USD Trading Outlook (29-09-2014)

AUD/USD After the pair broke the 0.8750 barrier profit taking kicked in. Short covering in Europe’s morning took the pair from 0.8748 to 0.8803 before it slid towards 0.8795 into NY’s open. Early NY saw a rally to 0.8800 but fresh offers camped in that area combined with the USD’s power run higher capped the lift. The pair then spent most of NY’s session drifting lower. A NY low of 0.8755 was all bears could muster though. AUD/NZD’s lift above 1.1140 and EUR/AUD’s slide to 1.4455/60 likely prevented further AUD losses vs. the USD. Late in the day AUD/USD sat near 0.8765. Bears hold control of AUD/USD. The weekly close below the 76.4 Fib of 0.8660-0.9505 combined with bear biased day/week RSIs and narrower yield spreads suggest a test of the 2014 low at 0.8660 is due. Daily lows of Feb. 3 & 4 at 0.8730 need to be overcome first. Once cleared only option barrier interest will provide some support but it’s unlikely to stem the l-t trend.