USD Trading Outlook (25-02-2015)

AUD/USD The key 0.7720/40 support zone was neared in Europe’s morning but couldn’t be taken out. The ensuing short covering bounce saw the pair lift near 0.7770 ahead of Yellen’s testimony. The initial USD rally after Yellen’s comments were released saw the support zone tested again but once again it held. The quick reversal in the USD’s gains saw the pair spike back above the 10 & 21-DMAs and approach 0.7830. The pair dipped back near 0.7800 but lifted again as AUD/NZD broke above 1.0430 resistance and eventually trade to 1.0471. AUD/USD’s lift saw the pair just below the 0.7830 level in NY’s afternoon. Traders now look to China’s Feb HSBC Mfg PMI for cues. Should the result come in above the 49.5 forecast (prv 49.8) we might see offers in the 0.7850/60 zone tested again. IF they get filled and 0.7880 breaks we’ll likely see a decent sized short squeeze. The pair then might make a run to 0.8000/30 resistance.