AUD/USD Monthly Technical Analysis for November 2015

The AUD/USD finished higher in October. The close at .7134 put the Forex pair up 0.0119, or 1.70% for the month. Although the Aussie did manage to finish higher for the month, the trade was volatile. Early in the month, the market rallied after the weaker-than-expected U.S. Non-Farm Payrolls report for September signaled the Fed may delay its interest rate hike. Near the end of the month, a hawkish Fed monetary policy statement drove the market back down.

The direction of the AUD/USD in November could be determined early in the month with the release of the Reserve Bank of Australia’s latest interest rate statement on November 3 and the U.S. Non-Farm Payrolls report on November 6.  

Investors will be looking for hints from the RBA regarding a possible rate cut in December. With the Fed signaling a possible rate hike in December, it’s going to want to see a strong employment report to keep it on course. After the release of last month’s hawkish monetary policy statement, investors have now placed the odds of a December rate hike at 50/50.

Look for a rally in November if the RBA fails to convince investors that a rate cut is imminent and U.S. economic reports continue to come in below expectations. The AUD/USD is likely to break if the RBA comes out strong for a rate cut and the U.S. economy continues to strengthen.

Technically, the main trend is down according to the monthly swing chart.

Based on the close at .7134, breaking below a long-term downtrending angle at .6944 will be the first sign of weakness. This could set up the AUD/USD for a further break into the September low at .6908. The chart indicates that this is a potential trigger point for the start of a steep decline.

If the AUD/USD rallies then the first target is a short-term downtrending angle at .7202. This angle stopped the rally last month.

If .7202 is taken out with conviction then the primary upside target over the near-term becomes .7535.

Look for a bullish tone on a sustained move over .7202 and a bearish tone on a sustained move under .6944. The direction and tone of the market this month will be determined by the RBA statement and the U.S. economic reports especially the jobs report and consumer inflation data.