Currency Updates:
It was a very quiet 24 hours on FX markets with holidays in the US and the UK encouraging many to take a long weekend from the screens. The AUD has continued to drift slowly lower and the lack of bounce is a telling factor.
The economic calendar is pretty bare again today and we will more than likely get any intraday leads from the Japanese stock and debt markets.
TECHNICALS: We will get an important break-out today, one way or the other, with last year’s spike lows at .9585 providing support and the short-term bearish trendline chasing lower, presently at .9665 (see chart). I’d play the edges of this range in early trade but keep stops tight either side.
CROSSES: AUD/JPY support on the daily chart at 96.90 has held the first attempt but a move lower to test the first Fibo at 95.50 seems quite possible (see chart).
EUR/AUD keeps grinding higher with little or no pullback although short-term momentum indicators have started to level out from seriously over-bought readings, which suggests that we may get a period of consolidation or retracement.
AUD/NZD has steadied after the break below 1.1950 but still looks quite bearish.
ORDERS & FLOWS: Very few flows of note reported overnight. Sovereign buyers still anticipated in the AUD/USD between .9600 and .9550.
INTRADAY CONCLUSION: It should be an interesting session for the AUD/USD which will either need to break its short-term downtrend or its major daily support. A break either side should give us a clear indication of where the next 200 pip move is headed.
TRADE OF THE DAY: I’d stick to the AUD/USD today; play the edges of the .9580/.9670 range edges with tight stops, and if one side breaks then look to enter on retracements for potentially big moves.
