Final: 47.4)

French Business conditions continue to improve with another marked rise in output

Spanish Manufacturing PMI: 53.5 in July vs. 49.0 in June

UK Manufacturing PMI at 53.3 in July (Flash: 53.6)

The Swiss consumer price index (CPI) fell by 0.2% in July 2020 m/m to 101.2 points

Commonwealth Bank Australia Manufacturing PMI: 54.0 in July vs. 51.2 in June

Japanese Manufacturing production falls at slowest pace since February

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

Fed Bullard speech at 4:30 pm GMT
Fed Evans speech at 6:00 pm GMT
Tokyo CPI at 11:30 pm GMT
Australia Trade Balance, Retail Sales at 1:30 am GMT (Aug. 4)
RBA Interest Rate Decision at 4:30 am GMT (Aug. 4)

What to Watch: AUD/USD

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

In the one hour chart above of AUD/USD, it looks like the bears have recently taken control of the currency pair after topping out around the 0.7200 major psychological handle, and breaking below a rising lows pattern marked on the chart above.

It seems that the renewed lockdown situations in Australia and the Dollar’s bounce to start the week may have got traders leaning on the pair to start the week.

Looking forward, we may see that bias continues with upcoming speeches from Federal Reserve Members in the afternoon U.S. session, and from the latest interest statement from the Reserve Bank of Australia in the upcoming Asia session.

Right now, there aren’t much expectations from the RBA to make any changes to policy at the moment, but it’s possible we may see surprise rhetoric now that the country is locking down once again.

For the bears, the short-term trend is on your side, but with Stochastic signaling oversold conditions and the market trading near a minor support area (around 0.7070), it might make sense to wait for a bounce and resistance patterns (potentially around  0.7125 – 0.7150) before considering a short position.

Of course, if we get bullish USD rhetoric from the upcoming Fed speeches or a bearish reaction to the RBA rate decision, then a break below the  0.7070 is one to watch for a pick up in downside momentum or new resistance forming in that area.

For the bulls, dovish comments from the upcoming Fed officials may be the only probably driver for a rally in the pair at the moment as broad risk sentiment doesn’t seem to have a strong influence at the moment and a potential for an RBA rate hike outlook is very low.

But if we see those catalysts play out, watch for support at the 0.7050 handle if retested or a break above 0.7150 before considering a long position.