The Aud is higher today as yield plays seem to come back into favour, and this despite the fact that Australian rates are below US rates, with the differential looking likely to widen over the next 12 months, and should add to downside pressure on the Aud.
1 hour/4 hour indicators: Turning higher.
Daily Indicators: Possible basing formation.
Weekly Indicators: Turning lower?
Preferred Strategy: The short term momentum indicators are looking strongly bullish and a run back towards 0.7785, 0.7805 and possibly to 0.7825 does seem to be on the cards.
Overall, I prefer the downside still as I think the yield differential will eventually weigh on the Aud, despite the current move. If correct, support will arrive at 0.7735/40 and then at around 0.7700 ahead of the session low of 0.7671. Below that would allow a move towards 0.7645, with only minor support at 0.7670 lying ahead of that. Under 0.7645 would allow a move to the 100 DMA (0.7615) and to major rising trend support 0.7570, although that may take a while.
Economic data highlights will include:
Unemployment – Feb
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