- AUD/USD bulls meeting a critical area of resistance.
- Bulls may look to reengage following significant correction.
- US dollar (DXY) under pressure at key support dispute higher 10-year Treasury yield.
AUD/USD is currently trading at 0.7731 between a range of 0.7634 and 0.7737, rising 1.2% on the day.
Overall, the USD is trading lower for a third consecutive session while the antipodeans are leading the session.
US yields had been crashing lower this week and removing some crucial support for the dollar.
However, there has been a pickup on Wednesday on the 10-year yield which may eventually see a response in the greenback, but so far this has not transpired on Wednesday.
On data, the US Consumer Price Index came in a tad higher than expected on Tuesday but not enough to warrant a rally in the greenback for markets presume a lower for longer Federal Reserve.
Even all of the heavy US Treasury issuance this week was easily absorbed.
Markets will now look to the Fed's Beige Book today and then US Retail Sales later on in the week.
''With US data coming in strong this week, we still believe the dollar’s rise can resume. However, this will require a turnaround in US yields and we’re not there yet,'' analysts at Brown Brothers Harriman have argued.
''DXY broke below near 92 and the next key retracement objective from the February-March rally comes in near 91.56. Break below that would target the February 25 low near 89.683,'' the analysts also pointed out.
DXY has already reached a low of 91.5740 so far in this recent cycle of dollar weakness.
Meanwhile, on the domestic front, the Westpac Consumer Sentiment rose by 6.2% MoM in Apr to 118.8.
This was the highest reading since Aug 2010 which coincided with Australia's post GFC rebound and mining boom, analysts at TD Securities noted.
''Today's stronger consumer confidence print coupled with the improvement in business conditions seen in NAB survey yesterday will provide some comfort to the RBA as the economic recovery is likely to pick up even as fiscal support unwinds.''
AUD/USD technical analysis
The daily outlook is bearish while below the resistance structure and given the rally will likely require a correction on profit-taking.
The most compelling area of support comes at the prior highs that meet the 38.2% Fibonacci retracement level of the bullish impulse at around 0.7680.
With that being said, there are prospects of a meanwhile upside extension deeper into the supply zone from an hourly perspective:
A 38.2% Fibo retracement of the hourly leg in the bullish impulse meets prior support from where bulls might wish to reengage, consequently taking the price higher.
A deeper retracement to a 61.8% Fibo meets the prior resistance and a 10-hour EMA confluence:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.