USD Trading Outlook (04-02-2015)

AUD/USD With follow through on the break of 0.7700 limited in Europe shorts decided to cover a bit. The pair lifted off the new trend low & sat near 0.7680 as NY began trading. Early action saw the lift persist and it got an added boost on a bout of weak US econ data. The pair tested resistance in the 0.7710/20 zone. The zone held but the pullback was shallow. Broad based USD weakness (ignited by EUR/USD’s lift) saw that zone broken and the short squeeze gathered pace. Pre-RBA levels near 0.7800/15 were only a speed bump for the rally. Upon breaking that zone the pair spiked to a 0.7855 high as shorts that sold post-RBA had to cover. As quick as the gains to the spike high were made, they were given back just as quickly as USD shorts covering took hold. The ensuing slide saw the pair just under 0.7790 late in the day. Recent shorts should have some concerns. RSIs are diverging on the new trend low, a long lower wick forms on the daily candle and the break below 0.7700 looks false. Bears need the 0.7890/10 (10-DMA, Jan 29 high) zone to hold. If it gives way key res near 0.8025/55 likely gets tested.