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AUDUSD support levels, 2nd May 2011

Forex Commentary:

The U.S. dollar index edged higher on Monday after falling to a three-year trough, but is seen poised to move lower again as investors seek higher rates offered abroad and shun the low-yielding greenback.

News that U.S. forces killed al-Qaeda leader Osama bin Laden had little impact on the foreign exchange market, with investors remaining fixated on interest rate differentials.

In late New York trading, the euro was up 0.2 percent to $1.4834 after earlier rising as high as $1.4902, according to Reuters data.

Trading Setups / Chart in Focus:

AUDUSD

The AUDUSD has moved aggressively higher over the last month, so it would not be surprising to see a rotation back to value before the uptrend resumes.

A small counter-trend pin bar formed today that could signal the start of a rotation lower. If price does move lower we see potential support near 1.0775; near the 8 day EMA, and then further below near 1.0580. We would still like to get long from value with confirmation from bullish price action, a strong setup near either of these support levels could be a good long opportunity.

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For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my Forex price action education website.

Other Markets:

On Wall Street today stocks rallied early on the back of news of Osama bin Laden’s death, but the rally weakened into the New York close and stocks were mostly lower at the close as the longevity of the recent rally came into question.

The Dow lost 3.18 points, or 0.02 percent, the S&P 500 lost 2.39 points, or 0.18 percent, and the Nasdaq lost 9.46 points, or 0.33 percent.

Upcoming important economic announcements: 5/3/2011

12:30am EST: Australia – Cash Rate
12:30am EST: Australia – RBA Rate Statement
4:30am EST: Britain – Manufacturing PMI
6:45pm EST: New Zealand – Building Consents m/m