Currency Updates:
It looks like an agreement has been reached on increasing the US debt ceiling and this deal is currently being voted on. The AUD has remained very well supported as ‘risk-on’ trades look to be the order of the day. AUD/JPY is trading at recent trend highs and just below important technical resistance whilst AUD/USD has taken out one barrier near .9550, although another bigger one looms at .9600. The economic calendar is again very bare and unfortunately we may be in for yet another very quiet session.
No change in the technical picture withthe short-term outlook still looking quite constructive to me and the close now above previous highs at .9525 suggests that there is more topside to come (see chart). The obvious topside target is a 50% retracement level at .9715. Support levels are relatively weak until levels near .9425/35 so patience is required if you are a dip-buyer.
AUD/JPY has important technical resistance close by at 94.45/65 (see chart), previous highs and the 200-dma, and these levels must be respected. EUR/AUD looks increasingly bearish and a move to levels sub-1.40 looks quite feasible. The market has been trying to buy AUD/NZD for weeks now and we might get a ‘disappointed’ sell-off soon?
One barrier in AUD/USD at .9550 was breached overnight but there is an even bigger barrier at .9600. AUD/NZD bids are still being reported at 1.1280.
The AUD looks increasingly strong on the crosses and this will give support to AUD/USD on any dips. Barrier protection ahead of .9600 is expected to be very heavy. More range trading in AUD/USD then, possibly .9490/.9590 range.
Sell EUR/AUD on any small intraday rallies towards 1.4200 keeping stops above 1.4255 looking for a move towards 1.4000. I prefer to avoid the USD pairs at the moment but there is a nice developing technical set-up in EUR/USD favouring selling rallies towards 1.3560/70 with stops above 1.3600.
