The Aussie dollar has continues to find it hard going over the last few weeks, as the pair find the 0.9400 price region a tough nut to crack. This level was first tested back in early April and clearly defined by the pivot high, with the pair duly selling off, before building a strong platform of support in the 0.9150. This level has been tested on several occasions over the last two months, but to date has held firm, providing the springboard for the current retest of the 0.9400 level, which has once again been marked with an isolated pivot high in last week’s trading session. For longer term swing or trend traders, the key now is patience. If this level is breached, then expect to see the pair move higher from this solid platform of price support, but as always, volume will reveal the strength of any move, and if the breakout is accompanied with above average or high volume, then this will validate the move and subsequent trend.
Moving to Cable, this too is in a consolidation phase of it’s own, with the 1.7050 price point offering some resistance to any further gains for the pair, which are now being driven higher on the prospect of interest rate differentials, following the Carney’s statement that interest rates will rise sooner rather than later, a statement he has since toned down following weak UK inflation data. The breakout from the 1.6700 to 1.6850 congestion phase was accompanied with ultra high volume, validating the move, and a strong signal of further bullish momentum to come. Since then the pair have stalled at the key 1.7050 level which has been tested both this week and last, but with yesterday’s volume falling well below the previous day, it is clear that sentiment remains positive for Sterling, and the current reversal is simply a minor pause in an otherwise longer term trend higher. Provided this level is breached, then as with the Ausssie dollar, expect to see a further extended move higher in due course.
The single currency continues to grind its way higher as it build a platform in the 1.3550 to 1.3600 region as it currently tests the 1.3650 price level where resistance has been building over the last few days. A move through here should see the EUR/USD push on to test the underside of resistance in the 1.3700 and beyond, and if this price level is taken out, then expect to see the pair continue higher and on towards the 1.3800 region in the longer term.
Finally to the Canadian dollar which has broke out on strong and rising volume to move firmly away from the consolidation phase which had seen the pair rangebound between 0.9100 to the downside and 0.9200 to the upside. The catalyst for the breakout was the price action of the 18th June, with the pair then propelled higher and through the 0.9300 region, with the CAD/USD futures contract now trading at 0.9321 at time of writing. With the breakout now complete expect to see the pair continue higher with the next logical target at 0.9460 on the daily chart.
By Anna Coulling
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