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Article / 17 February 2017 at 15:45 GMT

FX Board: AUDUSD momentum divergence, USD support eyed — #SaxoStrats

Head of FX Strategy / Saxo Bank
Denmark
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By John J Hardy

See today's Notes of Interest and the latest levels on the attached FX Board PDF – for now a couple of charts to consider for next week:

EURUSD

EURUSD spiked all the way back to midrange on an ugly correction in risk appetite that unfolded over the last couple of sessions and after reaching the key Fibonacci retracement near 1.0530. But the bears still have a case as long as we remain below 1.0700 and as political developments add a bit more negative spin on the euro into the weekend (note the EURJPY chart as well). A failure from here of the 1.0500-25 area could open up a full test of the sub-1.0350 lows for the cycle.

eurusd Source: Saxo Bank 

AUDUSD

The aussie has been very strong, nearly across the board, in recent weeks and AUDUSD has ploughed into the massive lines of resistance from 0.7700 up through 0.7835 that have held rallies for months. Locally speaking, we note signs of momentum divergence (higher prices at lower momentum readings – note that we use a higher frequency MACD than is typical) and wonder if at least a pause and dip back toward the very important 0.7500 area awaits over the next week.

audusd Source: Saxo Bank 

– Edited by Jack Davies

John J Hardy is head of FX strategy at Saxo Bank

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FX Board for Friday, February 17, 2017

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