AUD/USD: 0.7170EUR/USD: 1.1420The dollar has come under some pressure following the Fed's decision to leave rates unchanged, particularly against the European majors although the commodity bloc, despite a spike higher immediately following the announcement, have since given up most of these gains to sit towards the lower end of the day's range. The metals have seen good gains, but the equity markets, which also initially spiked to the topside with the S+P and the DJI both making 2 month highs, have since headed into reverse and are finishing close to session lows. More volatile trade looks to be in store and the market will now turn its focus on to the possibility of an October hike. There is little data due today and the action will be driven largely by follow-through action as traders re-position themselves following the Fed decision.
AUDUSD drifted to a session low of 0.7137 ahead of the Fed decision but then soared up to a high of 0.7275 once the announcement had been made that US rates would remain unchanged, before giving up a sizable portion of those gains in the next hour, currently trading at 0.7175.
The extremely volatile price action leaves the outlook as rather inconclusive so a neutral stance is required for the coming session. The Aud should receive decent support, in a yield differential basis, so further gains are possible, although the 4 hour indicators are overbought and suggest that any upside, back to the session high, where the 55 DMA (0.7275) prevented any further gains, is going to be slow and choppy.
A break of 0.7275, although looking doubtful today, would open the way towards 0.7300, above which the previous consolidation area of mid July/mid August would stretch all the way up to around 0.7430. Before then, 0.7200 looks as though it could be a struggle today, with interim minor resistances to be seen at 0.7220 and 0.7240/50.
The downside will see bids at the 0.7135/40 area, being the session low/100 HMA, but a break of which would want to take a look at 0.7100 and the 200 HMA at 0.7080.
Although it currently looks under some pressure, buying dips in the Aud may be the plan for the Aud in the next session or two given the positive look of the daily charts, but it will be choppy. Back below 0.7000 looks unlikely right now, but if wrong, further support would arrive at 0.6945 (session low) and then at 0.6900.
Further out, as we previously indicated, once back below 0.6900, there is little support until the April 2009 low at 0.6855, below which would then suggest a run towards 0.6773 (June 2004 low). A break of this would then open a black hole, in terms of support, until we reach the major Fibo support at around 0.6250 (76.4% of 0.4773/1.1082), which ties in with the lows seen in Feb 2009.
Jim LanglandsFX Charts
