In my blog last June 15, I asked whether the AUDUSD will head lower or higher. It turned out that the pair had moved north, at least for the time being, against the odds. As you can see, the pair had previously slid from a double top formation. Even before reaching its minimum downside target, it had already rallied and broken back above the pattern’s former neckline. This week’s price action which started on a very bullish note with a gap up confirmed its breakout from a shorter term double bottom. But withthe stochstics now in the extreme overbought area, the pair coul range fo awhile above the necklines of the double bottom and top before making a move for its minimum upside target (calculated by projecting the height of the double bottom formation from the point of breakout) somewhere at 0.9050. On the sour side, it could revisit this year’s low if and when it breaks below the neckline supports. In any case, this week’s moves are probably the first indication that the Australian dollar could be back on the hunt.
On the fundamental front, no major economic updates are due in Australia this week. Though, the high profile events in the other major countries would more likely influence the Aussie’s price action. On tap this week are Germany’s Ifo business climate survey, Canada’s inflation and retail sales figures, New Zealand’s current account and 1Q GDP numbers, and the US’s FEderal funds decision and durable orders along with its weekly unemployment claims. Upbeat marks from any of these accounts could spur risk appetite, benefiting the higher yielding currencies like the AUD.
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