AUDUSD at 0.6% gain yesterday


AUDJPY was the biggest mover yesterday out of the major currencies, presently showing a gain of 0.8%. The move has come after China trade data today revealed a bigger than expected import figure, which, as always, was taken as an Aussie buying cue by markets. A backdrop of higher global stock markets is another positive for this cross, which is widely seen as a proxy on global investor risk appetite.

Hence as I wrote on Tuesday, “We anticipate the bullish view of USDJPY to continue, with the BoJ seen remaining committed to its dovish policy stance for the foreseeable, which contrasts to the Fed’s tightening path. Hence Long entries have been taken at USDJPY and AUDJPY. Therefore, with the break of the significant 114.00 level and the break of May’s highest high Fractal in USDJPY, an entry was taken at 114.40. Daily Targets have been set at 115.00 and 115.50.

Elsewhere, AUDJPY has remained on the top, moving above 87.00, but also this week it manages to stay above the significant 200 period EMA in the weekly chart, which is the 86.00 level. Hence today morning after AUDJPY broke the last high fractal in the daily chart, another long entry was taken at 87.13.” Hence entry on USDJPY still holds, while AUDJPY entry hit both targets, with Net gain +77 pips.

Nevertheless, yesterday Dollar continues its weakens after Chair Fed’s Yellen has concluded her testimony. There wasn’t an attempt to walk back from the cautiously optimistic tone from yesterday’s testimony where she hedged the softer inflation dynamics.

Hence we have seen US dollar maintaining the same behavior since Wednesday, with AUDUSD following EURUSD’s up and then more firmly down action following Yellen’s remarks. Hence AUDUSD is showing a more moderate 0.6% gain on the day, although about 20 pips off its 0.7740 peaks, which is the loftiest level pegged since March.

Despite the fact that 0.7700 has been a strong resistance level, this morning a Long position was taken in the particular pair , in a Daily and Weekly time frame, after today’s open at 0.7728 followed with 3 Daily white soldiers to close the week strongly and break above the highest high fractal for the last 4 months, which is at 0.7710. Therefore, Entry was taken at 0.7752, with support at 0.7600.

On the topside, the 0.7700 level has been an ominous level for Aussie bulls, as numerous gains above here over the last two years have consistently proved to be short-lived affairs. However since this ominous level has been broken the last 2 Days, Long-term targets (Daily and Weekly) have been set above that level, at 0.7800 and 0.7850 respectively.

The pair appears to have confirmed a Tweezer bottom early June in the Daily chart, while it currently presents an extension of the upper Bollinger bands pattern. The parabolic SAR turned positive yesterday and although this remains against the higher time frame trend a retrace to target 1 is probable. Nevertheless, RSI is at 70, with further steam towards the overbought territory.

VIAAndria Pichidi, HotForex
Andria Pichidi is a Market Analyst at HotForex. She has been awarded a BSc in Mathematics and Physics from the University of Bath and an MSc degree in Mathematics, while she holds a postgraduate diploma (PGdip) in Actuarial Science from the University of Leicester.