Good day forex traders.
The end of the trading week is here and soon the end of the month of July. I feel that time flies faster as this koala here gets older. Could it be because one get’s busier? The illusion of how time flies is a result of a lack of time to get all things done? Heh.
In the previous AUD/USD forecast we noted that both SMAs were bullish and that indicated the possibility of further bullish momentum. 1.0430 is an immediate resistance and after which lies the extended bullish target of 1.0560.
The AUD/USD did head higher after breaking through the immediate support as mentioned.
SMA 20 = Bullish
SMA 50 = Bullish
The region above lies uncertainty from a technical point of view. There is a short term trend line above that may act as a resistance ( black thin line ). Should the trend line fail, 1.0560 may be tested next.
The currency pair was initially headed for a bearish week but developments mid week reversed the trend and erased all losses. ECB’s Draghi mentioned that they would do whatever it takes to preserve the 17 nation Euro currency and that brought about intense speculations of upcoming policy actions by the central bank in support of the Euro. Risk appetite was instantly restored and high yielding assets and currencies such as the Australian dollar benefited from the frenzied party.
This development would be what i call a knee jerk reaction, sentiment style! Investors usually get all excited about hawkish comments but when the dust settles and reality sets in, fundamental concerns return and so will the apprehension. This coming week features the release of Australia’s trade balance and being an export economy, this will be crucial. As usual, keep informed of China developments too. Any slow down will almost likely to affect the Aussie.