Pound bucks trend, aussie coiling for move higher

The British pound is the top performer against a weaker greenback with an advance of more than 0.15% on the session. The sterling has seen the biggest range on the session in early US trade with a move equal to more than 66% of its average true range. Our proprietary SSI index is currently at -2.3 (2.3 traders short for every one that is long) and suggests that further advances for the pound are likely in the interim.

Interim resistance for the GBPUSD rests with the 78.6% Fibonacci extension taken from the Feb. 22 and March 12 troughs at 1.5870 with a likely break here eyeing subsequent topside targets at 1.5890, 1.5920 and the 100% extension at 1.5945. Initial support is seen at 1.5850 backed by the 61.8% extension at 1.5815 and 1.5773. Key support rests at the 38.2% extension at 1.5730 with only a break below this level turning our bias to net short on the sterling.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.5858

100-Day SMA

1.5687

50-Day SMA

1.5694

2011 GBP HIGH

1.6745

The Australian dollar is the weakest performer ahead of the European close with a loss of just 0.11% on the session. The aussie has continued to lag advances in the commodity bloc currencies with the AUDUSD pullback back from key daily resistance at 1.0620 which represents the 23.6% Fibonacci retracement taken off the Dec. 15 advance. Look for the dollar to remain under pressure as the Dow Jones FXCM Dollar Index approaches daily support at 9945 with our short-term bias on the aussie weighted to the topside since the pair broke above trendline support dating back to the 29th of February.

Interim resistance stands at the 23.6% Fibonacci extension takn from the March 1st and 8th crests at 1.0595 backed by 1.0620, 1.0645, and the March 8 highs at 1.0668. Note that a breach above this level negates this particular extension with such a scenario eyeing targets at 1.0720 and 1.0745. Interim support rests at the 38.2% extension at 1.0550 with a break below this crucial level eyeing subsequent downside targets at 1.0520, and the 61.8% extebnsion at 1.0480.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.0402

100-Day SMA

1.0368

50-Day SMA

1.0606

2011 AUD HIGH

1.1079

 

About the Author
Michael Boutros

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB: www.DailyFX.com

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