AUD/USD is up to test the 200 sma on the hourly chart and has claimed a bid on the session, despite the market turmoil with volatility in play on the back of global fears and panic stations as investors preempt the worst ahead of Yellens testimony tomorrow.

The word on the street reveals credit markets in all sorts of trouble and European Banks standing out to be susceptible to another shock and exposure to bad debts, especially in Em's.

European banks are sitting on bad debts of €1tn – the equivalent to the GDP of Spain, according European Banking Authority (EBA). Investor's movements are telling and worrisome, as noted in the FT, "A popular credit derivatives index that tracks the likelihood of default of investment-grade debt of European companies and banks was trading at 118 basis points on Tuesday, near its highest level since June 2013. "

While the Aussie is not directly correlated to what goes on in the credit markets, the media have got hold of the prophet of doom situation, particularly oil and mining and the commodities sector is driving much of the concern. Gold has rallied, supporting the Aussie, on investors flight to safety while oil and copper are falling to through the floor again, capping gains in AUD/USD.

AUD/USD levels

The price is testing the 200 sma on the hourly chart and looking for a break towards the 100 sma on the same time frames at the 0.7124 level. However, the pair is someway off for anything convincing the reversal of 2016's downtrend. While below the high of 0.7242, and the 20 weekly sma at 0.7140, on a correction lower again, key support comes at the psychological 0.70. A break of there opens the downside back up for a reversal of the late January uptrend, commencing in the 0.6820's.

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