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7 Jul 2014
Bounces in AUD/USD to be sold - BBH
FXStreet (Bali) - Marc Chandler, Global Head of Currency Strategy at BBH, suspects that bounces in the AUD/USD will start being sold.
Key Quotes
An evaporation of domestic and foreign demand, as evidenced by the larger than expected drops in both retail sales and exports, coupled with the continued jawboning by the central bank, managed finally to turn back the Australian dollar, but not before it reached new 7-month highs just above $0.9500. The RSI is neutral, and the MACDs are crossing down. The 5-day moving average is poised to cross below the 20-day average in the days ahead.
We suspect there are many late longs that are trapped amid recent talks of a move back to parity. This suggests that bounces will be sold, but a break of $0.9320 may force selling in the hole. Even if, as we suspect, the Australian dollar is in a broad trading range, the lower end of it is still at a distant (given the low volatility) $0.9200.
Key Quotes
An evaporation of domestic and foreign demand, as evidenced by the larger than expected drops in both retail sales and exports, coupled with the continued jawboning by the central bank, managed finally to turn back the Australian dollar, but not before it reached new 7-month highs just above $0.9500. The RSI is neutral, and the MACDs are crossing down. The 5-day moving average is poised to cross below the 20-day average in the days ahead.
We suspect there are many late longs that are trapped amid recent talks of a move back to parity. This suggests that bounces will be sold, but a break of $0.9320 may force selling in the hole. Even if, as we suspect, the Australian dollar is in a broad trading range, the lower end of it is still at a distant (given the low volatility) $0.9200.