USD Trading Outlook (26-05-2014)

The Australian Dollar (AUD): AUD/USD The 55-DMA capped Asia’s rally & Europe pushed the pair toward 0.9220 into NY’s open. Bears made a push in early NY as USD/JPY was firm. The 0.9200/15 support was tested again but held as the 0.9214 low was all bears could muster. The USD’s bid faded a bit as US yield slipped and light short covering in AUD/USD ensued. The pair hit 0.9245 and settled near 0.9240 late in the day to leave the pair down nearly 1.3% for the week. Bears hold the advantage for now as the pair set a new low for the recent trend. The 0.9200 is proving to be a tough nut to crack and if further attempts to break it next week fail the risk of a big short squeeze will be extant. Oz April HIA new home sales and Q1 Capex are the main data risks for down under next week. Soft results should weigh on AUD and possibly aid a push below 0.9200. Tech support in the 0.9165/75 area (Dec highs, 200-DMA, channel & daily cloud bases) would then be the next hurdle for bears