Aussie has some serious headwinds ! North Korean tensions escalating are just getting risk off trading started. Critical levels in risk are still being respected … but for how long? The 100 DMA in S+P sits at 2423 the exact low this morning. A break here will start the next wave of risk off. USDYEN’s low for the year is 108.12. Break here will be very bearish for risk crosses such as AUDYEN and weigh on Aussie. Market waiting for a US response. With Trump at the wheel anything is possible and risk should be worried.
Friday we have a top tier double header of US data prints in payrolls and ISM manufacturing . Both have been the shining lights for US data and have been trending well. Expectations for Friday is for solid prints to continue. The USD should get some decent support to end the week from these top tier data prints.
Aussie wont be able to contend with risk off trading and positive US data prints weighing at the same time. The market is positioned long at extreme levels not seen in years. At 0.79+ its the wrong price.
Technically its showing signs of breaking down. Todays close will be important. If its below yesterdays low of 0.7922 it will be a key reversal day… top formation. Thats less than 10 points away now. The recent range lows at 0.7870 converge with the daily uptrend. Break here will confirm more technical cracks. However further out the real critical level is 0.7800. Break here.. will say good bye to the 50 DMA and also break a neckline of big double top ( chart below). This happens we can say with some confidence we have seen the high for 2017 in the Aussie. Shorts can work stops above the daily high at 0.7973 as above here negates the key reversal day set up and the trade is wrong.