The US Dollar is strengthening
The US Dollar is strengthening against most of its counterparts and the Australian Dollar is one of them. Lately the pair has been traveling south, with just brief periods of upside movement but overall the control belongs to the sellers.
So far this year we didn’t have any major Australian economic news announcements and today is no exception but the pair will be affected by a first look into U.S. jobs situation with the release of the ADP Non-Farm Employment Change.
This report is generated by a privately owned company and tries to mimic the more important Government data that comes out later in the week. Even if today’s indicator has a lower impact, higher numbers than analysts’ consensus of 193K (previous 217K) can strengthen the US Dollar and take the pair lower.
From a technical point of view, the pair is in a medium term downtrend and we anticipate further downside movement but it must be noted that price has travelled a long distance without a significant retracement and this increases the chances of a bullish (up) move.
The first potential target for this pullback is represented by the zone around 0.7130 which is minor resistance but a break of this area would open a door for a move into 0.7160. We expect the downside movement to resume at 0.7130 but if this level is broken, Puts should be entered only if 0.7160 is touched and the Relative Strength Index becomes overbought (above its 70 level).
How to trade
Enter end of day Puts at 0.7130 but if this level is broken to the upside, wait until the pair reaches 0.7160 and enter Puts there. Alternate scenario: if price travels to 0.7070 without retracement, enter end of day Calls when the level is touched.
Expiry time: 21:00 GMT