AUD/USD: bulls taking a breather, awaiting next catalyst with eyes for 0.77 handle

Currently, AUD/USD is trading at 0.7668, down -0.02% on the day, having posted a daily high at 0.7675 and low at 0.7667.

Forex today: Aussie leads, US yields drop but dollar robust on Fed speak

AUD/USD is consolidating the phase of bullishness that has emerged again upon the 0.76 handle. The rally is petering out in early Asia and awaits the next catalyst in the new home sales data later today in Tokyo. Meanwhile, the dollar has managed a bid elsewhere on the back of the ECB news, although the Aussie relished as US yields dropped following suit of the European rates. 

Iron ore making a comeback, supporting the Aussie

At the same time, iron ore made further recovery advances overnight amid probes into steel capacity closures in China. Hebei, the largest steel producing province in China pledged to cut capacity further as it suggested some companies hadn’t halted production or cut emission as required, explained analysts at ANZ. "Comments out of an industry conference also helped boost sentiment. BHP Billiton and Rio Tinto both suggested the there was more growth in China’s steel production." 

AUD/USD levels

Analysts at Westpac noted that AUD/USD is well supported around 0.7600 and is heading towards the 0.7700 area. "AUD/USD at risk of testing 0.7800 during the next few weeks as USD longs are pared. Longer term we expect to see it slightly lower to around 0.7600."

Valeria Bednarik, chief analyst at FXStreet explained that the 4 hours chart shows that the pair is favored towards the upside, but also that the upward momentum is limited. "The price has settled above a modestly bullish 20 SMA, while technical indicators aim modestly higher within positive territory, but with tepid upward slopes. Further gains beyond 0.7700 should result in a test of the recent highs in the 0.7740/50 region, although investors will likely rush to take profits out of the table on any spike beyond the 0.7700 level."