The move south, potentially forming a pin bar on the H4 NY close charts, follows lower-than-expected producer price index in Australia, down to +0.6% in Q3 vs 1.2% EXP, and serving as an excuse for some traders to bring down prices on expectations the RBA will end up lowering rates next week.
So far, market sources have not reported sizeable stops above 1.0415/20, so bearing in mind the market is very much driven by stop loss hunting, buyers face the risk of the tide turning against them should patience to blow stops north run out.
According to FXWW Founder Sean Lee, "dealers say that the stops above 1.0415 are not particularly huge and are being somewhat offset by more selling interest at 1.0420/25."
Should the sprint higher continue in the next sessions ahead, a crucial fibo resistance is found at 1.0445 (61.8% fibo retrac from the 1.0625/1.0149 decline), with a break higher allowing price to set new target at 1.05. On the downside, sellers may ease pressure once price returns below 1.0380, only then 1.0350 can be realistically accomplished.
With the NFP release around the corner, reaction on price is quite unpredictable, although in theory should mean price stay fairly quite within narrow margins as big traders remain glued to the sidelines.