The Australian dollar has found support around the .7330 region despite mixed signals from global markets.
“Usually, lower share prices and weak iron ore prices tend to be negatives for the Aussie dollar, but for the third day in a row, the Aussie was able to find support around the 0.7330 region,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
According to McKenna, this is an important level for many traders and institutional players who have been watching the recent movement of the Aussie dollar.
“Looks like traders will be prepared to step up and buy (into the Aussie dollar) at this level,” he added.
He added that whether or not this bounce can continue depends on how global markets trade in coming days and whether that atmosphere is benign enough to let the turn in the charts push the Aussie up toward the 0.7440/50 region.
However, he pointed out an overnight report which showed that US-based stock funds saw $2.1 billion in withdrawals – the second week of outflows – with money flowing into bonds, and European equity funds it’s looking like change is afoot in global markets.
“That could be a sign the US dollar’s strength can’t last which in itself would be good for the Australian dollar. That’s particularly the case if the negatives identified in the introduction continue,” he said.
And then, of course, we have next week’s release of the RBA minutes and April employment data in Australia.
“My sense is the minutes will be positive and upbeat and my hope is that the employment data will reflect the strength of the NAB’s sub-index of employment from its business survey,” McKenna said.
In the meantime, while 0.7325/35 holds momentum for the bounce can build.
But should it give way the 0.7280/0.7300 zone – which holds the long-term trendline from the 2015 low – is the next support.
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