By Fast Brokers – The Aussie is hold well above .86 while staring down monthly highs as the Euro posts a solid bounce. Investors continue to gain confidence in the risk trade as EU leaders meet for a one day summit in an effort to boost confidence in the union. Spain also announced it will release the results from its bank stress tests and other nations may follow suit. In all, money flows into the Euro have been encouraging and the risk trade as a whole has made a promising recovery from June lows. However, economic headwinds do remain and the Aussie is no exception. As we mentioned in our previous commentary, investors should keep a close eye for any developments in China regarding currency reform. Several articles have popped up in the China Daily lately suggesting that the government is planning to appreciate soon. Should the Chinese government in fact take action this could apply some near-term downward pressure on the Aussie since a stronger Yuan should cool growth in China. Meanwhile, the Shanghai Composite is still hanging around 2500 and it will be interesting to see whether this psychological level continues to hold. Australia will be quiet on the data wire for the remainder of the week, meaning the currency pair will likely follow its positive correlation with the risk trade for the time being.
Technically speaking, the Aussie faces technical barriers in the form of 6/14 and 5/18 highs. As for the downside, the Aussie has supports in the form of uptrend lines running from May lows along with 6/11 lows and the psychological .85 and .84 levels.
Price: .8615
Resistances: .8671, .8690, 8713, .8738, .8770, .8794, .8831
Supports: .8633, .8613, .8587, .8565, .8543, .8523, .8500
Psychological: .85
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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