By Fast Brokers – The Aussie is battling to avoid a retest of 3/22 lows after a wave of risk aversion hit the FX markets in reaction to more negative news from the EU. Fitch downgraded Portugal’s credit rating, adding onto negative momentum stemming from a lack of cooperation in regards to providing Greece with financial assistance as it implements aggressive austerity measures. Increasing uncertainty in the EU is weighing down on the Aussie since the RBA will likely deliberate this during next month’s meeting. Should EU economic conditions deteriorate further, the RBA could be enticed to keep its monetary policy in check, slowing the Aussie’s uptrend. All of this being said, the Aussie is still outperforming the Euro and Pound by a long shot since Australia’s economic data has been altogether positive so far this year. Today’s Japanese Trade Balance data revealed strong demand from China, a positive catalyst for the Aussie since China’s post-crisis boom has increased demand for Australia’s commodities. Meanwhile, it will be interesting to see whether the Aussie can stabilize from present levels, for its uptrend could snap should losses extend in the EUR/USD and Cable. Investors are locking in Dollar profits right now in reaction to weaker than expected U.S. New Home Sales data. However, it remains to be seen how far this boost will take us. The EU summit begins tomorrow surrounded by EU, UK, and U.S. data releases, meaning tomorrow could prove to be an active day as well.
Technically speaking, the Aussie has intraday, 3/22, and 3/9 lows serving as technical cushions along with the .91 and .90 levels should they be retested. As for the topside, the Aussie now faces multiple downtrend lines along with 3/23 and 3/17 highs.
Price: .9117
Resistances: .9125, .9137, .9145, .9156, .9162, .9169
Supports: .9110, .9101, .9087, .9073, .9061
Psychological: .91, .90, 2010 highs
(click chart to enlarge)
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