Forex: AUD/USD rebounds from 3½ year low

on Jan 21, 2014
Updated: Oct 21, 2019
Listen Tuesday, January 21th:_ After falling for four consecutive days and shedding 2.72 percent in the process, the AUD/USD yesterday scored an intraday gain of 0.30 percent in closing at 0.8802. The pair had earlier dropped to its lowest point since 22 July 2010, at 0.8755, but rebounded as that price failed to attract more bears to the market.

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Currently, the daily Stochastic is resident below its 20-line, indicating an oversold market and raising the prospects of a rebound. This view is supported by the daily RSI, which yesterday climbed away from its lowest point since 27 December.
Thus far today, the AUD/USD has been trading within the range 0.8798 to 0.8836, to be currently at 0.8822 – the point where Danske Bank’s latest technical indicators and signals suggest going short the pair with a target at 0.8737 and a stop-loss at 0.8874. According to the Danish bank’s technicals, the minor trend is descending, while the major trend is neutral.

However Credit Agricole continues to maintain a $5 million long position in the AUD/USD, with a stop-loss at 0.8630 and a target at 0.9530.
The French bank believes that the recent descent has been “mainly due to weaker labour data” in Australia, which has raised expectations that the Reserve Bank of Australia (RBA) will consider further policy action.

Credit Agricole maintains though that the RBA “is unlikely to ease rates further, at least not in the short term … because of late RBA members have been focusing primarily on the currency as a tool to steer monetary conditions”.
Its analysts note that inflation expectations have been starting to stabilise, supporting a neutral RBA policy stance for the time being, and suggest that investor focus will be on the Australian Consumer Price Index, due out tomorrow at 00.30 UTC.

Credit Agricole is picking minimal impact from the CPI on the RBA’s policy stance, “unless inflation surprises considerably lower”. Failing that eventuality, “we stick to the view that the AUD is likely to form a base around the current levels”.
Resistances today: 0.8830, 0.8870 and 0.8900.
Supports: 0.8800, 0.8775 and 0.8755.


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