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AUD/USD Resistance Looms At 0.9425

By Market Pulse (Stuart McPhee)ForexJun 19, 2014 01:06AM ET
AUD/USD Resistance Looms At 0.9425
By Market Pulse (Stuart McPhee)   |  Jun 19, 2014 01:06AM ET
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The Australian dollar has surged higher in recent hours from down near 0.9330 up to around 0.94 however the resistance level at 0.9425 looms large and is likely to continue to play a role.  After the Australian dollar has enjoyed a solid surge over over the last couple of weeks which has returned it to a previous resistance level around 0.9425, it has then fell sharply away from this level back to a one week low around 0.9330 a couple of days ago.  Its recent surge higher to the resistance level around 0.9425 was after spending a couple of weeks at the end of May trading near and finding support at 0.9220. In moving up to the resistance level around 0.9425, it achieved a two month high. The 0.9220 level has repeatedly reinforced its significance as it is again likely to support price should the Australia dollar retreat further. Only a month ago the Australian dollar was placing pressure on the resistance level at 0.94 when it was able to poke through for a short period and reach a four week high in the process, however in the last 24 hours it has surpassed those levels and achieved the two week high.

Throughout April and into May the Australian dollar drifted lower from resistance just below 0.95 after reaching a six month high in that area and down to the recent key level at 0.93 before falling lower. During this similar period the 0.93 level has become very significant as it has provided stiff resistance for some time. The Australian dollar appeared to be well settled around 0.93 which has illustrated the strong resurgence it has experienced throughout this year. For the best part of February and March the Australian dollar did very little other than continue to trade around the 0.90 level, although at the beginning of March it crept a little lower down to a three week low below 0.89. Towards the end of March however, the Australian dollar surged higher strongly moving to the resistance level at 0.93 before consolidating for a week or so.

For several months either side of the New Year the Australian dollar established and traded within a narrow range roughly between 0.88 and the previous resistance level at 0.90. Back in January the Australian dollar was able to rally higher pushing through the resistance at 0.90 to a one month high near 0.91, however it quickly returned to more familiar territory below the resistance levels at 0.90 and 0.88. After showing some resilience in early December moving to a one week high above 0.9150, the AUD/USD spent the next two weeks turning around sharply and falling heavily down to a then three month low close to 0.88.

Australian Leading Indexes were listless in May, and point to a slowdown in the economy. The MI Leading Index managed a paltry gain of 0.1%, its highest level in 2014. The CB Leading Index posted a decline of 0.1%, its worst showing since last September. Australia's key export sector is being squeezed by falling commodity prices while the high Australian dollar is making Australian goods less competitive on global markets. At the same time, consumer confidence and spending remains at very low levels. If key economic data points downward, the high-flying Aussie could lose ground.

AUD/USD 4 Hourly Chart
AUD/USD 4 Hourly Chart

AUD/USD June 19 at 00:05 GMT   0.9399   H: 0.9408   L: 0.9397

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9220 0.9100 --- 0.9380 0.9400 ---

During the early hours of the Asian trading session on Thursday, the AUD/USD is remaining steady right around 0.9400 after surging higher from down around 0.9330.  The Australian dollar was in a free-fall for a lot of last year falling close to 20 cents and it has done very well to recover slightly to well above 0.90 again. Current range: trading right around 0.9340.

Further levels in both directions:

• Below: 0.9220 and 0.9100.

• Above: 0.9425.

OANDA's Open Position Ratios

(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 fallen sharply of late as the Australian dollar has rallied back to two month highs. The trader sentiment remains in favour of short positions.

Economic Releases

  • 04:30 JP All Industry activity index (Apr)
  • 05:00 JP Leading indicator (Final) (Apr)
  • 08:30 UK Retail Sales (May)
  • 10:00 UK CBI Industrial Trends (Jun)
  • 12:30 US Initial Claims (14/06/2014)
  • 14:00 US Leading Indicator (May)
  • 14:00 US Philadelphia Fed Survey (Jun)

Original post

AUD/USD Resistance Looms At 0.9425
AUD/USD Resistance Looms At 0.9425

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