Holiday Trade Props AUD/USD- Relief Rally to be Short-Lived | Learn Forex | GoLearnForex.com

Holiday Trade Props AUD/USD- Relief Rally to be Short-Lived

Written by article default Friday, 25 November 2011 07:52

Daily Winners and Losers

The Australian dollar is the strongest performing currency in early North American trade with AUD/USD climbing 0.77%. Markets have gotten a reprieve from the heavy selling pressure seen over the past few sessions with European equity markets climbing 1.3-1.9% across the board. The advance comes despite a series of troubling remark made by European Union Economic and Monetary Affairs Commissioner Olli Rehn who stated that the recovery has come to a complete halt. Rehn warned that “Growth has stagnated and at the moment Europe is at zero growth,” and that, “The situation is very grave since the contagion effect that started from Greece and spread to other peripheral euro area countries is now lately touching near the core of the euro area, and in the past days on the core itself.” Investors took the remarks in stride however with markets rallying on stronger than expected German IFO confidence data. The relief rally is likely to be short lived as traders remain focused on developments out of the region after rating agency Fitch downgraded Portugal to BB+ from BBB-, officially putting the government’s debt into junk status.

The aussie continues to trade within the confines of a descending channel formation dating back to the November 13th high with interim price action currently holding below soft resistance at 0.9770. A topside break here eyes the convergence of channel resistance and the 0.9810 level. If this level is breached, the aussie may continue its advance with topside targets seen at 0.9880 and the 100% Fibonacci extension taken from the November 3rd and 13th crests at the 0.9945. Our medium-term bias remains weighted to the downside on the aussie with support targets seen at the 161.8% extension at the 0.97-figure, 0.9665, and the 0.96-handle.

Key Levels/Indicators

The British pound lagged all its major counterparts in today’s relief rally with the GBP/USD posting a marginal advance of just 0.03% at 8:30ET in New York. Disappointing economic data out of the UK weighed on the sterling after a report showed that 3Q imports grew by just 0.3% missing calls for a print of 0.7%, while exports contracted by 1.0% missing estimates for a positive read of 0.8%. With US equity markets closed in observance of Thanksgiving, the holiday rally is likely to taper off as European markets come to a close with interim support for the pair seen at the 1.55-figure, the 100% Fibonacci extension taken from the November 11th and 18th crests at 1.5480, and 1.5455. Price action continues to hold within the confines of a descending channel formation dating back to the November 18th high with a topside break resistance targets at the 76.4% extension at 1.5577, the 61.8% extension at 1.5635, and 1.5685. For complete Scalp Targets on the GBP/USDand EUR/USD refer to Monday’s Scalp Report.

Key Levels/Indicators

---Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or follow him on Twitter @MBForex.

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to This e-mail address is being protected from spambots. You need JavaScript enabled to view it