All trading involves risk. Losses can exceed deposits.

AUD/USD eyeing the 200-day moving average

I’ve been looking more favourably on the AUD of late and this seems to be the right call, with suggested long positions in the AUD against the NZD and CAD.

All trading involves risk. Losses can exceed deposits.

AUD/USD looks well supported and is eyeing the 200-day moving average at 0.9138 and neckline of the inverse head and shoulders just above. A break out here will naturally support the AUD against the crosses.

GBP/AUD (as shown in the chart) is looking vulnerable as well and I would certainly be trading this pair from the short side, despite the fundamentals being fairly neutral right now. The fact the BoE is likely to hike in Q1 is naturally bullish for the pound, but expected moves from the bank are priced in and it’s hard to see the market becoming more aggressive with its pricing structure than it already is, given the recent bias from the BoE to temper rate hike expectations.

In UK trade today we get the UK February inflation read and the market expects a twenty basis point fall to 1.7%. This is fairly interesting as inflation is now falling further from its 2% target, which could raise a few eyebrows. If FX markets are largely moving on inflation forces, a move below 1.7% should push GBP/AUD convincingly lower, especially with inflation in Australia at levels that the RBA would be looking more favourably at rate hikes than cuts.

Technically the pair is a sell. The neckline of the multi-month head and shoulders pattern has been breached and a subsequent close below the January 15 low of 1.8015 would clearly see the selling accelerate. The MACD on the daily chart is below zero and headed sharply lower, while the short-term moving averages are also headed lower, complimenting the bearish picture in the MACD in highlighting the downtrend. The pair does look a little oversold, so we could see a modest short-covering rally, however this should provide traders with a better entry level in which to sell.

What’s always good with GBP/AUD (similar to EUR/AUD), is that when this pair trends, it does so very well. 

AUD/USD
IG Charts

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