AUDUSD: Aud sitting just above critical support. Break sees 0.8000 – and potentially much lower by FX Charts

Having seen a holiday short-squeeze up to 0.8215 (31 Dec), the Aud has since given up all those gains and finally broke below 0.8100 on Friday, to close the week at 0.8090, just above the 0.8077 session low and also above the critical support at the May 2010 lows at 0.8066.A break of this level would be rather ominous, suggesting a quick run towards 0.8000. A break of this would head towards the important Fibo level at 0.7936 (61.8% of 0.6006/1.1080), which should hold it at least that the first attempt. If wrong, then we are headed to the July 2009 low at 0.7700 and then possibly to the RBA’s stated target at 0.7500.

The short term charts look negative, but we could see a bit of squeeze higher and on the topside, above 0.8100, expect to see sellers at around 0.8140/50 (200/100 HMA’s). This may be unattainable today, but if we do get a run to the topside, further strength could take the Aud back to 0.8200/15. I don’t really see it happening, although it would provide a decent sell opportunity if we were to get there, with a stop placed above short term trend/Fibo resistance at around 0.8240.

Economic data highlights will include:

M: AIG Performance of Mfg index

T: Trade Balance, HSBC Services PMI

W: AIG Performance of Services Index

T:  Consumer Inflation Expectation, Building Permits

F: AIG Performance of Construction Index, Retail Sales (Nov), China Trade Balance.

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