Bulls face strong headwinds but expected to remain in play while rising 10DMA holds
The pair slipped on Monday following fourth consecutive failure to clearly break above significant resistance at 0.6879 (daily cloud top / 50% retracement of 0.7082/0.6677 fall).
Fresh risk-off mode inflate the greenback and increase near-term pressure on Aussie.
Repeated upside rejections may signal stall of rally from 0.6687 (3 Sep low), as daily RSI and Stochastic head south and generate initial negative signal, although bullish momentum is still strong and partially offsets signal.
Near-term action is so far seen as consolidation of 0.6687/0.6894 upleg, as bulls are expected to remain intact while dips hold above rising 10DMA (0.6839).
Eventual break above 0.6879 pivot would signal recovery continuation and expose pivot at 0.6927 (Fibo 61.8% of 0.7082/0.6677).
Initial negative signal could be expected on break below 10DMA, with loss of pivotal supports at 0.6833/15 (daily cloud base / Fibo 38.2% of 0.6687/0.6894) to dent bulls and risk deeper pullback.
Fed policy decision is key event of the week, along with other major central banks’ meetings (UK, Japan, Switzerland).
The US central bank is widely expected to reduce interest rates by 0.25%, despite recent data with better than expected results that showed US economy is in good shape.
Traders will be focusing on the FOMC’s statement, to get more clues about central bank’s future steps, with stronger negative impact on the Aussie dollar expected if the tone from the statement disappoints expectations.
Res: 0.6883; 0.6894; 0.6900; 0.6927
Sup: 0.6855; 0.6839; 0.6815; 0.6794