AUD/USD: 0.7325EUR/USD: 1.1380The US$ and equities rebounded today after some better US data, which included a better than expected inflation reading and revived hopes of a Fed rate hike before than the end of the year. In European trade, the Euro had come under pressure failing just ahead of 1.1500, after a dovish outlook for the EU economy from the ECB governor Nowotny. We could get further evidence of that today, with the release of the EU CPI, after which there will be some more important US data to provide further evidence of when we can expect a rate hike (Industrial Production, Capacity Utilisation, Rts/Michigan Consumer Sentiment Index).
AUD had a volatile session in falling from the day’s high of 0.7363 to a low of 0.7265, seen after the upbeat US data, and then recovering, assisted by a solid session in stocks and commodities to currently sit at 0.7328.
The charts are mixed, so the intraday choppy trade can be expected to continue, although the dailies remain positive so a re-test of 0.7360/65 may eventuate, above which, stronger resistance still lies at 0.7375/80 (100 DMA/23.6% of 0.8162/0.6900). Above here would run into the major descending trend resistance, currently at 0.7390, a break of which would trigger plenty of stops and could propel the Aud a fair bit higher, although at this stage this is some way off and I would be surprised to see it above here today. If wrong, the next realistic targets would be at the 11 Aug high at 0.7438 and then at 0.7485 (61.8% of 0.7848/0.6900).
Back to the downside, minor support sits at 0.7300 ahead of the day’s low at 0.7265, a break of which would head to 0.7245 (200 HMA) and the previous session low of 0.7197. Under here would see a deeper correction towards the 50% pivot of 0.6936/0.7345, which lies at 0.7158 although I don’t see the Aud anywhere close to here today. Further out, the next supports come in at 0.7105 (61.8%) and at 0.7040 (76.4%).
Look for another choppy ride today, but with a bias towards a retest of 0.7365 and possibly 0.7380. If the descending trend resistance gives way look for a run above 0.7400, although this seems doubtful.
Jim LanglandsFX Charts
