AUD/USD bearish below 0.77; RBA's Lowe 'talked down' Australian dollar

Currently, AUD/USD is trading at 0.7685, down -0.38% or (38)-pips on the day, having posted a daily high at 0.7719 and low at 0.7664.

Today's US docket had limited news to support a dollar rebound. Nevertheless, the Michigan Consumer Sentiment Index clocked a slightly positive result at 96.3 against 96 consensus and 95.7 previous. Hence, the Australian dollar lost ground against the greenback as the pair broke below the 0.77 level to trade as low as 0.7660 or (50)-pips from the daily highs.

On the other hand, yesterday's comments from RBA's Lowe were enough to somewhat slow down the Aussie upside pressure. Australia's concerning household debt-to-income at 180% seems to be an issue the central banker would like to tame avoiding further easing which could be translated as no hikes in the short or medium-term. However, there is evidence to expect a change in this rhetoric if the Australian economy suddenly signals a lower rate growth.

AUD/USD keeps the bullish bias – UOB

Historical data available for traders and investors indicates during the last 8-weeks that AUD/USD pair, a commodity-linked currency, had the best trading day at +1.18% (Jan.17) or 89-pips, and the worst at -0.81% (Jan.18) or (61)-pips. Furthermore, the US 10yr treasury yields have traded from 2.38% to 2.32%, down -1.72% on the day at 2.33% or -0.0408.

Technical levels to consider

In terms of technical levels, upside barriers are aligned at 0.7740 (high Feb.23), then at 0.7777 (high Nov.8) and above that at 0.7834 (high April.21). While supports are aligned at 0.7617 (low Feb.14), later at 0.7512 (100-DMA) and below that at 0.7459 (50-DMA). On the other hand, Stochastic Oscillator (5,3,3) seems to shift direction to head south. Therefore, there is evidence to expect further Aussie losses in the near term.

On the long term view, if 0.7834 (high April 2016) is in fact, a relevant top, then the upside is limited at 0.7809 (short-term 38.2% Fib). Furthermore, RBA's Lowe removed from the table any further 'easing' via rate cuts, however, the interest rate advantage that favors the Aussie should decrease organically as the Federal Reserve continues increasing rates with '3-hikes' in the next 16 months.

To the downside, supports are aligned at 0.7433 (short-term 23.6% Fib), later at  0.7182 (reverse long-term 61.8% Fib) and below that back to 0.6826 (low Jan.2016).

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