USD Trading Outlook (19-09-2014)

AUD/USD Europe ha the pair hug the 0.8970 area for the most part in their morning as the mkt continued to digest the movement post-FOMC. NY walked in with the pair near 0.8975 and it looked set to consolidate further. Bear took control early on though as jobless claims came in much lower than f/c and the mkt grabbed hold of that data & ignored the poor housing data. US yields rallied and took the USD with them. AUD/USD dived lower & set a new trend low of 0.8927. The losses were quickly reversed though. US yields gave up some ground the the 2yr stalled short of 0.60% and the 10yr held below the 200-DMA again. AUD/USD steadily ascended from he low, took out Europe’s high and hit 0.8997. Some late day USD strength had the pair slip from the high and sit just beneath 0.8980 towards the close. The risk of a s-t squeeze exists. Daily RSI diverged on the new low and a long lower wick forms on today’s candle while yield spreads have widened. While the longer-term trend remains bearish, a retracement of the recent fall may be due.