USD Trading Outlook (03-10-2014)

AUD/USD Europe pushed AUD/USD lower from Asia’s high due to offers touted in the 0.8820-50 zone and a bout of USD strength. The pair slide from near 0.8820 & sat near 0.8775 at NY’s open. Early action saw gains as the USD began to weaken. The rise accelerated a bit and hit 0.8806 as US bond yields dropped. That rally was sold though as JPY strength permeated the market. AUD/JPY dropped from above 95.40 towards 94.80. AUD/USD went on to hit a NY low of 0.8765. Buyers emerged though as the USD stayed weak but overall risk sentiment improved as stocks recouped losses and went positive. AUD/USD climbed, broke Asia’s high,pierced the 10-DMA and rallied towards 0.8830 late in the day. The l-t trend for the pair remains down but bears should proceed with caution. The bullish hammer on Oct 1 saw upside follow through today while the day/week RSIs diverge. The bounce off key 0.8660/70 support is also a warning. A further squeeze cannot be ruled out. If NFP is weak tomorrow a test of 0.8950/0.9000 may be due.