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Aussie Dollar Plummets, Sterling Nose Dive, Here's Why

Updated 10:05AM 17/12/2019

Euro and US Dollar are the top G10 FX gainers today while Sterling and AUD are the top losers, down -1.03% and -0.51% vs the dollar. AUDUSD fell sharply on Tuesday after the RBA raised hopes of another cut in central bank cash rate as soon as February. The board was a concern that wage growth was too loo to revive consumption and inflation. In our view, AUD to dollar rate is likely to remain choppy but any significant slide is unlikely. Elsewhere, pound to dollar rate fell after reports that PM Boris Johnson is seeking a hard line on the transition period after Brexit. Next GBPUSD support lies around 1.3100 where support is likely to lead to recovery. In the Asian equities space, the Nikkei 225 closed up 0.47% at 24,066.12, Hang Seng closed 1.22% at 27843.71 and Kospi ended 1.27% at 2195.68. The European equities were trading mixed with the FTSE 0.04% at 7522.25, DAX -0.44% at 13348.68, and CAC -0.37% at 5969.26. In the rates market, global yields were trading weaker; the US 10-year yield was trading at 1.8661% and the Bund 10-year yield trading at -0.278%. In the energy space, the Brent (front month) is trading down (-0.31%) for the day at $65.14.


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Forex Chart and Technical Analysis


EURUSD Chart (Two-week)


Strategy: Resistance at 1.1167 for 1.1068
Short-term view: EUR/USD resistance at 1.1167, MACD and RSI are weak. Hence, we see a move to 1.1100, likely 1.1068. Above 1.1167 to open 1.1200.


GBPUSD Chart (Two-week)


Strategy: Support at 1.3096, for 1.3296
Short-term view: GBP/USD support at 1.3096, MACD and RSI are oversold. Hence, we expect a bounce to 1.3296. Below 1.3096 to open 1.3000.


USDJPY Chart (Two-week)


Strategy: Resistance at 110.00 for 109.00
Short-term view: USD/JPY resistance at 110.00, RSI and MACD are topping out. A move lower to 109.00 is likely. Above 110.00 to open 110.67


AUDUSD Chart (Two-week)


Strategy: Support at 0.6836 for 0.6920
Short-term view: AUD/USD MACD and RSI are giving mixed signals and support at 0.6836. A move towards 0.6920 is likely. Below 0.6836 to open 0.6780.