While
the value of the Aussie dollar against the US dollar remains elevated, and
while there are many forces that could push it lower, not least the recent
attempt by the Reserve Bank of Australia governor, Glenn Stevens, to talk it
down, it nevertheless remains stubbornly high.
As
can be seen on the daily chart above, the 200 Day Exponential Moving Average
(EMA) has become a strong barrier to any movement in the downward direction. It
is also true that the bounce of this level of support has not resulted in a
strong rise from there either, so we will continue to monitor with an eye
to a fall. This will require a catalyst, which could come in the form of the US
FOMC minutes of the last meeting, which will be released tomorrow (Wednesday).
If the record of the deliberations of the members of the committee give the impression that
interest rate rises in the US are likely to be brought forward, then the US dollar
will rise and the AUDUSD pair will fall. This will mean that the US Fed will
effectively being doing the job that the Aussie central bank wants done.
We
have long commented on the resilience of the Euro. Core interest rate reduction
by the ECB, negative overnight bank deposit rates by the same institution,
relatively high unemployment figures, damping rhetoric by various financial
figures including Mario Draghi and Christine Legarde, economic problems in
peripheral member states and an inflation rate that borders on deflation – none
of these things seem to be able to make the Euro trend like it used to do in the
olden days, which was very good for trading.
The
EURUSD rate has effectively been going sideways since late last year (see chart
above), so we say it is rangebound.
Now
that we are in the holiday period we can hardly expect the kind of economic
event that would cause a breakout, at least in the short term. As in the case
of the Aussie, discussed above, we are waiting to see what the mighty US dollar
does in order to possibly provide direction.
The
bias for the EURUSD pair is ultimately to the downside.
No comments:
Post a Comment