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  • AUD/USD is currently trading at 0.7136 from a high of 0.7197 and a low of 0.7135.
  • AUD/USD is extending the downside trend to critical  fibo  levels below S1 at 0.7153 with a wind in the bear’s sails as the US dollar takes on the upper third of the 95  handle  backed by stubbornly strong US data.

AUD/USD has had a squeeze higher before nose-diving again to the 76.4% fibo  extension objective  at 0.7193. There has been a low today so far of 0.7135 and break there could encourage further supply from  aggressive bears targetting a quick run towards  S2 at 0.7120, but that would be stretching RSI below 30 and towards yesterday’s low of 21.  

Joseph Trevisani, Senior Analyst at FXStreet explained  the  “healthy growth in ADP employment will keep expectations intact for a robust September employment report on Friday with expectations reaching beyond the 188,000 consensus forecast.”  

Joseph also commented on the service sector data that continues to drive the U.S. economy to new heights:

“Record levels of business optimism combined with the very strong ADP report, point to a further acceleration in the already robust job market in Friday’s payroll report.”

As for Australian RBA fundamentals:

“Even though the RBA managed to sound a fairly upbeat tone this week, it indicated that it is in no rush to hike rates. We see an increased likelihood of a step up in cautious sentiments from the RBA in the coming months and expect the AUD to remain under pressure,”

Analysts at Rabobank  explained.

AUD/USD levels – (target S2 but watch for profit taking)

RSI is oversold, S1 is broken, S2 is located at 0.7120 and that marries up with the highs of the early Sep consolidation channel which is likely to hold initial tests, certainly at this stage of play anyway. ATR is currently at around 20 pips on the 4hr sticks and 10 pips on the 1hr sticks giving room for a target of 0.7120/25. However, on the daily charts, a reading of 56 indicates that the pair has likely maxed out and a better risk-reward might found best looking elsewhere as the most likely outcome at this stage is a phase of sideways consolidation and a potential pullback on profit-taking as we draw closer to key data events such as retails sales in Australia tomorrow and the nonfarm payrolls at the end of the week.