Currency Updates:
The AUD bulls were driven back by heavy selling in AUD/USD near .9230 and in EUR/AUD near 1.4450. I’m still strongly of the opinion that we are in a consolidation phase for the AUD against most of the other majors and this will remain until the general election. Today’s main risk event will be the RBA minutes from the last meeting. I’d expect most of the action to be in the crosses once again and we can look to metals and equity markets for leads.
TECHNICALS: We are looking at 2 possibilities on the daily chart which both suggest the same outcome; further range-trading between .90/.93 in coming days. Oversold dailies could reverse as a basing formation develops (see chart) or the same oversold factors unwind through sideways consolidation before the downtrend continues.
CROSSES: EUR/AUD tested very important technical support near 1.4450 and bounced strongly and we should see increased top-side pressure in coming sessions (see chart). Prices now need to stay below 1.4750 in order for the recent topping formation to stay relevant.
AUD/NZD has started to look soft again and we are likely to get a test of recent support levels near 1.1200, and that might even happen today depending on what the RBNZ and the RBA have to say.
AUD/JPY has retraced back towards its recent support point at 88.70 and we can expect bearish momentum to pick up if 88.50 breaks.
ORDERS & FLOWS: AUD/USD bids are expected to be very heavy near .9050 where Sovereign buyers are reported.
INTRADAY CONCLUSION: We are nearing important support levels for the AUD against the JPY, NZD and EUR. It’s natural for the market to test these so I am expecting some downside probes early in the day, especially if the RBA minutes are reported as ‘dovish’ on the newswires. But I’m still a dip-buyer and see levels near .9050 as a good entry point.
TRADE OF THE DAY: There are a few possibilities today; short-term traders can buy AUD/JPY near 88.70 with very tight stop below 88.50; medium-term players can try buying AUD/USD near .9050 with a stop below .8960; AUD bears can try selling and intraday rallies in AUD/NZD looking for a 1.12 test.
