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AUDUSD looking to rollover

Market Analysis

AUDUSD, Daily               

The USD continues its recovery as the USD Index is hanging onto its gains from the Asian session and remains over the key psychological 100.00 level.  The Australian dollar rallied overnight following good trade data from China that saw their trade balance beat expectations at 355 billion yuan.  Expectations were for a 295 billion yuan surplus, so the actual reported figure was significant beat.  China is Australia’s major export market and with prices rising of key raw materials that Australia exports (notably Iron Ore Copper and Gold this has added to the recent gains in the Aussie.  The Reserve bank of Australia are also sounding more optimistic about domestic growth and the reemergence of inflation which is suggesting that further interest rate cuts were off the table, for the time being at least.  However, the recent rally in the AUDUSD (which has seen a 3.6% rise this year) is looking to cool.  There is a strong resistance zone around the 0.7700 level and the longer term monthly charts remain negative.  A SHORT position was taken last night at 0.7631 with target 1 at 0.7550 (a little over the 14 DATR and beyond the 23.6 Fibonacci level at 0.7565).  Target 2 is the strong congest zone between the 38.2 and 50.0 Fibonacci level at 0.7460.  The RSI remains positive at 62 and the parabolic SAR also remains positive, resistance to the move lower is the 20 DMA and 23.6 Fibonacci level around 0.7565.

 

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Stuart Cowell

Senior Market Analyst

HotForex

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