Currency Updates:
The important levels in the AUD/USD which we mentioned yesterday, 1.0220 on the downside and 1.0360 on the top, are both still relevant with the market failing to get within 20 pips of either. The main mover overnight was the GBP and the much better than expected GDP data might go some ways to shifting the bearish sentiment towards sterling. Nothing much is expected of this afternoon’s BOJ statement but there is always a risk of course.
TECHNICALS: I’m suggesting a broad 1.0260/1.0360 intraday range for the AUD/USD with moves primarily dependent on flows in the crosses like AUD/JPY, GBP/AUD and AUD/NZD. The charts (see chart) suggest that a base might be trying to form near 1.0220 but resistance should also be very firm at 1.0360 (Fibo and previous highs).
CROSSES: AUD/NZD broke below former weekly lows at 1.2100 yesterday amid heavy turnover, despite the Anzac day holiday. Further losses here look very likely and the first level of resistance is the prior daily low at 1.2145 (it opens near 1.2100 this morning).
GBP/AUD has made a strong move higher overnight but it is now running into very solid technical resistance near 1.4980. A clean break above this level opens the way for quite a significant move higher (see chart).
There was some very heavy turnover yesterday in AUD/NZD and the break below a previous weekly low at 1.2100 will have the bears salivating. Nevertheless the inability to close below there does post some questions about the strength of the bearish momentum at the moment.
ORDERS & FLOWS: The main overnight flows were in the crosses like AUD/NZD, during the Asian session, and GBP/AUD during the European session. AUD/USD has held up reasonably well despite the heavy AUD selling on the crosses.
INTRADAY CONCLUSION: I’m looking at a 1.0260/1.0360 range with a bullish bias. Despite the really heavy selling in pairs like AUD/NZD, the AUD/USD has held up really well so I fancy that the next move will be higher to test important technical resistance at 1.0360.
TRADE OF THE DAY: The obvious trade is to sell USD/JPY ahead of the big barriers, say at 99.70, with a tight stop above 100.00.
Good luck out there and TGIF.
