AUD/USD Current Price: 0.6526
- Australian Retail Sales increased by 0.4% in August, better than anticipated.
- Rallying equities and falling US government bond yields underpinned AUD/USD.
- AUD/USD bounced sharply on the broad greenback’s weakness.
The AUD/USD pair trades near a daily high of 0.6530, up from a fresh two-year low of 0.6362. The Australian dollar fell at the beginning of the day despite local Retail Sales being better than anticipated. According to the official release, sales were up 0.6% MoM in August, beating the 0.4% expected. However, market players kept blindly buying the greenback, which pushed the Dollar Index to a record high of 114.78. The DXY collapsed during the American session, now trading at around 112.70.
Meanwhile, Wall Street rallied, with the three major indexes up above 1% each, further supporting AUD/USD gains. But the key was a sharp retracement in US government bond yields which weighed on the greenback. The yield on the 10-year Treasury note peaked at 4.019%, now hovering at around 3.73%.
Australia will not publish macroeconomic data on Thursday.
AUD/USD short-term technical outlook
From a technical point of view, the AUD/USD pair could extend its ongoing recovery as long as it holds above 0.6490, the 23.6% retracement of the 0.6915/0.6362 slump. In the daily chart, technical indicators head north within negative, correcting extreme oversold conditions. The 20 SMA, in the meantime, maintains its downward slope, currently converging with the 61.8% retracement of the aforementioned decline at around 0.6705. The immediate Fibonacci resistance level is 0.6570.
The 4-hour chart shows that technical indicators partially lost their bullish strength right after crossing into positive territory, somehow limiting the bullish potential of AUD/USD. At the same time, the pair has advanced above its 20 SMA for the first time in two weeks, with the media losing bearish traction. The longer moving averages, on the other hand, maintain their downward slopes well above the current level.
Support levels: 0.6705 0.6660 0.6620
Resistance levels: 0.6570 0.6615 0.6650
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