Currency Updates:
It’s been another very quiet 24 hours in the FX market. The Yen fell on more stimulus talk and the GBP had some brief volatility around the UK GDP data but otherwise it’s been very quiet. The AUD/USD continues to stall just above the previous resistance levels between .9315/50 and this level is again looking pivotal. End-of-month flows tend to favour the USD across the board and with Friday usually a ‘risk-off’ day, we could see some downside pressure on the AUD/USD.
TECHNICALS: No change from yesterday morning and we are still faced with very strong technical support at .9350 and down through .9315 (see chart). The main support below there is a 38.2% Fibo at .9280. Hourly resistance levels start at .9400.
CROSSES: EUR/AUD has again failed at the neckline of the double-top formation, which comes in near 1.4450/60 (see chart). I favour selling into this resistance with fairly tight stops above 1.4490. AUD/JPY is consolidating below 93.00 and a deeper test towards very strong technical support 90.00/50 looks possible. AUD/NZD is back below 1.1300 and risk-reward would seem to favour the dip-buy with stops well below 1.1200.
ORDERS & FLOWS: Real-money funds have been buying dips in recent days, un-doing some over-hedging, and more bids are reported at regular 10 pip intervals below .9350. End-of-month flows are also expected to be significant and are expected to be USD positive.
INTRADAY CONCLUSION: Stay in range-trading mode in the AUD/USD; corporate flows are expected to be net AUD/USD sellers but real-money funds have solid bids on dips. I’d suggest a .9335/.9395 type range, 30 pips either side of opening levels.
TRADE OF THE DAY: EUR/AUD again looks like the stand-out trade for me, with clear resistance at 1.4460; sell intraday rallies towards there with fairly tight stops in place. There are also good-sized orders reported in the EUR/USD, so playing the edges of a 1.3460/1.3520 range would seem to make good sense.
