AUD/USD longs are nervous as the 21- and 55-DMAs break and a fall below the daily cloud base is threatened after the greenback rallied sharply on Philly Fed services data nAQN00HBE6.
The upbeat results to the Philly Fed new orders and employment components suggest the U.S. economy remains an island of robust growth in an otherwise lackluster global economy, making the greenback and equities attractive to investors.
AUD/USD bulls are hoping for upbeat Australian inflation to save them from further pain, though inflation remains below the RBA's target and is expected to deteriorate from Q4 results. The subdued inflation picture has confounded the RBA as the Australian jobs market is in solid shape and has driven Australian 3-month bank bills to price in an RBA cut in Q4 2019.
Should tonight's CPI come in above forecasts the odds of that cut will be reduced and AUD/USD could rally sharply.
CFTC stats 0#NETUSDFX= show net-short AUD positions have been reduced a bit.
An above-forecast CPI result could see the reduction intensify, possibly reversing AUD/USD's recent slide and setting up a test of key 0.7205/10 resistance.
A break above that zone would target January's 0.7295 high.
chart: Click here