AUD / USD climbs above 0.7400 to test 100-day moving average
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The weakness of the dollar over the past few days is certainly one of the reasons for the rise, but the aussie itself has shown some resilience since it briefly fell below 0.7200 at the end. of the month of September.
Risk sentiment has been a bit more mixed this week, but today’s more upbeat mood won’t hurt the aussie’s charm, which I think has more to do with rising prices. commodities in recent weeks than anything else.
To this may be added the technical breakout of the AUD / JPY as the pair climbs to its highest since July above 84.00 currently, after breaking above key resistance levels of the September highs to near 82.00 early in the week.
So what’s next for the AUD / USD?
The 100 day moving average (red line) @ 0.7413 is the first immediate resistance at this time, so buyers will need to try to maintain a break above this to maintain the uptrend. The September highs @ 0.7469-78 will then be the next key test.
Overall I’m not a big fan of the Aussie, but the technicalities are hard to ignore and considering the drop from 0.7700 to almost 0.7100 since June, there has already been a modest decline in the currency.
The COVID-19 situation is also likely to improve as vaccinations approach the 80% rate for the states of NSW and Victoria. So this is not going to pose an additional threat to the outlook, even if economic conditions are still not the best.
Overall, I would say that monetary policy divergence is still a key factor and with the Fed and RBA lying somewhat on two different sides of the spectrum, a return to 0.7800 to 0.8000 is probably out of the way. about.
As such, fair value gains may indicate a push towards the 200-day moving average (blue line) at most on a technical breakout, but it shouldn’t be much more than that.