Currency Updates:
USD/JPY broke lower on Monday night, re-taking the important psychological barrier at 100.00, and this has impacted on all USD pairs. The AUD/USD was another big mover, triggering trailing stops above .9700. It has been premature talk of an end to QE which got the USD bulls fired up but with this looking increasingly unlikely anytime soon, the dollar bulls have started to beat a hasty retreat.
Today’s big event is the RBA meeting and rate decision, and whilst it’s still unlikely that the RBA will cut rates I certainly wouldn’t discount the possibility.
TECHNICALS: The AUD/USD has finally started to retrace after the vertical fall from 1.0580 and the obvious target is the 38.2% Fibonacci at .9930 (see chart). Previously solid short-term resistance at .9700 now provides the first level of support and there are some solid hourly highs near .9840 which will attract sellers today.
CROSSES: AUD/JPY has broken back above short-term resistance at 96.90 and the fact that it did so despite a much weaker USD/JPY leg shows just how short the AUD market must’ve been. Deep dips towards Fibo support at 95.50 (see chart) should now be considered buying opportunities.
AUD/NZD should consolidate now between 1.1950 and 1.2150. EUR/AUD has pulled back sharply and also looks to be entering retracement mode.
ORDERS & FLOWS: Heavy trailing stops were triggered above .9700 last night and this level is likely to provide solid support on any dips.
INTRADAY CONCLUSION: It is likely to be volatile today with positional adjustment ahead of the RBA decision at 2:30 pm Sydney time. AUD/USD is still in a downtrend but this has started to reverse aggressively so both sides of the market are vulnerable. I’d suggest playing the edges of a .9700/.9850 intraday range.
TRADE OF THE DAY: The break below 100.00 in USD/JPY should change medium-term momentum, so sell any intraday rallies to 100.20 looking for a test of 99.00.
