Early selloff in AUDUSD today, reversed in European/NY trading
The AUDUSD opened lower on the back of China's trade balance, which showed a modest -3.3% decline in exports and a whopping -19.9% decline in imports.
The data sent the AUDUSD price below the 100 hour moving average (blue line in the chart above) and that is where trading was centered below for the 1st half of the trading day.
Early in the European/London session, the price started to extend back above the key 100 hour moving average level, and that helped turn the bias back around for the pair (i.e. more bullish). The 200 hour moving average (green line in the chart above) was subsequently broken as well.
For buyers, both the 100 and 200 hour moving averages are now risk defining levels (they are both at 0.7795 now). this is the 2nd consecutive day that the AUDUSD has traded above the 200 hour moving average. on Friday, the momentum faded on the back of the stronger US employment statistics. Today the push above has less upside momentum, but staying above the MA's is a slight bullish positive for the pair
On the bearish side of the ledger is the failure to extend the gains to the next targets to the topside. Those targets include the 50% retracement at the 0.78246 level. The price has traded above this level today. However, there has not been a closing bars to help confirm the buyers are strong. The 0.78485 to 0.78579 are also levels that need to be breached,if the buyers are to take more control. So although there are reasons to feel constructive to the upside from a technical perspective, there are concerns from the lack of momentum.
Also of concern is the fundamentally picture. The RBA semi surprised the market with a cut in interest rates citing lower growth, inflation and employment. Gov. Stevens, still thinks the AUDUSD is overvalued. In the past he has expressed the 0.7500 level as a more equilibrium level for the pair. Commodities are generally off the lows, but are still at low levels. The central bank reduced the 2015 growth forecast downwards to 1.75-2.75 percent, from 2-3 percent previously. So although technicals may be a little more bullish, rallies should also find sellers. A move back below the 100 and 200 hour MA may also attract sellers as well.