AUD looking heavy ahead of decent support sub 0.7800.

AUD/USD: 0.7820

EUR/USD: 1.0880
 

It was another wild ride today with all markets seeing excessive volatility.  Equities were knocked lower – but later recovered – while the metals and oil prices jumped,  after Saudi Arabia and assorted allies carried out air strikes in Yemen,  fuelling worries of a further escalation of tensions in the ME. Early European dollar sales have been sharply reversed ahead of what could be another volatile session as focus turns to the US GDP and also towards speeches from the Fed’s Janet Yellen and Stanley Fischer. Also watch out for Mark Carney who may cause some ripples in Cable. Expect another busy session. Good w/e all.

The Aud squeezed up to a 0.7880 peak in early Europe on the back of the selloff in the dollar but has since returned to levels seen yesterday and currently sits at 0.7815. With the 1 and 4 hour charts showing a negative bias, a more substantial test of 0.7800 would not surprise, below which would run towards the magnetic 100 Month MA at 0.7775 (50% of 0.7559/0.7937) and then to the 23 Mar low at 0.7762. A break of this would then see a deeper correction to the 200 HMA at 0.7750 and the next Fibo support at 0.7735 (61.8%).

Back to the topside, 0.7845 (100 HMA) will be the initial resistance ahead of the session high of 0.7880. I don’t really see it above here today but further resistances would arrive at 0.7900. If wrong, further advances would suggest a run to the previous session high at 0.7935 above which would open up the chance for a bigger squeeze, with the potential to revisit the Fibo resistance at 0.8010 (61.8% of 0.8294/0.7559) and the pivot level at 0.8025.

Selling rallies and trading it from the short side still appears to be the plan today, although the dailies are still positive, so overall  the conditions look set to remain quite choppy.