Forex Technical Update
AUD/USD 1H Chart 5/14/2012 10:03AM EDT
There was no double bottom attempt in the AUD/USD as the market continues to slide now below parity, and nearing 0.9950 in the 5/14 US session. China cutting its Reserve Ratio Requirement by 50 basis points to 20% was a possible risk-on move and the AUD would have gotten a boost because it is a major trading partner of China's, but the uncertainty in the Eurozone trumped this dynamic. Risk aversion is hitting commodities, and the commodity currencies hard.
As the AUD/USD breaks the support from last week and below parity, the 1.00-1.0020 area might flip to being resistance in case of a pullback in the short-term. The AUD/USD has been sliding sharply and there's a feeling that USD strength is a bit overstretched in the short-term. However, corrections that do not come from substantial changes in risk sentiment continue to provide better price to continue lower toward the next support pivot near 0.9860, as seen in the daily chart below.
Counter-trend traders may be more prudent to wait for the market to get near this area before looking for a pullback play.
AUD/USD Daily Chart 10:10AM EDT 5/14/2012
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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