AUD/USD intermarket: DXY and lower commodities to weigh on Aussie?
|Currently, AUD/USD is trading at 0.7570, down -1.38% on the day, having posted a daily high at 0.7684 and low at 0.7566.
AUD/USD has lost its charm and is one of the worst performers as the greenback battles back to top position among the G10's this week. Despite the Aussies recent glory as being the best performer rising more than 6% this year and having its best month last month, the country's performance has been heavily weighted on the commodity sector, and with a bounce back in the dollar, such commodities such as iron ore and copper could come under significant pressure as could China's commodity and manufacturing industry of which Australia's export industry rely's on greatly to the tune of roughly 34% of exports.
Meanwhile, in respect to the DXY, analysts at Bank of Tokyo Mitsubish explained that the dollar needs to break 104.00 for the possibility of a breakout and a catch-up play in respect to the divergence of yields and the Fed's path and pace of tightening this year:
US dollar strength could play catch up with widening yield spreads - BTMU
These are all factors that the RBA will have to consider in the run-up to next week's meeting, but given the correction in the Aussie currently, they could be satisfied with the status quo for now and jaw bone the currency some more helping the bears along to a key target of 0.7520 and below the reverse H&S for a test of the 0.7500 level.
AUD/USD levels
Analysts at Commerzbank explained that they suspect that prices will need to go sub 0.7464, the 55-day ma, to alleviate upside pressure and trigger losses to 0.7312/00 then 0.7161/64, the recent lows. for the meantime, the 50-d sma is holding the offers up at around 0.7575 and the lows of 0.7563 today so far, but given it has given way to the pressures, on a daily closing basis the bears could extend the supply and test the neckline of the aforementioned H&S the guard a break to 0.7320 on the wide. 0.7740 is the upside target to alleviate the status quo reversal of the 2017 rally from 0.7159 late Dec lows.
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