AUD/USD: 0.9240EUR/USD: 1.3700The Aud and Kiwi, both under pressure, were the main movers today, in a market that is pretty much sitting on its hands, waiting for the FOMC Minutes, and on any comments from Janet Yellen with regard to the direction of US policy. Mixed messages from the Fed's Plosser & Dudley over the timing of any potential tightening in the US sent the equity markets lower although most currency pairs, while choppy, have ended pretty much unchanged. Today's focus, in Asia, will be the BOJ meeting, which also sees the WBC Consumer Confidence data. The UK will get the BOE Minutes and Retail sales, but otherwise it looks to be all on hold, waiting for the FOMC Minutes/Yellen.
The Aud had a tough session on the back of the AFR article re. Australia's credit rating, softer iron ore prices and then later in the day, after the dovish comments from the RBA’s Debelle. Later on some mixed comments from a couple of Fed members on the timing of potential US rate tightening did little help the Aud. It has been to a low of 0.9241 (weekly tenkan) in the US session, which could again be tested if the WBC Consumer Confidence Index comes in on the soft side, with further event risk possible through Aud/Jpy once the BOJ decision is made.
The hourly indicators are now oversold and look as though they are attempting to recover, but the 4 hour charts are still pointing lower, and having broken back below the top of the daily cloud, the nearby rising trend support at 0.9230 looks likely to come under pressure. Should this give way then there is not too much to stop it heading down below 0.9201 (2 May low). Below here 0.9190 is fairly critical support.
As I said before, as long as we stay above 0.9190 – the long term reverse SHS neckline, I prefer to buy the dips, eventually looking for a return to the upside, but at no stage would I want to see the Aud under the neckline, as I suspect that if this were to occur, we could then be in for a much steeper fall, probably back towards/below 0.9000. The daily cloud base (0.9175) and the 200 DMA at 0.9170 would provide some interim support.
On the topside, minor Fibo resistances will be seen at 0.9280 and at 0.9305, albeit that they look unlikely to be seen today.
Use 0.9210/75 as an initial guide, with the good chance of a test to lower levels later in the session. As long as 0.9200 holds, I would be a buyer of dips, but a tight stop at 0.9165 needs to be in place. Below here, the next meaningful support is at 0.9095 (100 DMA). Keep an eye on iron ore which fell again yesterday to 97.50pt.
Economic data highlights will include:
WBC Consumer Confidence Index, Wage Price Index
Jim LanglandsFX Charts www.fxcharts.com.au
