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3 Apr 2014
AUD/USD - Break below 0.9210 exposes 0.9070/0.91 - ANZ
FXStreet (Bali) - Tim Riddell, Head of Global Markets Research at ANZ, thinks that a close below 0.9210 in AUD/USD should be enough to return to 0.9070-0.9100 within larger moves back towards 0.8900.
Key Quotes
"The squeeze in AUD/USD during March may have exceeded the expected retracement target of 0.9210 (50% of the decline from October’s 0.9760 high), but the patterns off January’s 0.8655-60 low are still considered to be a series of corrective rebounds rather than some form of reversal."
"The faltering in front of 0.9335-40 (61.8% retracement) may not have occurred with daily momentum divergence, as seen in NZD/USD, but shorter term indicators (not shown) have displayed distinct divergence above 0.9250."
"There is some latent risk of measured moves towards 0.9360 or even 0.9400, but the current bias, as outlined above, is that the retracement cycle is
mature and poised to correct back towards the congestion area seen in February (0.8900-0.9070). A close below 0.9210 should be enough to trigger a flush towards 0.9070-0.9100 within larger moves back towards 0.8900."
"The rebounds in AUD/USD have occurred with standard retracements developing in EUR/AUD and GBP/AUD. These moves also are showing signs of maturity."
"Therefore, near-term rebounds in both crosses need to be closely monitored in order to provide confirmation of any break in AUD/USD. Even if AUD maintains its recent uptrend, these other crosses should provide indications of end-cycle divergence. This all suggests that the AUD is unlikely to sustain further strength and is at increasing risk of corrections through its recent gains."
Key Quotes
"The squeeze in AUD/USD during March may have exceeded the expected retracement target of 0.9210 (50% of the decline from October’s 0.9760 high), but the patterns off January’s 0.8655-60 low are still considered to be a series of corrective rebounds rather than some form of reversal."
"The faltering in front of 0.9335-40 (61.8% retracement) may not have occurred with daily momentum divergence, as seen in NZD/USD, but shorter term indicators (not shown) have displayed distinct divergence above 0.9250."
"There is some latent risk of measured moves towards 0.9360 or even 0.9400, but the current bias, as outlined above, is that the retracement cycle is
mature and poised to correct back towards the congestion area seen in February (0.8900-0.9070). A close below 0.9210 should be enough to trigger a flush towards 0.9070-0.9100 within larger moves back towards 0.8900."
"The rebounds in AUD/USD have occurred with standard retracements developing in EUR/AUD and GBP/AUD. These moves also are showing signs of maturity."
"Therefore, near-term rebounds in both crosses need to be closely monitored in order to provide confirmation of any break in AUD/USD. Even if AUD maintains its recent uptrend, these other crosses should provide indications of end-cycle divergence. This all suggests that the AUD is unlikely to sustain further strength and is at increasing risk of corrections through its recent gains."