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Aussie Back in trend?

Market Analysis


U.S. initial jobless claims fell 4k to 232k in the week ended May 13 after slipping 2k to 236k previously. That dropped the 4-week moving average to 240.75k from 243.5k. The labor market data remain very strong. U.S. Philly Fed index on the other hand, rebounded 16.8 points to 38.8 in May, stronger than expected, after tumbling 10.8 points to 22.0 in April and 10.5 points to 32.8 in March. The surprisingly strong 19.7-point surge to 43.3 in February resulted in the highest reading since early 1984.

Despite the fact that US dollar losses continued in overnight trade, the dollar edged higher after the much better Philly Fed index print, and lower than expected jobless claims. EURUSD fell 10 points to 1.1125, as USDJPY touched 111.77 from near 111.60, while Equity futures continues to indicate a modestly lower Wall Street open, while yields were a bit firmer.

The announcement of the data did not have much of an impact on Aussie though, since AUDUSD rise only 8 points to 0.7440.  Hence despite the general picture of U.S. politics be the driver of the Market, Aussie seems to be weak today, in comparisons with US Dollar.In the 4 hour chart, AUDUSD currently moves below the upper Bollinger bands for two consecutive sessions. However, the luck of upper shadow in the 1st candlestick and the big down shadows in the last 2 candles, suggested that Downtrend observed since March 21, is likely to be continue. A Short position was taken with entry at 0.7438. By using ATR, Target 1 was set at 0.7410, which is also close to 50-period EMA and Target 2 was set at 0.7380. Support set at 200- period EMA, i.e. at 0.7480.

An Andrews Pitchfork was applied on the chart, with an Upper Trigger Line since March 21. Hence the fact that the pair did not manage to break the upper Trigger Line strengthened even more this entry. In the Daily chart, RSI is neutral at 45 while MACD remains negative.

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Andria Pichidi

Market Analyst


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