AUD/USD: 0.8880EUR/USD: 1.2780The Euro finally gave up trying to make a break for the topside and has headed lower to reach the medium term target with a good chance of further losses in the days to come. The commodity bloc have had a slightly better session and equities have recovered the losses of the last couple of days after some cautious words from the Fed with regard to any impending rate hike. In the absence of any major data until the US Durable Goods orders, it looks as though we could be in for some sideways action today, although RBA Governor, Glen Stevens, will be speaking and may try to talk the Aud lower once more. BOE Governor Carney will also be speaking later in the session.
Europe tried to take the Aud higher, but having made it to 0.8896 it ran out of steam and has since chopped around below here, allowing the shorter term charts to unwind their oversold condition.
The Aud now looks as though it is in the process of breaking above the recent steep downtrend trend resistance and if 0.8900 can be overcome, we could get a bit of a squeeze up towards 0.8925 and possibly to the first Fibo resistance at 0.8980 (23.6% of 0.9472/0.8830). Above there would see a further squeeze towards 0.9000, which should be strong resistance, this being both psychological and also where the long term previous support – now resistance – trend line lies. I don’t really see it up at these levels, but if wrong, it would present a decent sell opportunity
The downside will today see bids at 0.8845 and again at 0.8830. It does not appear that we are going under here today, but the greater trend does remain lower, and below 0.8830 would head quickly to 0.8800 and the 1.618 Fibo extension of the head/shoulder target at 0.8790. Below there will see bids at the rising trend support off the July 2007 low at 0.7721, at 0.8775 and eventually it looks as though we are going to want to retest the January low at 0.8660, but that will take a while.
For today, look for a similar sort of day to yesterday and use 0.8830/0.8900 as a guide, with the chance of a squeeze to the topside although Glen Stevens will be speaking to the Economic Forum in Melbourne. He rarely misses an opportunity to talk the Aud lower, although right now it seems to be doing a pretty good job of it, on its own!
Economic data highlights will include:
RBA Glen Stevens speech
Jim LanglandsFX Charts www.fxchartsdaily.com
