AUD/USD: 0.9100EUR/USD: 1.2920The dollar made new trend highs against the Yen and the commodity bloc today, while consolidating its gains against the Euro and Chf, as traders begin to focus on next week’s FOMC meeting. Cable did its own thing and continued to recover from the trend lows after the "No" vote in Scotland found some relief from the latest poll. Gold and Silver are testing the recent lows, both under pressure from the strong dollar, while WTI headed higher on supply concerns stemming from the Russia sanctions. There is a bit of secondary data due today but the US Retail Sales will be the highlight and will provide the direction heading into the weekend.
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After shooting up to 0.9215 following the good jobs data yesterday, the Aud was put firmly put back in its box once traders turned to focus on the soft China CPI data, while also looking towards next week’s FOMC meeting. Having been a major recipient of the carry trade it has been very resilient in holding up, but the Aud now looks as though it is catching up and looks to have further downside potential and as I have said over the last few sessions, I think the Aud will be trading under 0.9000 in the not too distant future, looking to run to the head/shoulder target at 0.8950.
We are now sitting right on the 100 month MA, having bounced off 0.9088 but further losses look very possible. We could see the Aud hang about here today, as the 4 hour charts remain very oversold, but the strategy of selling into strength remains unchanged.
A squeeze could see the Aud head back towards 0.9115, and beyond this there is potential to move back to the steep descending trend resistance, now at around 0.9175. Above here looks doubtful today, but if wrong, we could make a run towards 0.9200 and possibly to the spike high seen yesterday at 0.9216, which if seen would once again be a sell.
The downside will see bids at the trend lows (0.9088), where the 50% pivot of 0.8660/0.9505 lies at 0.9083. Below here would then head towards 0.9050 (Weekly Cloud Base, 50% pivot of 0.8660/0.9505, Monthly Tenkan) and eventually towards 0.9000. Further out, 61.8% of 0.8660/0.9505 is at 0.8975 and then the head/shoulder target is to be seen at around 0.8950.
In the absence of any data, look for a session of hugging close to current levels, but trading from the short side as we head nearer to next week’s FOMC.
Jim LanglandsFX Charts www.fxchartsdaily.com
