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AUD/USD: Bearish sentiment, 0.86 potential draw on huge 3bln expiry

FXStreet (Bali) - AUD/USD printed a fresh low for the year at 0.8517, with AUD buyers fearing that the latest bear run may be the beginning of another significant leg down, judging by the ferocity of the drop from 0.8720 on Nov 21st to 0.8517 in a matter of days, as the commodity complex remains depressed.

The fall in commodity prices does not bode well for the Aussie, with recent negative price action quite revealing as last Friday's Chinese easing proved short-lived, leading to a short squeeze before sellers re-took control. Thursday's Australian CAPEX report, together with Wed's US PCE Deflator and Durable Good Orders, are the main mover for the AUD and USD in the next 24 hours.

It is worth noting that a huge 3bln option expiry at 0.86 today in the US could act as a potential draw, keeping prices not far from the level. Besides, there is a reported barrier at 0.8500 which should keep the downside limited for now.

Technically, while an extension below 0.85 would establish a firmer foundation to increase bearish pressures, on the upside, prospects for a recovery look limited, with 0.86 seen as a major hurdle now, with buyers first having to overcome 0.8550/60 ahead of 0.8575 before the aforementioned round number comes into play.

Australia Construction Work Done registered at -2.2%, below expectations (-1%) in 3Q

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