AUD/USD Settles Around 0.9260

AUD/USD For Wednesday, May 28, 2014

Over the last 24 hours, the Australian dollar has been able to rally a little higher and move up to a short term resistance level around 0.9270 before just easing back a little. It has established a narrow range during this time between around 0.9235 and 0.9270 before appearing to settle around 0.9260. It was only a couple of weeks ago that the Australian dollar was placing pressure on the resistance level at 0.94 when it was able to poke through for a short period and reach a four week high in the process. However, since that time it has slowly drifted lower and found support again around 0.9220. This level is being revisited after previously providing some support several weeks ago. The Australian dollar did well to finish out a few weeks ago in moving through the resistance level at 0.93 and maintaining the break. Prior to the breakthrough, the Australian dollar had fallen back down below the 0.93 level and settled within a very narrow range just below the level before surging back up.

The last month or so has seen the Australian dollar drift lower from resistance just below 0.95 after reaching a six month high in that area and down to the recent key level at 0.93 before falling lower. During this period, the 0.93 level has become very significant as it has provided stiff resistance for some time. The Australian dollar appeared to be well settled around 0.93 which has illustrated the strong resurgence it has experienced throughout this year. For the best part of February and March, the Australian dollar did very little other than continue to trade around the 0.90 level, although at the beginning of March it crept a little lower down to a three week low below 0.89. Towards the end of March however, the Australian dollar surged higher strongly moving to the resistance level at 0.93 before consolidating for a week or so.

For several months either side of the New Year the Australian dollar established and traded within a narrow range roughly between 0.88 and the previous resistance level at 0.90. Back in January the Australian dollar was able to rally higher pushing through the resistance at 0.90 to a one month high near 0.91, however it quickly returned to more familiar territory below the resistance levels at 0.90 and 0.88. After showing some resilience in early December moving to a one week high above 0.9150, the AUD/USD spent the next two weeks turning around sharply and falling heavily down to a then three month low close to 0.88.

Prime Minister Tony Abbott denies he’s facing internal party backlash on his budget and won’t surrender it in the face of pressure to compromise over its most unpopular measures. Mr Abbott is confident the coalition’s first budget will pass the Senate because the alternative would be a double dissolution election. Senior government ministers have signalled compromising on key budget reforms such as higher education interest rates and the GP co-payment, amid a fierce public backlash and a hostile Senate. Continuing the budget sell, Mr Abbott said his team “absolutely” understood the “iron necessity” of sticking with difficult and unpopular budget measures. “We are not going to surrender our budget commitments,” Mr Abbott told reporters in Adelaide. But negotiations were inevitable. “You have got to negotiate your legislation through the parliament,” he said. Mr Abbott was confident that the government would get the budget through the Senate in the end, because the alternative would be a double dissolution election.

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AUD/USD May 28 at 02:45 GMT   0.9256   H: 0.9268   L: 0.9250

AUD/USD Technical