The Australian dollar tripped some light stops above the Asian high on the way to 0.9294. Offers ahead of 0.9300 are the main obstacle for the Aussie but if the US dollar continues to slump, it will give way eventually.
USD just can’t seem to find its legs for three reasons:
- Speculative longs were at a 6-week high and traders are scaling out of longs as the summer doldrums hit
- The market is seeing weaker US growth, especially on soft corporate revenue
- The taper is mostly priced in but it doesn’t mean rates are going higher for 2+ years
I don’t necessarily agree with those, especially growth.
Other currencies have beaten up the dollar in the past week but the Aussie hasn’t really participated. Today’s gains take out the minor downtrend/channel since late June but the July 11 high of 0.9306 and the June 26 high of 0.9345 are the main resistance points. The entire currency market has been moving in tandem over the last 10 days and similar levels have broken on other charts so AUD shorts are probably nervous. I was bearish on AUD at the start of the week but if those levels break, look for an extended rally.
AUD/USD daily chart