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AUD/USD Forecast 28 Feb 2014

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AUD/USD chart 28 Feb 2014
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The Australian dollar looks set to continue probing the downside

As the US dollar is on the back foot across the board during the US trading session following disappointing Jobless Claims data, we are still thinking that the Australian dollar will underperform in this situation as the numbers from across the Pacific overnight weren't pretty either.

We are buying daily puts for tomorrow at current levels just above 0.8960 since the daily picture on the charts is looking severely damaged. The only scenario that would make us change our minds is if we see a sustained break above the figure at 0.90.

The main trend in this pair has been lower for the most part of last year and into the beginning of 2014. As a correction has finally ensued, we have to keep in mind, that the Australian Economy is closely tied to the Chinese one. Since China has been slowing down for the past couple of months, the AUD is suffering.

With prices failing to sustain a daily close above 0.9050 the pressure on the downside has been intensifying in recent sessions. We would be surprised if the bulls manage to take control of the current situation and manage to push above 0.90 again.

Yet markets have their own way of thinking and one has to respect them. With the approach of 0.89 today, the pair has actually given up most of its gains for the day and we should not be surprised if we manage a close higher than current levels.

We are triggering our trade at this hour and are staying flexible in case the chart picture changes. Remember that tomorrow is a very busy data day, so it would be worth while to keep a close eye on US GDP and the Consumer Sentiment numbers that are coming out in late European afternoon at 13:30 and 17:00 GMT.

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