• Aussie losing sensitivity to equities and commodities, a sign of bulls' strength.
  • AUD/USD lost its upward momentum but bears still hesitate.

The strong upward momentum of the AUD/USD pair seen at the end of the previous week that send it up to a fresh 3-month high of 0.7337,  faded on risk sentiment, with the pair finishing this one barely above the 0.7200 level. Not that the pair has made any relevant breakout. The pair has been trading within 400 pips since last August, with a yearly bottom achieved October at 0.7020. The pair has been in recovery mode ever since then, but such recovery has suffered a bad knee-jerk these days, despite the decline has been little relevant in terms of percentage move. The key continues being the 0.7300 level, as gains beyond it have been unsustainable in this last 4 months.

The Australian macroeconomic calendar offered nothing of interest as the only relevant scheduled event, the Minutes of the latest RBA monetary policy meeting, repeated that, while the next rate move will likely be to the upside, there's no strong case for a near-term move. Despite the latest employment data was much better than anticipated, policymakers remain concerned about the jobs market, as they noted that average real earnings had not risen in six years remaining as a key uncertainty.  They also noted that credit related to the housing market has remained tight.

Commodities collapsed with oil leading the way, while equities didn't do much better, with US indexes plummeting and back below their yearly opening levels, adding to Aussie's weakness. And still, the risk of lower lows for this year are limited, as bulls are defending the mentioned 0.7200 area ever since the week started. The pair is clearly sensitive to political turmoil outside Australia, although to a lesser extent than European currencies. While the pair is still correlated to equities and commodities behavior, downward movements in these last have had a decreasing effect on the Aussie, a sign that bulls are still strong.

These upcoming days the Australian macroeconomic calendar has little to offer,  while the US will offer  October PCE inflation and the second estimate of Q3 GDP, both capable to affect the Fed's future decisions.

AUD/USD technical outlook

Measuring the rally from yearly lows to this month peak, the pair is currently trading a few pips above the 38.2% retracement, this last at 0.7210. Technical readings in the weekly chart suggest that the decline could continue if the 0.7200 level gives up, as the pair trimmed gains beyond the 20 SMA, now trading a few pips below it, while technical indicators turned back south, both hovering within neutral levels.

In the daily chart, technical indicators have pulled down sharply from overbought readings and are currently nearing their midlines, the Momentum maintaining a strong downward slope but the RSI with limited downward strength. In the mentioned chart, the 20 DMA maintains a strong bullish slope, now converging with the mentioned 38.2% retracement reinforcing the relevance of the support. Below the 0.7200 figure, the next supports come at 0.7150 and 0.7100, while below this last, the path is clear toward the yearly low. Resistances are 0.7300 and this month high at 0.7340, with gains beyond this last still unclear.

AUD/USD sentiment poll

The FXStreet Forecast Poll shows that bulls prevail in the short term, but their conviction fades as time goes by, decreasing from 60% in the weekly perspective to 35% in the three-month view. In this last time frame, bulls take over, up to 50%, from 37% in the previous week, although with average target lowered to 0.7261 from 0.7303. Traders are far more bearish than banks, which lead bulls seeing the pair as high as 0.7700 in the longer term perspective.

 The Overview chart shows that moving averages have turned back south, reflecting discouraging bulls after the pair failed to settle above 0.7300. However, there's no clear long-term picture, with a wide 1,000 pips' range of possible targets.

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