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Checking out the range on AUD/USD as the pair drifts to the bottom ahead of potential catalysts from both Australia and the U.S. this week.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on AUD/JPY for a potential risk-off play, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 13849.37 +0.01%
FTSE: 6729.86 +0.14%
S&P 500: 3788.37 +0.53%
NASDAQ: 13107.97 +0.84%
US 10-YR: 1.097% 0.00
Bund 10-YR: -0.524% 0.00
UK 10-YR: 0.289% 0.00
JPN 10-YR: 0.045% -0.007
Oil: 53.03 +1.28%
Gold: 1,839.40 +0.51%
Bitcoin: 37,629.25 +3.07%
Ethereum: 1,432.53 +14.17%

Fresh Market Headlines & Economic Data:

Stocks rise slightly on stimulus bets, rebounding from a losing week

Ether, the world’s second-biggest cryptocurrency, is closing in on an all-time high

Biden plans to reverse Trump policies during first days in office

Oil gains on hopes for improving demand

Merkel strikes deal to extend German virus curbs to mid-February

German investor morale rises on upbeat export expectations – ZEW

The Swiss Producer and Import Price Index rose in December 2020 by 0.5% m/m

German Inflation rate in 2020: +0.5% on the previous year

Upcoming Potential Catalysts on the Economic Calendar

U.S. Net Long-term Tic Flows at 9:00 pm GMT
Australia Consumer Confidence at 11:30 pm GMT

What to Watch: AUD/USD

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

On the one-hour chart above of AUD/USD, we can see that the pair has fallen into a sideways pattern since the beginning of the new year. That seems understandable as traders are battling between the rising COVID cases/lockdowns and hopes of a fast recovery as vaccines are rolled out across the world. It seems like every day, traders are flipping back and forth between hope and risk aversion.

Well, the pair is about to test the bottom of the range, a strong support area just above the 0.7650 minor psychological level, which brought in buyers for a short-term rally twice this month. Will a third retest once again bring the bulls back?

Well, we’ve got low tier events from both Australia and the U.S. that could bring some volatility, but not likely direction, so it’s more likely that technicals may once again prevail in the short-term. If you’re a fundamental bull on AUD/USD or even leaning towards risk-on in the broad markets, you may want to want that support area for bullish reversal candles.

For the bears on AUD/USD, it’s a terrible trade at these levels without a bearish catalysts (possibly a violent disruption with Biden’s inauguration tomorrow?) and the pair to break below that strong support area. If we see that scenario play out, that could lead to a momentum move lower. This is a very low probability scenario, which of course could a big winner for the bears if it unexpectedly comes along.