AUD/USD Sinks Back to .89 Amid Broad Dollar Strength

By Fast Brokers – The AUD/USD is heading lower amid high volatility as the Dollar strengthens across the board after a better than expected U.S. economic data set.  U.S. Advance GDP, Chicago PMI, and UoM Consumer Sentiment data all impressed and a Dollar buying spree has ensued as investors choose the U.S. economy as a safe harbor amid global economic uncertainty.  Meanwhile, gold is heading lower towards its psychological $1075/oz with investors debating where to send the Greenback.  Volatility has been at a heightened level thus far and it will be interesting to see where the Dollar ends up at the end of the day.  Thus far the Dollar is beating out higher risk currencies and it seems this trend may continue as the trading week draws to a close.  Meanwhile, the AUD/USD is having a tough time leaving behind .8900 level and is finding support in our present 1st tier uptrend line.  Our current uptrend lines run through April 2009 levels, or the .70 area, marking the importance of present supports.  The Aussie should remain active as next week kicks off.  China will begin the trading week by releasing Manufacturing PMI data.  We’ve witnessed the influence China’s more hawkish monetary policy had on the Aussie this week.  Therefore, we expect the currency to react to Monday’s key data release as well.  Australia will also begin the trading week with some data releases, including New Home Sales, HPI, and Quarterly Business Confidence.  Furthermore, the RBA will make its monetary policy decision during Tuesday’s Asia trading session.  Hence, the AUD/USD appears to have a busy week ahead of itself.

Technically speaking, the AUD/USD is currently fighting to stay above our 1st tier uptrend line with multiple uptrend lines hanging below.  Additionally, previous January lows and the psychological .8900 level could continue to serve as technical cushions for the time being.  As for the topside, the AUD/USD faces multiple downtrend lines along with 1/28 and 1/26 highs serving as technical barriers.  Furthermore, the .9000 area could serve as a psychological force should it be reached.

Price: .8900

Resistances:   .8901, .8912, .8933, .8949, .8959, .8984

Supports: .8884, .8870, .8857, .8842, .8822, .8812

Psychological: .90, January highs and lows

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