The AUD/USD just continues to drift slowly but surely as it has again just fallen a little lower and to new lows below 94 cents. At the right hand edge of the 4 hourly chart below you can see that it has found a little bit of support at that level and is presently trying to hold on. Over the last couple of weeks it has shown some positive signs of rallying higher breaking back through to 0.9850 and then towards 0.9800 in the last week, however it has been all too little too late. It has now moved through the bottom of the recent trading range and to a new 20 month low below 0.9400. During the last few weeks the Australian dollar established and traded within a range between two key levels at 0.9550 and 0.97, which was able to halt the strong decline it experienced through May. A few weeks ago the 0.97 level provided some support and in recent weeks has provided stiff resistance to any rally efforts, which is why it was significant that the AUD/USD broke through that level a week ago, despite its recent reversal. It had attempted on a few occasions to rally however the Australian dollar had run into a brick wall of resistance at this level.
About a month ago, the AUD/USD experienced its worst week in a long time which saw it continue to move to new lows near 0.98, from highs not so long ago above 1.0250, although it did settle a little and find some support at the long term support level at 97 cents. Although presently appearing unlikely in the short term, should it recover and move back, it is likely the 1.00 level may now provide some resistance to higher prices, as well as the 0.97 level and around 0.9800. The AUD/USD has now experienced an ordinary last month as it wasn’t so long ago it was moving up above 1.03 and threatening the key level at 1.0360, and before that it was approaching 1.06. Up until earlier in May, the 1.02 level was one of significance and presented as a long term support level however this has now clearly been broken. It had been showing some bearish as it continued to place selling pressure on the 1.0220 and 1.02 levels and the RBA rate cut last month was the catalyst for a strong push lower, seeing it just fall very heavily as if all support gave way.
The last couple of months have seen the AUD/USD establish a strong medium term down trend with lower peaks and lower troughs, as it has moved from near 1.06 down to below 0.94 in that time. In doing so, it has completely ignored any likely support at either 1.04 or 1.0360, and more recently the long term support level at 0.97. Up until mid April, the Australian dollar was enjoying its best move higher since October and November last year. Up until a month ago, the AUD/USD spent the best part of a month trading between the two key levels of 1.0220 and 1.0360 and it will take some effort to return it to this range, with the resistance being offered at the 1.02 level and now likely at 1 too.
The Australian dollar continues to lose ground and has shed around nine cents against the US dollar since the beginning of May. Last week, Australian key releases faltered, as Retail Sales, GDP and Trade Balance all missed their estimates. There was more bleak news on Thursday, as BlackRock, the world’s largest issuer of exchange traded funds, said that a number of U.S. hedge funds are lining up to short the struggling Australian dollar. Meanwhile, the Aussie got no help from Chinese key data. Chinese Trade Balance rose to $20.4 billion, but this was short of the estimate of $20.8 billion. Chinese CPI, the most important inflation indicator, dropped to 2.1%. The estimate stood at 2.4%. These weak numbers from Australia’s most important trading partner are not good news for the Australian currency.
AUD/USD June 11 at 03:00 GMT 0.9408 H: 0.9480 L: 0.9381
During the early hours of the Asian trading session on Tuesday, the AUD/USD is trying to rally and stay above the support level of 94 cents. The Australian dollar continues it free-fall, as the currency has lost almost nine cents since the beginning of May. Nothing seems to be going right for the Australian dollar. In moving through to 1.0580 only a couple of months ago, it moved to its highest level since January. Current range: trading just above 0.9400 around 0.9410.
Further levels in both directions:
• Below: 0.9400
• Above: 0.9700, 0.9800 and 0.9850
(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The long position ratio for the AUD/USD has moved back above 75% again as the Australian dollar has fallen ever further to near 94 cents. The trader sentiment remains strongly in favour of long positions.
Economic Releases
- 01:30 AU Housing & Lending Finance (Apr)
- 01:30 AU NAB Business Conditions & Confidence (May)
- 08:30 UK Industrial & Manufacturing Production (Apr)
- 14:00 UK NIESR GDP Est. (May)
- 14:00 US Wholesale Inventories (Apr)
- JP BoJ MPC – Overnight Rate (Jun)
- JP BoJ Monetary Policy Meeting (final day) and Interim Assessment of the Outlook Report
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