FOREX: Weaker Risk Sentiment Weighing on AUD, Support Not Seen Until 0.6310
Apr-30 14:36
- Weaker sentiment across the major equity benchmarks Wednesday has moderately weighed on the likes of AUD and NZD, both registering fresh weekly lows in recent trade. As a reminder, month-end models are suggestive of greenback demand, which may provide an additional headwind as we approach today’s WMR fix.
- In particular, AUDUSD’s sharp recovery from the April lows has stalled over the past week, and today’s firmer-than-expected Australian CPI data has done little to move the needle. Notably the pair has traded either side of the 0.6400 handle for eight consecutive trading sessions, unable to build any lasting momentum above the February highs around 0.6410.
- Initial key support to monitor is 0.6310, the 50-day EMA. A clear break of this average would be a concern for the underlying bullish narrative, signalling scope for a deeper pullback towards 0.6181, the Apr 11 low.
- It is worth noting that AUDJPY has broadly respected initial resistance at the prior breakdown level around 91.85. Moving average indicators continue to indicate a bearish trend for the cross, while trendline resistance off the 2024 highs also remains firmly intact.
- Goldman Sachs recently noted that equities still look vulnerable to nearer-term downside. They highlighted that the speed of the Dollar sell-off leaves it susceptible to shorter-term swings, therefore preferring to be short AUDJPY tactically.
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