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Risk-taking took a step back during the Asian and early European sessions as traders brace for potential market-moving events this week.

Will the U.S. traders extend the risk-off vibes?

Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

  • Japan and China’s markets out on holiday
  • U.K.’s property asking prices hit record high as buyer demand heats up – Rightmove
  • New Zealand services activity contracts in August
  • Hong Kong stocks sink as property fear spreads beyond Evergrande
  • Germany producer price inflation fastest since 1974
  • AUD, NZD spooked by China worries ahead of Fed meeting
  • Safety flows extend dollar rally ahead of Fed
  • Asian shares at 1-month low, default fears stalk China Evergrande
  • European shares slide 1% on global growth, taper worries

Upcoming Potential Catalysts on the Economic Calendar:

  • Canada’s federal elections scheduled today
  • U.S. NAHB housing market index at 2:00 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: AUD/USD

AUD/USD 1-hour Forex Chart

AUD/USD 1-hour Forex Chart

In case you missed it, risky bets like the commodity-related currencies dropped across the board as traders worried about this week’s potential market movers.

See, the Fed could share more deets on its tapering plans once the members finish their meeting on Wednesday.

Debt-ridden property developer China Evergrande also has $83.5 million in bond interest payments due on Thursday. And then there’s iron ore – one of Australia’s top exports – which extended its slump after China’s crackdown on steelmaking.

It also didn’t help that Japan, China, and South Korea’s markets were out on holidays and led to thin trading conditions.

All the risk aversion got me looking at AUD/USD, which is trading at an area of interest just above .7200 and is showing a bullish divergence on the 1-hour time frame.

There won’t be any major top-tier economic report printed during the U.S. session so U.S. traders will likely take their cues from existing market sentiments.

If U.S. session playas extend the risk-off vibes, then we could see AUD/USD drop below .7200 and make its way to its .7100 August lows.

But if risk-takers dominate the sellers, then AUD/USD could see enough bullish pressure to pull back to the .7280 inflection point and present trend entry opportunities.