AUD/USD: 0.8220EUR/USD: 1.2500It has been an extremely hectic session, led by some serious volatility in the Yen (and the Russian Rouble), with the Dollar initially seeing a general sell-off, before a partial recovery later in the day. Commodities were also extremely volatile and included another selloff, to a new trend low in the oil price before a sharp $3 bounce. Focus will now turn towards today’s FOMC meeting, although before then we get to see the EU & US CPI figures, while from the UK, the BOE Minutes and Unemployment data. Liquidity is getting thinner by the day, so it could become even more choppy later on. Keep stops tight!
The Aud has been choppy today, but largely rangebound, as the consolidation above 0.8200 continues. It did manage an intraday squeeze up to 0.8275 in Europe before succumbing to the sellers and is now back sitting precariously above 0.8200.
With yield spreads continuing to narrow, it seems likely that the Aud will eventually head lower, and if the Aud does head below 0.8200, this would potentially see an acceleration lower, towards a wave equality target at 0.8145 (AB=CD; from 0.9398 to 0.8642, from 0.8901; see daily chart, below), beneath which there is little to hold the Aud up until the May 2010 lows at 0.8066.
On the topside, 0.8255 (100 HMA) and the session high of 0.8275, and also now the descending trend resistance will be the initial hurdles. A break of this could result in a squeeze higher, towards 0.8300, a break of which would head on towards 0.8315 (daily Tenkan) and 0.8338 (23.6% of 0.8795/0.8200) and then to last week’s peak at 0.8375, beyond which would take a run towards 0.8400, and which if seen would be a good medium term sell, I suspect.
Selling into strength still seems the way to go, possibly for a quick run lower if the stops below 0.8200 are triggered.
Economic data highlights will include:
China FDI.
Jim LanglandsFX Charts www.fxchartsdaily.com
