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AUDUSD Consolidates After Five-Month High

by on April 9, 2014 5:19 pm GMT
 

The Australian dollar continues to push higher against the greenback, as traders dump the US dollar in typically fashion going into the FOMC minutes this afternoon. The US dollar is down roughly $1 in three sessions, which was triggered on the rejection of the daily 200 EMA. Robert Lynch, FX strategist at HSBC Holdings PLC, said there is “a broadly weaker U.S. dollar bias, but not necessarily tied to one specific event or condition.”

AUDUSD received a boost after the Westpac consumer sentiment and home loans month-over-month came in much better than expectations. Price action was unable to reach .9400 and pulled back slightly. Data from the Commodity Futures Trading Commission (CFTC) indicate that hedge funds and large speculators reduced their net-short positions. “With recent domestic data showing signs of improvement, the market has been very quick to remove shorts,” said Robert Rennie, head of FX and commodity strategy at Westpac Banking Corp.

The hourly chart of AUDUSD shows consolidation along the top of the recent move upward. Support has held at .9360, with additional support at .9345 and .9335. Price action is, currently, clustered on the small ascending trend line as momentum wanes just ahead of the FOMC minutes. The + DMI has is elevated, suggesting lingering bullish price action; but, the ADX is sloping downward.

1H Chart of USDCAD

1H Chart of USDCAD

The daily chart is showing price action – in doji form – stalling just under .9400. The RSI is in overbought territory at 71. The momentum in the current trend remains strong, but a pullback to .9300 is probable. Further support on the daily chart lies between .9220 and .9240, where the 200 EMA and price action support merge.

If AUDUSD can breakout, .9480 is open for the taking before seeing more resistance at .9525.

1D Chart of AUDUSD

1D Chart of AUDUSD