AUD/USD analysis: back to square one

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7644

The AUD/USD pair jumped up to 0.7708 this Wednesday, but trimmed all of its daily gains, closing it flat in the 0.7640 region. The Aussie surged to its highest for the week after the release of better-than-expected Q3 inflation figures, as headline inflation increased by 0.7% in the quarter, against expectations of a 0.4% advance, which helped lift the annual rate to 1.3% from previous 1.0%. Trimmed CPI year-on-year basis, came in as expected at 1.7%. The positive news dented expectations of a RBA rate cut in the nearest term, backing Aussie demand. Nevertheless, positive US data alongside with falling commodities prices, pushed the pair back to square one. The 0.7700 level has been a tough bone to break, as the pair has been steadily rejected on advances beyond it, ever since last April. Nevertheless, the downside potential is also limited in the longer run by 0.7450. Shorter term, the 1 hour chart supports some further slides for this Thursday, as the price has extended its decline below its 20 SMA, while technical indicators head south within bearish territory, with the RSI extending to fresh lows around 40. In the 4 hours chart, technical indicators have retreated sharply from overbought levels and are about to cross their mid-lines towards the downside, while the price is holding a few pips above a bullish 20 SMA, currently at 0.7630, the immediate support.

Support levels: 0.7630 0.7590 0.7550

Resistance levels: 0.7660 0.7700 0.7735

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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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