The AUD/USD is presently trying to rally a little and move back towards 0.98, after having recently bounced off the short term support level at 97 cents late last week. It has experienced its worst week in a long time which has seen it continue to move to new lows near 0.97, from highs not so long ago above 1.0250, although in the last couple of trading days it has settled a little and found some support at 97 cents.
It has slowed its decline a little however in this recent period and moved to a new 11 month low near 0.9700. It is likely the 1.00 level may now provide some resistance to higher prices as the AUD/USD tried to claw back some lost ground. At the end of the week a couple of weeks ago, it experienced its largest 24 hour drop in a long time, falling strongly down through 1.02 and 1.01. Last week saw this form continue falling sharply back down below parity.
It has now experienced an ordinary last couple of weeks as it wasn’t so long ago it was moving up above 1.03 and threatening the key level at 1.0360. Up until recently, the 1.02 level was one of significance, presented as a long term support level; However, this has now clearly been broken.
The pair had been showing some bearish signs over the last few weeks as it continued to place selling pressure on the 1.0220 and 1.02 levels. The RBA rate cut a couple of weeks ago was the catalyst for a strong push lower, seeing it just fall very heavily as if all support gave way.
The past few weeks have seen the AUD/USD establish a strong medium term down trend with lower peaks and lower troughs, as it has moved from near 1.04 down to below 1 during that time. In the previous few weeks, the AUD/USD spent most of its time trading between 1.02 and 1.0360. During that time, it moved up to a two week high and back towards 1.04. Recently though, it quickly handed back all of those gains and then some. A couple of times in that same period it received solid support around 1.0220, just above the key long term level at 1.02.
Over the course of the last month, the Australian dollar has fallen very sharply from near 1.06 to its lows near 0.9700, and in doing so, it also completely ignored any likely support at either 1.04 or 1.0360. In contrast, the week prior, it enjoyed a solid week moving strongly off the key level of 1.0360 towards 1.06 and to its highest levels since January. Up until mid April, the Australian dollar was enjoying its best move higher since October and November last year. Up until earlier this week, the AUD/USD spent the best part of a month trading between the two key levels of 1.0220 and 1.0360 and it will take some effort to return it to this range, with the resistance being offered at the 1.02 level and now likely at 1 too.
The Australian dollar continues to slide against the US currency, as the pair broke through the 0.98 line in Friday’s Asian session. The pair has fallen to the mid-97 range and shows no signs of finding its footing.
Overall, the Aussie has had a miserable May, shedding a remarkable six cents since the start of the month. The beleaguered Aussie has been taking it on the chin from all corners. New Motor Vehicle Sales, an important consumer indicator, looked weak, and the budget release indicates that Australia will post a record deficit.
The RBA has also contributed to the currency’s free-fall. The recent interest rate cut, which surprised the markets, pushed down on the Australian dollar. The central bank added more fuel to the fire when it stated in its Monetary Policy Statement that it expected “subdued” growth from the economy.
AUD/USD May 20 at 03:10 GMT 0.9773 H: 0.9775 L: 0.9730
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During the early hours of the Asian trading session on Monday, the AUD/USD is trying to rally a little and move back towards 0.98, after having recently bounced off the short term support level at 97 cents late last week. Up until a few weeks ago, the AUD/USD was spending a fair amount of time within a trading range roughly between the key levels of 1.04 and 1.05, however that range seems a distant memory as it has fallen down to a 11 month low near 0.9700. In moving through to 1.0580 only a few weeks ago, it moved to its highest level since January. Current range: trading right around 0.9765.
Further levels in both directions:
• Below: 0.9800.
• Above: 1.0000, 1.0360 and 1.0550.
(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The long position ratio for the AUD/USD remains above 70% which is it highest level in a long time, as the Australian dollar has moved back down towards 97 cents. The trader sentiment remains strongly in favour of long positions.
Economic Releases
- 05:00 JP Leading indicator (Final) (Mar)