AUD/USD: Support At 0.77 Continues

AUD/USD for Friday, February 13, 2015

For the last couple of weeks the Australian dollar has steadied well and traded in a narrow range between support at 0.77 and 0.78. In the last 12 hours it has rallied a little higher again back towards 0.78 however it has since eased back and is presently trading in a very narrow range above the key support level at 0.7700. Earlier last week the Australian dollar was on a roller-coaster ride dropping sharply to a new multi-year low below 0.7630 before rallying strongly and moving back up above the 0.77 level and more recently 0.78 before easing back again into its present range. It is presently relying on support from the current key level at 0.77. Prior to all the recent activity, in the last couple of weeks the Australian dollar fall very sharply and break lower from the trading range that had been established roughly between 0.8050 and 0.8200. The 0.77 range is currently offering some support to the Australian dollar, which has allowed it to consolidate a little and temporarily stop the recent decline over the last week.

Several weeks ago it made numerous attempts at the resistance level at 0.82 only to be sent back often before finally finishing that week moving through this key level. In doing so it was able to reach a one month high near 0.83 before being sold back down again towards 0.82 as the resistance and selling activity above this level kicked in. Over the Christmas / New Year period, the Australian dollar seemed to have been content with trading in a narrow range below the resistance at 0.82, which continues to remain a key level as it is presently provides resistance. The Australian dollar experienced a disappointing November and December moving from resistance around 0.88 down to the new lows recently. For a couple of months from September through to November, the Australian dollar did well to stop the bleeding and trade within a range between 0.8650 and 0.88 after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650.

Back at the beginning of September the Australian dollar showed some positive signs as it surged higher again bouncing off support below 0.93 and reaching a new four week high around 0.94 however that all now seems a distant memory. It seems a long way away now but the Australian dollar reached a three week high just shy of 0.9480 at the end of July after it enjoyed a solid period which saw it surge higher through the resistance level at 0.9425 to the three week around 0.9480, before easing back towards that level. The Australian dollar enjoyed a solid surge higher reaching a new eight month high above 0.95 at the end of June, only to return most of its gains in very quick time to finish out that week. Since the middle of June the Australian dollar has made repeated attempts to break through the resistance level around 0.9425, however despite its best efforts it was rejected every time as the key level continued to stand tall, even though it has allowed the small excursion to above 0.95.

Australia’s economy unexpectedly lost jobs in January, data showed on Thursday, while jobless rate spiked to a 10-year high. The number of people employed shrank 12,200 in the month, according to figures from the Australia Bureau of Statistics, versus a Reuters poll expecting an addition of 5,000 jobs, pushing the unemployment rate to 6.4 percent, much higher than the 6.2 percent expected print. The data will add to the case of further monetary easing. The Reserve Bank of Australia cut rates last week for the first time since August 2013 by a quarter point to a fresh record low of 2.25 percent. The debt market now implies a 60 percent probability of a rate cut in March, and over 90 percent for April, Reuters reported. It even moved to price in a sizeable chance rates would hit 1.75 percent late this year.

(Daily chart / 4 hourly chart below)

AUD/USD February 12 at 21:45 GMT 0.7740 H: 0.7779 L: 0.7644

AUD/USD Technical

During the early hours of the Asian trading session on Friday, the AUD/USD is easing back a little towards the key support level at 0.77 after surging higher to 0.7780 in the last 12 hours. Current range: trading right around 0.7740.

Further levels in both directions:

• Below: 0.7700.

• Above: 0.8200, 0.8650, and 0.8800.

OANDA’s Open Position Ratios

(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 up a little back towards 55% as the Australian dollar has dropped sharply back under the resistance level at 0.82 and down to a multi-year low near 0.7600 before rallying back above the support at 0.77 in the last week. The trader sentiment remains in favour of long positions.

Economic Releases

• 09:30 UK Construction Output (sa) (Dec)
• 10:00 EU GDP (1st Est.) (Q4)
• 10:00 EU Trade Balance (sa) (Dec)
• 13:30 CA Manufacturing sales (Dec)
• 13:30 US Import Price Index (Jan)
• 15:00 US Univ of Mich Sent. (Prelim.) (Feb)

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