AUD/USD: 0.7640EUR/USD: 1.1315The US dollar has been under heavy pressure following on the FOMC Decision yesterday, with all the majors making good gains, as have commodities, with WTI regaining $40pb for the first time since early December. Stocks have also made good gains and it looks as though the risk-on rally, given the diminished prospects of any imminent rate hike, has legs to carry on to higher levels yet.. Today will end the week with a fairly thin calendar, with just the German PPI and the Rts/Michigan Consumer Sentiment Index, along with speeches from the Fed’s Dudley, Rosengren & Bullard. The BOJ Minutes &BOE Quarterly Bulletin are also due.
The RBA’s deputy governor, Debelle cannot have been impressed yesterday as his wish for a lower Aud$ was completely ignored by the market, which saw reason to take it straight up through 0.7600 despite the soft jobs data, since when it has made further gains to reach as high as 0.7656 on the back of the general US$ selling spree.
AudUsd has now reached levels last seen in July 2015and looks, from a technical perspective, to be heading higher. A cautious stance is required though as the daily charts are becoming increasingly overbought and there is strong resistance right ahead, at 0.7650 (61.8% of 0.8162/0.6826). We have already briefly been to 0.7656 and this could remain toppish, but a break of this would signal further progress towards 0.7700 and then to 0.7738 (1 July 2015 high). Beyond there would head towards 0.7800, with the next Fibo levels not seen until 0.7845 (38.2% of 0.9504/0.6826 and also 76.4% of 0.8162/0.6826), but which should be very strong, if/when seen.
A failure at these levels would head back to support which will be seen at 0.7600 (minor) and then at 0.7530 (minor) ahead of 0.7500. Below here looks unlikely to be seen again for a while, but further losses could extend towards 0.7460 (23.6% of 0.6826/0.7656).
Buying into weakness appears to be the gameplan, although I would be very cautious, as a reversal in commodity prices or even one strong bit of data from the US could see all these gains quickly undone, and the RBA are not going to be pleased to see the Aud at these levels either.
Jim LanglandsFX Charts
