AUD/USD analysis: bulls took over, 0.7420 at sight
|AUD/USD Current price: 0.7334
- Australian dollar at August highs as base metals surge on industrial demand.
- Political woes in Europe could limit gains but won't likely affect the pair negatively.
Bulls took their chances on a broadly dollar weak environment sending the AUD/USD pair to its highest since last August. The AUD/USD pair finished the week at 0.7330 after trading as high as 0.7337, up for a third consecutive week. The Australian currency got an unexpected boost mid-week from a solid employment report, finding also support in rising base metals, with palladium prices reaching record highs amid increasing demand from the industrial sector. Safe-haven gold also rose, after US Federal Reserve officials signaled that the global economic slowdown could impact the US economy negatively. Furthermore, equities bounced Friday, recovering part of their weekly losses, underpinning the latest recovery of AUD/USD. Risk aversion due to political woes in Europe will likely continue dominating markets, although these last days, the Aussie has been quite reluctant to fall in runs to safety.
As the new week begins, the daily chart offers a bullish stance, as the pair broke above its 100 DMA while the 20 DMA gains upward strength well below it. Technical indicators in the mentioned chart maintain their upward strength, with the Momentum in extreme overbought readings and the RSI currently at 65. In the 4 hours chart and for the shorter term, the risk is also skewed to the upside, as the pair surged following a test of a bullish 20 SMA, now trading above all of its moving averages, while technical indicators barely retreated from overbought readings, rather reflecting decreasing volume at the end of the day than suggesting downward exhaustion.
support levels: 0.7315 0.7280 0.7235
Resistance levels: 0.7340 0.7380 0.7420
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