steve.jarvis's picture

Australian Dollar bouncing from key support, but the medium-term outlook does not look good

The corrective recovery we spoke about for the Australian Dollar several weeks ago proved to be very short-lived and a fresh lurch lower followed, culminating in a short-lived plunge on Tuesday on the back of the RBA cutting rates.  On several of the Australian Dollar charts, the low recorded on Tuesday was at or near a key support level, triggering the latest bounce.

On a medium-term trend basis, the Australian Dollar remains an underperforming currency and the bounce from the low, just like the one before it, looks corrective, ahead of yet new lows over coming weeks.  It's trend remains particularly bearish against the US Dollar, Sterling & Japanese Yen, has potential to turn negative against the Euro, Canadian & New Zealand Dollars, but for now is still bullish - but with potential to reverse - against the Norwegian & Swedish Krona.

As with the early-mid January bounce, the latest improvement could again be short-lived.  The three charts immediately below are of AUD/USD, AUD/GBP & AUD/JPY (all shown with AUD on the left side to highlight the trend from an AUD perspective).   






The three charts below (AUD/EUR, AUD/NOK & AUD/SEK) are those for which the Australian Dollar currently has it's strongest underlying trend, but the latter two show the particular risk of an AUD breakdown over coming weeks, but first we need to see a bounce leave a lower top below the one recorded a couple of weeks ago.

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