Financial stocks dragged London's FTSE 100 to a near one-month low on Tuesday after the index notched its strongest August in six years on optimism that the worst of the pandemic's economic damage was over.
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The NZD/USD pair capitalized on the heavy selling pressure surrounding the greenback last week and gained more than 200 pips to post its highest weekly close since mid-July at 0.6742. In the absence of significant fundamental drivers at the start of the week, the pair seems to have gone into a consolidation phase and was last seen registering small daily losses at 0.6732.
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GBP/AUD traded lower during the morning after hitting resistance near yesterday’s high of 1.8290. That said, the slide was stopped by the 1.8210 level, with the rate rebounding somewhat thereafter. Overall, the pair has been printing lower highs and lower lows below a downside resistance line since August 3rd, and thus, we would consider the short-term outlook to be cautiously bearish for now.
If the bears are strong enough to push the pair below 1.8210 soon, we may see them aiming for Friday’s low, at around 1.8135. However, a break below that zone would make us more confident with regards to a trend resumption, as this would confirm a forthcoming lower low on both the 4-hour and daily charts. Such a dip may set the stage for extensions towards the 1.8054 obstacle, which is marked as a support by an intraday swing low formed on July 29th.
Shifting attention to our short-term oscillators, we see that the RSI stands flat near its 50 line, while the MACD lies very close to both its zero and trigger lines. Both indicators suggest a lack of directional momentum and that’s why we prefer to wait for a strong dip below 1.8210, before we start examining the potential of more declines in this exchange rate.
On the upside, a strong rebound above 1.8290 would force us to abandon the bearish case. Such a move would also take the rate above the aforementioned downside resistance line and may initially open the way towards the peak of August 6th, at around 1.8353. Another break, above 1.8353, could see scope for extensions towards the 1.8400 zone, fractionally below the peak of August 3rd.
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AUD/JPY eases to 77.32 during the early Friday morning in Asia. The pair refreshed the yearly high the previous day after breaking an upward sloping trend line from the early-June. However, failures to rise past-February 2019 low triggers the latest pullback.
Even so, bullish MACD and the successful break of the key short-term resistance line favor the buyers targeting a break of 77.44 immediate hurdle ahead of challenging March 2019 bottom surrounding 77.55.
It should, however, be noted that the pair’s ability to cross 77.55 enables it to pierce 78.00 round-figures while challenging the April 2019 low of 78.11.
On the contrary, a clear break below the multi-week-old support line, previous resistance, at 77.00 now, will highlight the early-month top surrounding 76.70 as the following rest-points.
In a case where the bears dominate past-76.70, a 21-day SMA level of 76.23 and an upward sloping trend line from July 30 near 75.87 will be important to watch.
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