Australian dollar hovers near two-month high

Economic news (26 March 2013) – The Australian dollar climbed to  almost a two-month high against its US counterpart during yesterday’s trading, following the eagerly-anticipated Cyprus bailout deal. The Aussie managed to keep the gains accumulated last week and reached as high as $1.0478 during Monday’s session.

After a relatively flat start of Asia Tuesday trading, the Aussie quickly jumped close to its yesterday’s high and was trading at $1.0473 at the time of writing.

RBA’s Governor Glenn Stevens speech earlier today had very little impact on the Aussie’s chart movements as he declined to address both the fiscal and the monetary policies. His comments reflected on the Cyprus bailout terms, stating that the revised deal was better that the original plan, with European leaders likely to stay ‘’case specific’’ when dealing with the crisis. However, market players appeared to feel more cautious as the initial relief after the Cyprus bailout agreement was quickly turned into a more sober assessment. Concerns over handling future bank crises remained, particularly triggered by comments by the head of the Eurogroup, which almost immediately dragged down the European currency and shares.


The euro’s big sell-offs in response to the Cyprus crisis, together with diminishing prospects of RBA cutting the interest rate, supported the Aussie’ strong performance. The lack of new data on the Australian economic scene though, made the Aussie to trade in a narrow range. It is likely for it to stay so, at least for today, as there is very little to guide the currency direction on the Forex charts.


Technical analysis


At yesterday’s trading the Australian dollar was moving in the range of 1.0430-1.0475. This morning the currency pair was trading at 1.0445-1.0460.

Should the Australian dollar successfully overcome the resistance zone at 1.0460-1.0475, its aim will be reaching and testing the 1.0500-1.0520 zone. If successful, the upward trend will continue to 1.0545-1.0565. If it falls below the support zone at 1.0450-1.0430, the next zone it is expected to find support at is 1.0410-1.0400. In case of a breakdown, the downward trend will continue to 1.0375-1.0360.




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