The FX market has been ignoring the continued weakness in US equity prices on Tuesday, with all currencies reversing overnight price action against the USD since the New York open. The Euro, Sterling and Swissy are all moderately bid heading into the London fix, while the Yen has begun to find some offers. This is in sharp contrast to an overnight session which saw significant broad based USD and Yen buying. Meanwhile Eur/Gbp has come under some intense pressure to break below key barriers by 0.9000 into the London fix. Downbeat comments from ECB Provopoulos, weaker Eurozone GDP and better than expected UK industrial production data have all contributed to the acceleration in cross related sales. The Australian Dollar has held up quite well today following the latest 25bp RBA rate cut, with a local article suggesting that the RBA is done, helping to bolster the commodity currency. The DJIA is the biggest equity loser on the day, down some 2.00%, while oil and gold diverge, with oil down some 2.50% and gold up nearly 1.50%.
Eur/Aud: (LONG TRADE TRIGGERED) The cross continues to trade with a heavy tone since breaking down from a multi-day consolidation in late March. Setbacks however have now extended back to a very well supported area, with the daily chart showing the cross now trading at the bottom of a longer-term range. With daily studies showing oversold, scope exists for yet another bounce out from current levels back into the middle of a very familiar range that has defined trade since October 2008. Our long has been triggered and is currently well out of the money. We will look to exit on the close if no upside is seen as per instruction. Position: LONG @1.8655 FOR A 1.9450 OBJECTIVE, STOP @1.8455. Stops to be trailed to cost on a break back above 1.8800. If 1.8800 not broken, position to be closed out at NY close (5pm EDT) on Tuesday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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Monday-Friday (between 5:30am-6:30am EST)
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“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
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