Currency Updates:
Not unexpectedly, Glenn Stevens did his best to talk down the AUD/USD yesterday and this had quite far-reaching repercussions. The market initially targeted stops in the AUD/USD below .9510 and this also put pressure on other pairs like GBP/USD, which gapped sharply lower when stops were tripped below 1.6100. Everything is somehow related in the FX market. There are no major events on today’s economic calendar but we should get some movement as traders adjust positions ahead of the Federal Reserve meeting.
The clean break below .9520 has given the dailies a more bearish feel and this level now provides initial intraday resistance. There is some decent technical support nearby at .9460 (see chart) but a clean break below there opens the way for .9350 at least.
The overall outlook for the AUD took a bearish turn yesterday as it lost ground and broke through important technical levels against many of the other majors. AUD/NZD broke back below 1.1500 but I will stick to my shortish-term bullish outlook here; most likely we are in a 1.1350/1.1650 consolidation range. AUD/JPY is still hanging around 93.00 but momentum has definitely shifted from bullish to neutral at best. GBP/AUD and EUR/AUD broke above important short-term resistance levels and buying dips looks like the best way to play both of these pairs in the short term.
Plenty of large flows reported on the crosses yesterday with a definite sell bias across the board. Good bids reported around .9410.
The levels are pretty clear today, with solid support at .9460 and resistance at .9530. I’d play this range with a bias towards selling rallies.
My hot streak is over and perhaps you should use my ideas now as reverse indicators! It looks like the USD bulls might have more joy over the next 24 hours so sell rallies in cable to 1.6110, AUD/USD to .9530, or EUR/USD to 1.3800, (depending on your preferred pair) with fairly tight stops in each case.
