AUD/USD – Looking for Support at 0.8650 Again

AUD/USD for Monday, October 13, 2014

The last month has not been an enjoyable time for the Australian dollar as it endured a strong decline moving from close to 0.94 down to below 0.8650 and an eight month low in the process. For the last couple of weeks it has taken a breather mainly between 0.87 and 0.88.  Even though it has met significant resistance at the 0.88 level, it was able to move through to a two week high above 0.8900 towards the end of last week before recently falling sharply below 0.87 again to finish out last week.   Several weeks ago the Australian dollar found some much needed support at 0.8950 and rallied back up to just shy of the key 0.90 level before resuming its decline. The long term key level at 0.90 was called upon to desperately provide some much needed support to the Australian dollar, which it did a little a few weeks ago, however it has more recently provided resistance.

Back at the beginning of September the Australian dollar showed some positive signs as it surged higher again bouncing off support below 0.93 and reaching a new four week high around 0.94 however that all now seems a distant memory.  The Australian dollar reached a three week high just shy of 0.9480 at the end of July after it enjoyed a solid period which saw it surge higher through the resistance level at 0.9425 to the three week around 0.9480, before easing back towards that level. The Australian dollar enjoyed a solid surge higher reaching a new eight month high above 0.95 at the end of June, only to return most of its gains in very quick time to finish out that week. Since the middle of June the Australian dollar has made repeated attempts to break through the resistance level around 0.9425, however despite its best efforts it was rejected every time as the key level continued to stand tall, even though it has allowed the small excursion to above 0.95.

After the Australian dollar had enjoyed a solid surge in the first couple of weeks of June which returned it to the resistance level around 0.9425, it then fell sharply away from this level back to a one week low around 0.9330 before rallying higher yet again. Its recent surge higher to the resistance level around 0.9425 was after spending a couple of weeks at the end of May trading near and finding support at 0.9220. Throughout April and into May the Australian dollar drifted 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 similar 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.

Australia’s gyrating jobs figures are making it harder for the central bank and investors to gauge the impact of record-low interest rates on the nation’s economy.  The number of people employed fell by 29,700 last month after rising 32,100 in August, the statistics bureau said in Sydney today. It yesterday announced a review of methodology designed to smooth seasonal factors that produced a record 121,000 increase in jobs in August and would’ve shown a 172,000 loss in September.  “The admission of statistical discrepancies has essentially muddied the state of the labor market,” said Savanth Sebastian, an economist at a unit of Commonwealth Bank of Australia in Sydney. “Not only does it make it difficult for investors and analysts to get a clearer picture of employment growth, but it will result in Reserve Bank policy makers being more cautious when it comes to interest-rate decisions.”

(Daily chart / 4 hourly chart below)

AUD/USD October 12 at 23:00 GMT   0.8679   H: 0.8696   L: 0.8678

AUD/USD Technical

S3

S2

S1

R1

R2

R3

0.8650

—

—

0.8800

0.9000

0.9100

During the early hours of the Asian trading session on Monday, the AUD/USD is continuing to ease below the key 0.87 level after recently falling sharply from resistance at 0.89. The Australian dollar was in a free-fall for a lot of last year falling close to 20 cents and it has done very well to recover slightly to near 0.95 again earlier this year. Current range: trading right around 0.8680.

Further levels in both directions:

• Below: 0.8650.

• Above: 0.8800, 0.9000, and 0.9100.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for the AUD/USD has moved back up above 70% as the Australian dollar has fallen back through 0.87 again. The trader sentiment remains in favour of long positions.

Economic Releases

23:01 (Sun) UK BRC Retail Sales Monitor (Sep)

23:50 (Sun) JP M2 Money Supply (Sep)

23:50 (Sun) JP CGPI (Sep)

EU Eurogroup meeting in Luxembourg

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.