AUD/USD: Runs Into Stiff Resistance At 0.95

AUD/USD for Tuesday, October 15, 2013

In the last couple of weeks the AUD/USD has enjoyed a solid and steady move higher from the support level at 0.93 up to the present significant resistance level at 0.95. Throughout the first half of September the AUD/USD enjoyed a solid run which was punctuated by a strong surge higher sending it to a three month high just above 0.95. Since that time it has traded within a range between 0.93 and 0.95 finding support at the former level and more recently resistance at 0.95. About a month ago the AUD/USD had been trying valiantly to stay above the support level at 0.89 as all week it placed downward pressure but was unable to sustain any break lower. At the beginning of August it moved very well from three year lows to move back above the key level of 90 cents and beyond to a two week high just above 0.92 to finish out that week. At the end of July the AUD/USD fell very strongly and appeared to resume the medium term down trend as it moved to a new three year low near 0.8850 but it reversed very well and looked poised to continue back towards the longer term resistance level at 0.93. For the most part of the last week, it has moved very little and been quite subdued staying above the support level at 0.94.

Throughout July the AUD/USD placed constant pressure on the 0.93 level again as it continued to place buying pressure on that level however the resistance there was able to stand firm. It was during this time it did very well to maintain its price level well above 0.92 as place upward buying pressure on the resistance level at 0.93. Over the course of the last couple of months the 0.93 level has provided reasonable resistance to any movement higher and now that this level has been broken, it is providing a measure of support. Throughout July, the AUD/USD spent most of its time trading between 0.90 and 0.93 threatening to break through either level at multiple stages. The 0.9150 level also became a key level during that time providing both some resistance and more recently support, and this was called upon again a few weeks ago providing some much needed support however it was completely ignored a couple of weeks ago as the AUD/USD fell heavily through it.

It was only a couple of months ago that many were waiting for the AUD/USD to break below the 90 cents level and then it would have been a matter of how far can it drop. It had continued to drift lower and move towards the 90 cents level, a level not seen for three years. Considering the speed of its decline throughout several months this year, the last couple of months has seen a significant slowing down and almost some consolidation as it has rested well on the support at 0.90 and now made its way back to 0.95. Throughout April to August, the AUD/USD established a strong medium term down trend with lower peaks and lower troughs, as it has moved from near 1.06 down to near 0.90 in that time. Up until mid April, the Australian dollar was enjoying its best move higher since October and November last year. After making a solid run higher in the middle of June back towards the key level of 0.97, the AUD/USD has since continued its strong and steady decline moving to below 0.90 and levels not seen since near the middle of 2010.

The week got off to slow start in Australia, as Home Loans posted a sharp decline of -3.9%. It was the weakest reading from the important housing indicator since March 2011. The indicator has looked solid in recent readings, so the poor release surprised the markets, which had expected a smaller drop of -2.1%. In China, CPI jumped from 2.6% to 3.1%, its highest level since February. This beat the estimate of 2.8%, and points to increased activity in the Chinese economy. The Australian dollar is sensitive to key Chinese data, as the Asian giant is Australia's number one trading partner.
AUD/USD Daily Chart" title="AUD/USD Daily Chart" src="https://d1-invdn-com.akamaized.net/content/picb05a8637ec79725bc331e68e8cc48fad.gif" height="244" width="550">
AUD/USD 4 Hourly Chart" title="AUD/USD 4 Hourly Chart" src="https://d1-invdn-com.akamaized.net/content/pic0d16d88f60ab796c676ee13b5484439e.gif" height="244" width="550">
AUD/USD October 14 at 22:25 GMT 0.9491 H: 0.9507 L: 0.9453

During the early hours of the Asian trading session on Tuesday, the AUD/USD is just easing away from the resistance level at 0.95 after having moved up strongly to that level in the last several hours. Despite its slowing and slight recovery the last couple of months, the Australian dollar has been in a free-fall for a lot of this year. In moving through to 1.0580 only a few months ago, it moved to its highest level since January. Current range: trading around 0.9490.

Further levels in both directions:

• Below: 0.9400, 0.9300 and 0.8900

• Above: 0.9500.

OANDA’s Open Position Ratios
AUD/USD" title="AUD/USD" src="https://d1-invdn-com.akamaized.net/content/picde0f1c13c4b92e622d23927cb58816c0.gif" height="25" width="542">
(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for the AUD/USD has moved slightly back above 60% as the Australian dollar has moved up towards 0.95 again. The trader sentiment remains in favour of long positions.

Economic Releases

00:30 AU New motor vehicle sales (Sep)
00:30 AU RBA minutes of prior October meeting
04:30 JP Capacity Utilisation (Aug)
04:30 JP Industrial Production (Final) (Aug)
08:30 UK CPI (Sep)
08:30 UK Input & Output Prices (Sep)
08:30 UK ONS House Prices (Aug)
09:00 EU ZEW (Economic Sentiment) (Oct)

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