Currency Updates:
The Federal Reserve made no changes to either policy or statement at their overnight meeting and this caused a slight blip in the USD. The market had anticipated that the statement might be adjusted to be slightly more dovish. The other big event for the AUD was a large option expiry at .9500 during the NY session which guaranteed a 10 pip range either side for much of the night. The NZD has been quite volatile over the last 24 hours, dropping sharply on some Moody ratings headlines and rising after a more hawkish RBNZ. Australian business confidence and the BOJ rate decision are on today’s calendar.
The break below Fibo support at .9460 (albeit a marginal one so far) has the overall picture looking slightly more bearish and selling rallies back towards the previous pivot at .9520 makes excellent sense (see chart).
These markets are unbelievably choppy with bursts of volatility but no sign of a trend to rely on and even the ranges are unreliable. AUD/NZD is back below 1.1500 and threatening to squeeze all the longs that’ve been building over the last few weeks. The RBNZ statement might even drive out a few more longs. AUD/JPY constantly gravitates towards 93.00 and momentum has swung to neutral from bullish. EUR/AUD should encounter stiff resistance near 1.4560 (see chart).
Strong bids reported .9410/20, likely Sovereign interest. We can also expect there to be plenty of sellers near .9520/30 and trailing stop-loss buy orders above .9535.
Resistance levels are clear at .9520/30 and with strong bids reported at .9410/20, it’s hard to argue with this as our 100 pip range of the day.
I would try and remain patient today but I do like the short-term prospects for the AUD/USD bulls. The AUD is nearing better-value levels against the NZD, JPY and EUR and in the absence of any strong trends, I’m tending towards buying AUD/USD dips. If an hourly base forms near .9420, buy with a tightish stop.
