USD Trading Outlook (17-07-2014)

AUD/USD Europe walked in and saw the pair couldn’t break through 0.9320/30 support or the thin daily cloud and began some light short covering. From the 0.9329 low they pushed the pair near 0.9345 as NY got going. NY continued the slow & steady squeeze even as AU-US 2 year yield spreads narrowed further. The squeeze saw a NY high near 0.9365. Aiding the lift was pressure in EUR/AUD as EUR was offered across the board. EUR/USD tested support near 1.4440 and held just above that support late in the day. AUD/USD’s squeeze relented a bit in NY’s afternoon and the pair sat near 0.9360 towards the close. Bears are gaining some confidence as daily & weekly RSIs weigh and spreads narrow. They may get a boost later as NAB Q2 Business Confidence is due. RBA Assistant Governor Edey speaks as well. It’s possible comments echoing recent rhetoric from other RBA staff might be echoed. A break below 0.9320/30 puts bears fully in control. They would then target the 0.9195/0.9205 area where the 200-DMA and a series of daily lows sit.