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Chart of The Day AUDCHF

Chart of the Day AUDCHF
AUDCHF Potential Reversal Zone – Probable Price Path
Buoyant risk appetite has elevated commodity currencies to levels from which they are likely to struggle. The weaker yuan is a powerful force that is sure to undermine risk appetite and riskier currencies. The trade-weighted value of the yuan has dropped a long way, hitting a 2020 low today. The United States is struggling with the coronavirus, so this drop in China’s currency will escalate tensions. Oil’s recovery is faltering as stockpiles grow, with producers less inclined to cut production. From their own perspectives, the rise of commodity currencies amounts to a significant tightening of monetary policy that will choke economic recoveries. Intervention to support some currencies, such as Australia’s dollar, may have been possible a few months ago, but the likely outcome now is a verbal bashing from central bankers intended to halt unwelcome rises. Commodity currencies are more likely to underperform currencies like the euro, yen or Swiss franc, which are deemed safe and profit from weaker oil
AUD: The relationship between Australia and China tends to be tense, which may limit the performance of the Australian dollar in the short term; some technical indicators show that there is an overbought signal. The Ministry of Education of China issued an early warning for studying abroad, indicating that there is a risk of racial discrimination in Australia. It is necessary to make a risk assessment of studying in the country. Currently, it is prudent to choose to go to Australia or return to Australia. Sino-Australian frictions escalated.
CHF: The Swiss unemployment rate in May was 3.4%, lower than the expected 3.6%; the unemployment rate in April was revised downward from 3.3% to 3.1%

From a technical and trading perspective, the AUDCHF has tested the pivotal .6700 handle before printing a sharp daily rejection candle from this area. The engulfing candle pattern consumed the prior four days of trading and suggested significant supply in this area. As such bearish exposure should be rewarded on a breach of yesterday’s low, such positioning benefits from the potential of using the overnight highs as an invalidation point for the thesis, offering excellent risk reward metrics, with bearish positioning targeting a test of symmetry swing support at .6480 as highlighted in the chart above
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