AUD/USD: Sold-off aggressively on firmer USD
|The AUD/USD pair witnessed a steep drop in the European session, despite a better sentiment toward risk assets, as broad based US dollar buying remains unabated ahead of the US dataflow.
AUD/USD: Focus shifts to Au jobs
The spot accelerated its declines from above 0.7850 levels and printed daily lows at 0.7819 levels, before entering a consolidative mode over the last hour. The renewed strength seen in the US dollar across its main competitors, in tandem with Treasury yields, is mainly responsible for the latest sell-off seen in the Aussie.
Moreover, increased cautiousness, as the 19th China National Congress got underway, also added to the weaker tone around the Australian dollar. Meanwhile, a round of profit-taking ahead of Thursday’s crucial Australian job figures also cannot be ruled out. For September, the Australian economy is expected to have added 14.1K jobs, while the previous two months have surprised markets to the upside.
Later today, the pair will be influenced by the USD dynamics ahead of the Fedspeaks and US housing data.
AUD/USD Technical Strategy
James Chen, Head of Research for Forex.com, noted, “On a longer-term basis, AUD/USD is still trading within a bullish trend, but the late September breakdown has suggested a potentially significant correction in the making. Most recently, the currency pair rebounded from major support around the 0.7750 level last week. This level should once again be the area to watch if the US dollar continues to surge on rising Fed expectations as well as a potentially growing policy divergence between the Fed and RBA. With any further breakdown below 0.7750, the next major downside target is around the key 0.7500 support area.”
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