Chart of the Day AUDUSD

<h2><span>Chart of the Day AUDUSD</span></h2>
<p><strong>AUDUSD – Probable Price Paths</strong></p>
<p><span>Broad USD was slightly mixed overnight, with the greenback softening against both the cyclicals, led by the AUD (supported risk sentiment, firm commodity complex), and the JPY. However, the EUR lost further traction against the USD. </span></p>
<p><span>It is important to note two separate episodes in understanding risk sentiment – initial market stress at the onset of the COVID-19 spread, and the macro hit from the uncertainties and containment measures. Traders seem to be, thus far, anchored by the first episode. In absolute terms, the typical indicators (LIBOR-OIS spread, VIX etc) of market stress still looks worse than normal, but the delta is in the right direction. The utilization of Fed swap lines with other central banks reduced, and the Fed is dialing back on repo facilities. These developments suggest room to be positive on risk.  The question mark is over the macro hit – traders either have not shifted focus to that (suggesting that there may be another round of risk-off in the coming weeks), or that they believe it will be sufficiently short-lived that they can look past it (which suggest that we have probably seen the worst of market outcomes). The worsening macro trajectory will be felt in the coming weeks and a defensive strategy will likely be warranted. Nevertheless, it is appropriate to keep an open mind in the interim. As the shifting risk sentiment continues to play out, the up-move in the cyclicals may still have some room to extend.</span></p>
<p><span>From a flow dynamic Goldman Sachs highlights some interesting dynamics at play in the AUDUSD right now. </span></p>
<p><img class="aligncenter wp-image-41728 " src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.22.55-300×186.png" alt="" width="326" height="202" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.22.55-300×186.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.22.55-1024×635.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.22.55-768×476.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.22.55-1536×953.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.22.55.png 1991w" sizes="(max-width: 326px) 100vw, 326px" /></p>
<p><span>Equally noteworthy is the options flow which has mainly been mainly one way today, with players betting on gains. Buyers of 0.6500 strikes stand out ,expiries on a one-week to one-month horizon, they would benefit from AUDUSD being above the strike at expiry. Above there the interest is certainly lighter with only a couple of 0.6600 strikes for two-three months. Big 0.6400 option expiry for today and 1-bln 0.6450 Wednesday.</span></p>
<p><span>On the CFTC front, leveraged accounts reduced their implied USD longs, especially against the EUR and AUD, while non-commercial accounts deepened their implied USD shorts marginally. Overall, even though the short term players moved against the USD in the latest week, note that the absolute change in positions has been very small over the past four weeks, suggesting that the community itself is also tentative and uncertain over the broad USD outlook.</span></p>
<p><img class="aligncenter size-full wp-image-41727" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.20.38.png" alt="" width="2187" height="1221" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.20.38.png 2187w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.20.38-300×167.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.20.38-1024×572.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.20.38-768×429.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.20.38-1536×858.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-14-09.20.38-2048×1143.png 2048w" sizes="(max-width: 2187px) 100vw, 2187px" /></p>
<p><span>From a technical and trading perspective, the AUDUSD continues to grind higher currently testing the 78.6% retracement of the crisi decline, as this area contains, there are two key support areas where bulls will likely look to reload long positions. The first area will be the projected ascending trendline support coming in around the .6300 area, a failure to attract sufficient bids will open a deeper corrective move to test symmetry swing support and prior resistance at the .6200 handle. Bulls will be looking for bullish reversal patterns at either level to reload longs targeting the upside equality objective at .6695 from which we will likely witness a more sustained corrective phase</span></p>
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