All trading involves risk. Losses can exceed deposits.

AUD/USD technical view - targeting $0.7150 AUD/USD

As we can see from the daily chart, AUD/USD is trending lower and should be traded from the short side.

All trading involves risk. Losses can exceed deposits.
Aud
Source: Bloomberg

We have trend, momentum price action, fundamentals and sentiment working against the Aussie right now, but the key question is whether we get a short covering counter-rally. The probability of a rate cut from the RBA by the August meeting has increased to 62%, while the implied probability of a rate hike in the US continues to fall. Key terms of trade (iron ore and steel) are in free-fall and the speculative players are still net long AUD.

Last week’s break of the head and shoulders pattern targets sub 72c. The pair is holding below the October and December former double top, so if we see another acceleration in selling then I would look to jump on board. Key support comes in at $0.7331 and the 50% retracement of the 14.8% rally between January to April. Any upside should be limited to $0.7450.

AUM-AUD-USD-090516-SML-v2
Click to enlarge

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.

Find articles by analysts