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31 Jul 2015
AUD/USD pressures key support after BIG spike
FXStreet (Guatemala) - AUD/USD is currently trading at 0.7318 with a high of 0.7367 and a low of 0.7234.
AUD/USD has seen a very keen spike on US employment costs and US treasuries, when it met supply at the aforementioned highs, falling back to test the downside of 0.7320 which has been a tough resistance over the last couple of days leading in to month end and falling to 0.7256.
The major has otherwise been dragged lower and lower on the sentiment of the FOMC for a rate hike looming by the end of the year, maybe even as soon as September, as the members of the board switch from, "Why hike?", to "Why not hike?".
The week ahead gets interesting with the Nonfarm Payrolls. These will be the most key event for the dollar this year so far given the timings and the latest FOMC statement. That coupled with Australia's employment data should give traders a real "run for their money". We also have the RBA's statement, however, current sentiment for the RBA is a period of stability, exposing the downside in the price of AUD/USD.
Analysts at Bank of America Merrill Lynch explained that the RBA appears relatively comfortable with rates where they are. "We have no doubt that in the short-term it continues to scan the environment for any downside risks, but we believe the hurdle for another cut is a high one. There has certainly been no catalyst in the data flow since its last meeting, which would prompt the RBA to consider cutting rates at its meeting next week. And, our base case remains that the Bank's comfort in keeping rates unchanged should gradually grow over time, allowing it to leave rates on hold for an extended period."
Technically in between key support/resistance
Technically, AUD/USD has been attempting to recover from the base of the two-year channel at 0.7188 and major support in the form of a long-term Fibonacci retracement at 0.7185 and the 14 year support line at 0.7144, as noted by Karren Jones, chief analyst at Commerzbank. "Rallies will find initial resistance at 0.7463/73, the 23.6% retracement short-term resistance line to remain directly offered."
AUD/USD has seen a very keen spike on US employment costs and US treasuries, when it met supply at the aforementioned highs, falling back to test the downside of 0.7320 which has been a tough resistance over the last couple of days leading in to month end and falling to 0.7256.
The major has otherwise been dragged lower and lower on the sentiment of the FOMC for a rate hike looming by the end of the year, maybe even as soon as September, as the members of the board switch from, "Why hike?", to "Why not hike?".
The week ahead gets interesting with the Nonfarm Payrolls. These will be the most key event for the dollar this year so far given the timings and the latest FOMC statement. That coupled with Australia's employment data should give traders a real "run for their money". We also have the RBA's statement, however, current sentiment for the RBA is a period of stability, exposing the downside in the price of AUD/USD.
Analysts at Bank of America Merrill Lynch explained that the RBA appears relatively comfortable with rates where they are. "We have no doubt that in the short-term it continues to scan the environment for any downside risks, but we believe the hurdle for another cut is a high one. There has certainly been no catalyst in the data flow since its last meeting, which would prompt the RBA to consider cutting rates at its meeting next week. And, our base case remains that the Bank's comfort in keeping rates unchanged should gradually grow over time, allowing it to leave rates on hold for an extended period."
Technically in between key support/resistance
Technically, AUD/USD has been attempting to recover from the base of the two-year channel at 0.7188 and major support in the form of a long-term Fibonacci retracement at 0.7185 and the 14 year support line at 0.7144, as noted by Karren Jones, chief analyst at Commerzbank. "Rallies will find initial resistance at 0.7463/73, the 23.6% retracement short-term resistance line to remain directly offered."