AUDUSD has bulled higher into a key resistance zone ahead of tomrrow’s FOMC meeting – it’s time for the USD to pivot back to strength very soon or we’re back in technical limbo again.
AUDUSD has bulled higher as the market has decided that EU worries for the moment have been set aside sufficiently to allow for a further unwinding of risk averse positioning, particularly given strong anticipation that the FOMC is on the cusp of setting off a new round of liquidity in the US. Considering the strength of the move, the Fed will need to deliver on expectations tomorrow and perhaps then some to keep this rally going, though it will be equally important that the EU summit provides signs of a credible path toward a more permanent easing of the sovereign debt stress at the periphery.
Chart: AUDUSD
AUDUSD is closing in on the final levels that must hold to keep the bearish technical in place – the 1.0225 area that was the previous low on the way down and the 200-day moving average slightly higher. To the downside, those looking for this latest move to blossom into more upside will look at parity as the key support level. Stay tuned – it’s hard to believe that we are in for another cycle of gung-ho risk taking with so many critical unknowns down the road, but we need a big USD move here soon to get the USD bull back on track or else we’ll soon be back in technical limbo again…
John J Hardy,
SAXO BANK