AUD/USD for Monday, May 26, 2014
It was only a couple of weeks ago that 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, since that time it has slowly drifted lower and found support again around 0.9220, where it presently sits. This level is being revisited after previously providing some support several weeks ago. The Australian dollar did well to finish out a few weeks ago in moving through the resistance level at 0.93 and maintaining the break. Prior to the breakthrough, the Australian dollar had fallen back down below the 0.93 level and settled within a very narrow range just below the level before surging back up.
The last month or so has seen the Australian dollar drift 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 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 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 and moving to a one week high above 0.9150, the AUD/USD spent the next two weeks turning around sharply and falling heavily to a then three month low close of 0.88.
Consumer confidence has tumbled to its lowest level in nearly three years after the Federal Government's budget. Westpac and the Melbourne Institute's long-running and widely watched survey of consumer sentiment dropped 6.8 per cent between April and May to a reading of 92.9; solidly below the 100-point level where optimists equal pessimists. However, the national gloom over the nation's key financial document is far from unprecedented, with last year's budget eliciting a virtually identical 7 per cent fall in confidence, albeit from a slightly higher starting point. Unlike last year's budget though, where almost half the respondents expected no effect on their family finances over the next year, almost 60 per cent expect the first budget from the Coalition to make them worse off, with only 3.1 per cent expecting to be better off. Westpac's (ASX:WBC) chief economist, Bill Evans, says it will take another month or two to ascertain whether the budget has a lasting impact on confidence.
AUD/USD May 26 at 02:15 GMT 0.9235 H: 0.9244 L: 0.9229
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 Monday, the AUD/USD is just rolling over away from 0.9240 as it looks towards the key support level at 0.9220 again. 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 once again. Current range: trading around 0.9235.
Further levels in both directions:
• Below: 0.9220 and 0.9100.
• Above: 0.9380 and 0.9400.
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 moved back strongly above 60% as the Australian dollar has fallen back towards 0.92. The trader sentiment remains in favour of long positions.
Economic Releases
- 06:00 UK Nationwide House Prices (26th-30th) (May)
- JP BoJ release minutes