AUDUSD: A neutral stance is required

Jim Langlands FX Charts

Early losses saw Asia take the Aud down to 0.7422 on Friday, although these were later reversed through Europe/US trade, and a squeeze to 0.7460 was seen ahead of a close at 0.7445.

The momentum indicators are mixed at the start of the week, and in the absence of the UK/US a quiet session would seem to lie ahead. The daily charts still look mildly constructive, and above Friday’s high we might expect a run back towards minor resistance at 0.7480 and at 0.7500 ahead of the 23 May high of 0.7517. Above here would then look for a run towards 0.7540/45 and eventually to 0.7555 although that remains remote.

On the downside, support will be seen at Friday’s low of 0.7422 ahead of 0.7400/10 and the recent lows at 0.7384/88. Below this would open the way to the 12 May low of 0.7366 and 0.7350 (minor), ahead of the stronger 0.7330 level. Back below the 9 May low of 0.7328 would find little to hold the Aud up until 0.7300 and the rising trend support, at 0.7285, although this seems unlikely to be seen for a while.

A neutral stance is required, although the dailies do seem to hint at slightly higher levels, but the prospect of a soft (even negative) GDP reading on Wednesday may well limit any positive momentum.

Economic data highlights will include:

M: Company Gross Operating Profits (Q1)

T: Building Permits (Apr)

W: Private Sector Credit, (Apr), GDP (Q1), China Mfg/Non Mfg PMI (May)

T: AIG Mfg Index (May), Retail Sales (Apr), US Personal Consumption/Expenditure (Q1), Caixin China Flash Services PMI (May)

F: New Home Sales

Author

Jim Langlands

FX Charts

Jim Langlands began his trading career in the commodities markets in London in 1976, before moving to Australia in 1979 to work as a floor trader on the Sydney Futures Exchange.

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