USD Trading Outlook (30-10-2014)

AUD/USD Europe pushed the pair higher as JPY cross buys persisted and the market was leaning towards a dovish Fed outcome. AUD lifted from the 0.8860 area and sat near 0.8880 as NY got going. NY kept the bull pressure on as risk was elevated. AUD/JPY’s lift continued towards 96.25 and equity markets rallied early to aid AUD/USD’s rise. A broad based bout of USD sales post-option expiries saw the pair spike higher, run stops above 0.8900 and hit a 0.8912 high. Action then settled and the pair drifted lower as the Fed neared. The pair sat near 0.8885 as the Fed hit the wires. The message was not as dovish as hoped. US yield rocketed higher as did the USD. In no time AUD/USD dived to a 0.8780 low. Some give back in the USD rally saw the pair bounce and it sat near the 200-hour MA late in the day. Downside risks emerge as daily RSI diverged on the new s-t high, spreads narrow and the 10 & 21-DMAs are threatened. There is little data overnight so a further unwind by recent longs might persist.