The Real Fundamental Analysis

There it is.

Long on AUDUSD for the next couple of weeks setting up.

As mentioned…

The fundamental sentiment is bearish USD since the FOMC:


Seasonals are also bearish USD in this period.

With particular bullishness on AUDUSD:

So that’s the context.

You can see the technical plan on the chart.

Will update along the way as usual.

Quick update…

First part of the move getting done on AUDUSD.

Fundamentally the PCE from the US tomorrow is one to watch.

Most models are expecting a soft print

Here’s BofA for instance:


So that should allow this Dollar weakness to extend further.

But either way…

The trade has already stop loss at breakeven.

First part of the move done on AUDUSD.


The fundamental context is still the same.

So bearish USD.

The PCE on Friday also printed soft as expected.


And on top of the fundamental context, seasonals are still bearish for the Dollar too.

In other words…

The trade has room to run.

Quick update to AUDUSD.

Likely this continues to expand higher.

But either way, keep in mind…

If it breaks below 0.6820 the trade gets trailed out in profit.


Waiting for the next solid trade setup to share here.

Not much solid sentiment going on at the moment to give a clean fundamental direction to trade into.

So waiting…

NFP tomorrow could be interesting.

And then US CPI on Thursday next week too.

There it is…

Long on AUDUSD setting up again.


Interesting mix of data from the US today.

Still fairly strong labor market on the headlines BUT with prior NFP releases that get revised lower, and…

ISM services almost in contractionary territory.

That’s slightly bearish for the Dollar.

But on top of that, the CPI next week from the US should be on the soft side.

So the point is that Dollar shorts are again an interesting trade fundamentally.


That’s the fundamental side.

What about the technical side?

Here’s see the chart:

Technically on AUDUSD there’s a clean impulse from support after it flushed the lows during the NFP.

That looks good with a clean fakeout and rejection from a solid support zone followed by the break of market structure.


Fundamentals and technicals aligned.

And that makes a trade for us.

You can see the exact trade plan on the chart above.

Will update along the way as usual.

Mostly sideways action so far this week…


US CPI tomorrow.

Here’s what most models are saying:



Most likely outcome should be a print at 0.3% for both core and headline.

No big number, but arguably no soft either.

Here’s BofA with more details:


A 0.3% print on both shouldn’t change much FED’s pricings.


The short term reaction could be a bit choppy.

Will update after the print.

Take a look at copper. It’s been the biggest influence on AUD/USD.


And thank you for the comment.

Slightly hot print relative to expectations with the latest CPI.

We squared the AUDUSD longs for half a stop.

Context is now slightly more in favor of the Dollar.

Something to keep in mind.

We may get some USD longs to take soon.

Will share a chart and more details when there’s something actionable as usual.

The price action this morning is on a different tune already.

So nothing to take action on, just a lot of sideways chop.

When the fundamental bias doesn’t align with the technical side that’s when it’s better to sit on the sidelines patiently waiting for the right conditions to position again.

Will share a chart and more details as usual when we see something interesting to jump on.

Context matters.

Alright guys.

Starting to build the case for some potential Dollar shorts later into the week.

Nothing actionable yet.

But here’s a small snippet from a note from Goldmans Sachs which explains the context fairly well…


In other words…

From here Dollar strength will NOT be as easy to get as it has been over the past couple of weeks.

Plus, contextually we also have an important inflation metric on Friday.

It’s the FED’s preferred measure of inflation.

The PCE.

And here’s what most models are pointing at:


2.9% on the core yearly reading is a pretty dovish number.

So this in and of itself should be cause for a bit of Dollar weakness around the release.

But with that said…

So far this is just CONTEXT.

Very useful to avoid getting caught in the wrong direction.

But still nothing high conviction to our a trade on.

Will share a chart with technical details as usual when there’s a setup to take action on.


Long AUDNZD shaping up.

Expecting the CPI from New Zealand later tonight to be a bit on the soft side.


China should be exporting some deflation:


CPI in Australia printed on the soft side two weeks ago:


And RBNZ is super tight with rates at 5.5%,

That context makes me think the risks favor a weak inflation figure.

And that should soften the NZD, and lift AUDNZD higher.

Here’s the chart:

Simply, I like the risk reward of positioning for weak NZ CPI and a more dovish RBNZ going forward.

Target 1.0950.

Quick stop on AUDNZD.

New Zealand CPI overnight not as soft as it could have been.

Here’s Bloomberg on the matter:


In other words…

The core of the trade idea didn’t unfold as we would have wanted it.

So trade stopped.


Keep an eye on the PCE tomorrow if you want to have an insight into the most likely trends heading into the FOMC next week.

As you know…

So that’s an important piece of data to watch.

If you want to dive a bit more into its details I’ve written about it in this post.

With that said…

Will share here as usual if anything interesting comes out of it.

But remember…

The most likely outcome is a soft print with core at 2.9%.

And that would allow the Dollar to keep pulling back further.

So would be wise to avoid Dollar longs into tomorrow.

And if you want to be aggressive you could even think about some shorts.

Right now tho, personally, I don’t see a setup to position in that direction.

So waiting for the data.

2.9% on that yearly core PCE reading as anticipated.

So again, keep in mind…

Still tho…

So no trade for me.

But keep in mind the fundamental context to avid getting stuck against the dominant flows.

EURGBP short setting up.

Liking the technical lineup here with that fakeout of the highs and the hourly close back below the weekly open…

While fundamentally we also have a medium term bearish bias on the pair as inflation in the EU is slowing a lot faster than in the UK.

Meaning the ECB will have to cut rates much earlier than the BoE.


Medium term fundamental bias, short term technical trigger.

Target 0.8460.

EU CPI tomorrow and BoE on Thursday are two catalysts for some volatility here.

Will update along the way as usual.

Quick update guys…

Trade structurally unfolding well, but keep in mind fundamentally the BoE rate decision could be a bit of a risk.

I don’t have the cleanest read on that so the trade size has been reduced a little by taking some profits already.

Still running a good half tho.

By far not the best looking trade…


Fundamentally all this chop is likely to resolve to the downside.

So keeping the remaining size of the trade running.