By Fast Brokers – The Aussie is testing the upper bands of its recent consolidation pattern as the EUR/USD and Cable run higher in the wake of a successful debt auction in Greece. Investors have shrugged off weak EU economic data and a Moody’s downgrade of Portugal’s debt and are instead focusing on Greece’s oversubscribed debt auction and a solid earnings report from blue-chip Alcoa. Australia was relatively quiet on the data wire today, although business confidence did decline by a basis point. Meanwhile, the Aussie looks set to perform well should investor sentiment continue to improve around the globe. Recent economic data from Australia has been encouraging, including yesterday’s stronger than expected home loans figure. Investors should also keep in mind that last week’s employment data topped estimates and the RBA expressed confidence in the sustainability of Australia’s economic recovery. Hence, if the environment continues to improve in the EU and U.S. then the RBA has little reason to loosen monetary policy and more incentive to tighten in the future, a positive for the Aussie. However, we will have to see how the week unfolds with key economic data from China, the EU, and U.S. over the coming days along with U.S. corporate earnings.
Technically speaking, the Aussie faces technical barriers in the form of 7/8 and June highs. Additionally, the highly psychological .90 level could serve as a sufficient barrier should it be tested. Therefore, the Aussie does have limited room to the topside unless it receives another strong fundamental or psychological boost. As for the downside, the Aussie has multiple near-term uptrend lines working in its favor along with intraday lows and its psychological .85 level.
Price: .8779
Resistances: .8789, .8804, .8828, .8858, .8879, .8902
Supports: .8760, .8743, .8726, .8710, .8690, .8670, .8646
Psychological: .90, .85, June highs and July lows
(click chart to enlarge)
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