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AUD/USD Daily: Bearish Engulfing Inside the Ichimoku Cloud
Suggested positioning: Short Positions Below 0.79 with target at 0.76
Technical Analysis: The AUD/USD pair faced a sharp decline on Monday but wasn’t able to break below the Ichimoku cloud. Support remains at 0.76 with the pivot level set at 0.79
Alternative Scenario: Above 0.79 look for upside moves towards Fibonacii levels at 0.8042 and 0.8317
Where I’m setting my stops and limits:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 0.76 | 0.79 | 0.8042 |
| 0.73 | 0.8317 |
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With light economic data this week, we could expect the consolidation to continue for a few days. While all eyes remain on the Greek deal in the eurozone, On the economic calendar, we have the German ZEW Economic Sentiment on Tuesday at 10 am followed by Canada’s Wholesales data at 1:30 PM. Wednesday could create more volatility in the Aussie dollar with Australia’s CPI released at 2:30 am GMT. London session’s most important announcement will be MPC Official Bank Rate Votes at 9:30 AM.
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Fundamentals Today
Australia: The RBA last night considered cutting rates in April, retaining a strong easing bias, however maintained rates as they are, currently too easy. However the RBA Governor commented that “interest rates should be quite accommodative and the question of whether they should be reduced has to be on the table.” Dependent upon the upcoming CPI data tomorrow, barring an unexpected result, we still expect a rate cut to 2% in the May meeting, with concerns about unstable housing prices, sandbagging is all but a reality. Naturally the AUD sold off against the USD following the comments.
China: The actions of China’s central bank on Sunday are seeing Asian stocks holding steady, China’s latest step to prop up its faltering economy has cut the amount of cash banks must hold as reserves, its latest attempt to spur lending and combat a slowing economy. “China’s actions undid the damage caused by the crackdown,” on margin lending, global equities are benefitting from this new slurry of cash floating about as well.
UK: With less than three weeks to go to the polling day, the outcome of the UK general election is as uncertain as it ever has been. According to polls both major parties are running neck and neck, in such cases historically this is the precursor to a shift, to whom, no one knows but invariably the incumbent. Certainly if last night’s appearance from Ed Miliband is anything to go by, getting a battering from the soft shelled Evan Davis, a life in politics is perhaps not for him. Regardless of what happens on election day a hung parliament is inevitable and the ultimate concern is who will partner with who. Libdems are always game, whoever bats an eyelid really, so you can be pretty sure that they will be in, again always to the incumbent!
Europe: Greece again win the award on column inches, in a scrabble to pay its bills and with the IMF loan repayments due next month Greece has been tapping into public cash reserves. Local officials, municipalities et cetera have had their piggy banks cracked open. Briefly refusing, resistance was ultimately futile, however the efforts of Greece have been dubbed inadequate and inconsequential. It is hard not to agree, when they are stealing the petty cash reserved for the Council Christmas Party. French PM waded in “Greece must take its responsibilities and go faster. We’re wasting time and time is precious on this matter.” The deadline is May 11th when the IMF requires a 750 million euro loan repayment. This story will re appear again we are sure.
