AUD/USD: 0.7125EUR/USD: 1.0820The Fed interest rate rise has seen the US$ head higher on all fronts, while stocks and commodities have reversed earlier gains as the market digests the decision, and traders now look forward to the chance of further interest rate moves in 2016. Today sees the BOJ Meeting, but there is little other data from the EU/US and it could be a session of position squaring ahead of next week’s holidays, which could cap further dollar strength, and underpin the Euro, given that the market is generally running long dollars/short euros. The commodity bloc currencies could be interesting and appear to have further downside ahead of them over the next few days.
The Australian dollar is lower after a tough session, pressured by the growing strength of the US$, with added pressure seen through the selloff in commodities and equities which has undermined risk assets.
AUDUSD has now taken out the neckline (0.7160) of the Head/Shoulders formation that we have been watching for a while, and this should act as firm resistance. Stops will build above here though, which if triggered, would take the Aud back to 0.7200 and possibly back to the session high near 0.7250, although I don’t see this as likely.
With the 4 hour and daily charts both pointing lower, a test of 0.7100 (0.7155; 76.4% of 0.7015/0.7385 would seem more likely, below which would then open the way towards 0.7070 (18 Nov low/rising trend support). Below that would see a run at 0.7000 and eventually to the 0.6930 head/shoulder target, albeit that this may be for another day.
Staying short and selling rallies towards 0.7160, with a SL above 0.7200 seems to be the plan.
Jim LanglandsFX Charts
