Daily Forex Market Preview, 04/10/2016
The Reserve Bank of Australia's monetary policy meeting today saw the central bank leaving interest rates unchanged at 1.50%. The US dollar remains strong with prices seen rising for the second consecutive day. Resistance at 96.00 is likely to be tested in the US dollar index in the near term with further gains coming only on a close above this price level. The dollar remained bullish as yesterday's ISM manufacturing data posted a rebound. The economic calendar is relatively quiet today with no major US data on the tap.
AUDUSD (0.7667): AUDUSD is potentially forming a head and shoulders pattern at the current levels with the 4-hour session showing a shooting star pattern near the right shoulder. Neckline support is seen at 0.7600 - 0.7610 region. A breakout below this neckline support could trigger further declines down towards 0.7555. The short bias remains invalidated if AUDUSD manages to rally above the recent right shoulder high at 0.7691.
USDJPY (102.17): USDJPY is seen attempting to breakout above 102.00 resistance currently. However, there could be a risk of a pullback considering the five consecutive days of gains. With the resistance at 102.00, any pullbacks could be seen limited to 101.00. On the 4-hour chart, price action currently shows a hidden bearish divergence with the Stochastics printing a higher high against the lower high in price. To the upside, further gains could see USDJPY test the next main resistance at 103.00.
EURAUD (1.4604): EURAUD is currently testing September 28 lows near 1.4581. A bullish close on the 4-hour session above this support could keep EURAUD range bound below 1.4650 - 1.4632. However, the bias remains to the upside, and a breakout above 1.4650 could trigger further gains towards 1.4800. The Stochastics on the 4-hour chart shows a bullish divergence which could be confirmed on a convincing close above the resistance level of 1.4650 - 1.4632. Alternately, the long bias remains invalidated should prices fail to rise above the resistance level, in which case further declines could be expected.