AUD/USD analysis: Aussie to continue depending on markets' mood

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7314

Bounce in base metals and solid equities gains, helped AUD/USD to close above 0.7300.
Short-term picture supports another advance but the pair remains intrinsically bearish.

The Aussie was among the best performers against the greenback Friday, as the commodity-linked currency got supported by a recovery in base metals and the positive momentum in US equities. The AUD/USD pair settled a handful of pips above the 0.7300 level, after spending the week below it. Nevertheless, and as it happened with other major pairs, the advance had more to do with easing demand for the USD on a better mood environment, as Australian fundamentals are far from supporting a solid recovery. Governor Lowe spoke Friday in the semiannual parliamentary testimony, offering quite an encouraging stance, as he said that overall, the Australian economy is moving in the right direction. However, the central bank downgraded its inflation forecast for the year earlier in the week, while Assistant Governor Ellis stated that based on what they have been seeing in developed economies, Australian wage growth could be slower to respond to a tightening labor market than initially anticipated. Technically, the advance seems corrective given that in the daily chart, indicators have recovered from oversold readings, maintaining upward slopes but well below their midlines, as the price remains far below bearish moving averages. Shorter term, and according to the 4 hours chart, the technical outlook is more encouraging, as technical indicators remain near overbought readings, as the price moved far above its 20 SMA, which slowly gains upward traction.

Support levels: 0.7270 0.7230 0.7190

Resistance levels: 0.7340 0.7380 0.7415

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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