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"The list of potential negatives out there is growing. The difference between Obama and Boehner is still very large on the fiscal cliff, we have increasing tensions now in Gaza and disappointing data out of Europe. It argues for lower levels for the Aussie and kiwi"
- Westpac Banking Corp. (based on Bloomberg)Pair's Outlook
AUD/USD has finally closed below the up-trend support line that was responsible for a nearly 300-pip rally over the last 30 days. Both 55 and 100-day SMAs have already been broken, leaving the 200-day SMA at 1.0260/55 exposed. Support levels scattered en route to the moving average are unlikely to pose a serious threat to the evolving leg down, although they may become reasons for the currency pair to initiate a temporary correction.
Traders' Sentiment
An overwhelming majority of market participants (72%) continue to hold short positions on AUD/USD, recent performance of which justified their bias (a dip of over 100 pips over two days). On the other hand, distribution between buy and sell orders is almost even, being 53% to 47%, accordingly.
© Dukascopy Bank SA