The easing of trade tension helped accelerate the Australian dollar's recovery and it has strung together the first back-to-back weekly advance since January, points out the research team at BBH.
“It had taken the better part of two weeks to carve a low near $0.7630. As recently as April 9 it was near $0.7650. Before the weekend it briefly traded above $0.7800 for the first time in nearly a month. It was rebuffed ahead of the 61.8% retracement of the leg down that began in the in middle of March. The technical tone would deteriorate if the Aussie were pushed back below the $0.7740 area.”
“We had previously noted that the Australian dollar was testing a three-year-old uptrend against the New Zealand dollar (~NZD1.05). The trendline has remained intact even if marred, and the technical tone is improving. A move now above the 20-day moving average (~NZD1.06) could boost confidence that a durable low is in place. Short-term participants see the Kiwi is as more immune from the trade wars than the Aussie, making the cross a trade play.”
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