The dollar ended up giving up some ground in thin holiday conditions, but not before it made a new multi year high against the Yen. Further near term losses look possible, with the focus today being on the EU Industrial Production and US Wholesale Inventories, while Cable will be busy with the release of the BOE Quarterly Inflation Report and October Jobs data. Before then, Australia gets the Consumer Confidence figure
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Having tested the downside, trading to a low of 0.8590 in Europe, the Aud has turned higher, in a thin US market, and currently sits below the session highs of 0.8718. With the short term indicators looking positive, further gains may be in store and a break of the session high would see the Aud move towards the Fibo resistance at 0.8765 (23.6% of 0.9398/0.8540) and then to descending trend resistance at 0.8785.
The downside will find support at the 200 HMA at 0.8680 and then at the 100 HMA at 0.8615.
Further out, nothing has changed and back below 0.8600 would see a run towards 0.8570 and then possibly to last week’s low at 0.8540. As we said before, this will provide very strong support, being both 50% of the move from 0.6006/1.1082 and also the base of the monthly cloud. A break of this level though, and a November close below it, would have very bearish implications, for a test of the major channel base at around 0.8474 and then the May 2010 lows at 0.8066.
For the time being it looks as though we may have seen the base for the Aud, and while I still prefer to sell into strength for an eventual continuation of the downside, I suspect that we are likely to see higher levels ahead before the US dollar resumes its trend to higher ground.
Economic data highlights will include:
Wage Price Index, WBC Consumer Confidence
Jim LanglandsFX Charts www.fxchartsdaily.com
