AUD/USD analysis: upside potential limited despite solid advance in equities, commodities

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7327

Political relief helped the Aussie bounce back on Friday.
Strong rally in equities and commodities underpinned the currency, upside potential seen limited.

The AUD/USD pair traded within a wide range this past week but closed it barely up at around 0.7330. The Aussie plunged to 0.7237 as PM Turnbull suffered a leadership contest, which ended with him stepping down and Scott Morrison, the former treasurer, becoming the new PM by an adjusted 45 to 40 votes, beating Peter Dutton, the man who launched the strike against Turnbull. The pair recovered on relief after the situation settled and the ruling Liberal-led coalition managed to get a new leader, with the Aussie further supported by a sharp recovery in base metals and rallying US equities. The Australian macroeconomic calendar has nothing relevant to offer these upcoming days, but China will release August official PMI, which usually affect the commodity-linked currency. From a technical point of view, the upward potential for the pair remains limited, as in the daily chart, it stalled its latest recovery around a bearish 20 DMA, also below the 50.0% retracement of its August decline, while technical indicators recovered from near oversold readings, but remain well into negative territory. In the 4 hours chart, the pair finished around its 20 and 100 SMA, both maintaining downward slopes, while technical indicators turned horizontal within neutral levels, suggesting that buying interest remains limited.

Support levels: 0.7300 0.7270 0.7230

Resistance levels: 0.7355 0.7390 0.7420

View Live Chart for the AUD/USD

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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