AUD/USD: Bulls break above the 0.7500 handle amid USD profit-taking

  • Profit-taking on the US dollar pushes the Aussie above the 0.7500 handle.
  • US Treasury yields and the US dollar are both in corrective mode after their strong advance earlier this week.
  • Coming up next in Australia is the consumer inflation expectations and the employment data at 1:00 and 1:30 GMT respectively.

The AUD/USD pair is trading at around 0.7516 up 0.60% on Wednesday as both USD and the US Treasuries are in corrective mode.

In Asia, the Aussie rebounded from the 0.7450 level and climbed steadily throughout the European session. In the early part of the American session, the pair broke above the 0.7500 handle.

The recent move higher on AUD is attributed to some USD profit-taking, a mild boost in copper prices which affect the commodity-linked currency and to a lesser extent the China’s industrial production which advanced to 7.0% year-on-year in April. 

"Copper price, known as a barometer of economic health, reversed direction and is touching previous resistance now converted into support," Gonçalo Moreira, technical analyst at FXStreet noted on the market risk on/off sentiment on Wednesday. 

On Tuesday, the US Treasury yields broke multi-year highs. The 10-year Treasury yield benchmark is now consolidating its advance in the 3.070% region while the US Dollar Index (DXY) is also in corrective mode trading close to the 90.30 mark.

Coming up next on the macroeconomic front in Australia, the consumer inflation expectation at 1:00 GMT followed by the employment data at 1:30 GMT on Thursday. If the Australian data come above expectations and the US dollar continues its corrective move, then the AUD/USD can have another boost higher.

On the broader picture, the greenback has been in a strong uptrend since mid-April as investors are expecting the Fed to hike at least three times in 2018.

AUD/USD 4-hour chart 

The main trend is bearish and immediate support is seen at the 0.7450 level (low of the day) followed by 0.7411 cyclical low and the 0.7500 handle. To the upside, bulls can expect resistance at the 0.7550 figure and the 0.7640 previous supply level. The Aussie is trading below its 100 and 200-period simple moving average suggesting downward momentum, however, bulls are challenging the 50-period SMA.

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