This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
This puts the 20-day average in play at 0.9313 and judging by the fact it is starting to turn higher we could see buyers here. The 20-day seems to be important now for the bulls.
A break of the 20-day could see the lower Bollinger being tested in the short-term, which also happens to converge with the 200-day MA and series of lows through May. Stochastics have broken through the 20 level (although could still give a failed signal), so I am watching this oscillator as it could indicate a deeper sell-off.
In a sideways trading market, Bollinger bands are generally excellent ways of playing this market condition.
I suggested potentially buying AUD/USD last week at 0.9350 (the 38.2% retracement of the recent rally), but price has breezed through this level, so I have closed the positions (given the failure of any bounce). I will look to see if the pair finds buyers at the 20-day, otherwise there are signs the pair could head to the lower Bollinger.
The break higher in US yields seems be getting the USD bulls fairly excited.