AUD/USD capped at 0.7500 after Not So bad US data

Currently, AUD/USD is trading at 0.7455, down -0.40% on the day, having posted a daily high at 0.7507 and low at 0.7451.

Once again, US data seems to fail dollar bulls after some results not too close to consensus, but not too bad either. In the aftermath, the Australian dollar fades from 0.7500 a critical psychological mark, needed to increase the odds to sustain a move higher towards 0.7580 and above.

The economic outlook remains stable after Retail Sales MoM printed 0.6% from an expected 0.7% (-0.1% marginal spread), Retail Sales ex Autos MoM printed 0.2% from a 0.5% consensus (still the same 0.2% as previous report) and Retail Sales control group printed 0.2% from the 0.4% consensus figure (again a Not So bad case +0.1% from previous).

Strong recovery in January; Is the Aussie going higher?

On this matter, The Australian reports about the geopolitical risks and narrowing interest rate differentials affecting the Australian dollar in the near term, "US interest rate hikes, elections in Europe, US-China tensions, North Korean belligerence, worries about China’s financial system and instability in the Middle East could continue favouring the US dollar even after it struck a 14-year high against its trade-weighted index this month.

This report concludes, "A strong US dollar could cap the Aussie at US75c, but surprisingly-robust commodity prices and still-attractive interest rate differentials may lend support near US70c." 

AUD/USD Technical Levels

To the downside, as long as prices do not close and open below the 50 SMA the recovery is on track. As soon as it breaks, 0.7440/0.7420 support zone seems to be the first stop to expect some buy interest. To the upside, the pairs seem capped below 0.7500 round figure and without further severe negative news for the US dollar, this resistance can be tough to break. 

On the daily chart, there is a broad perspective and trading map to follow as 0.7451 (long-term 61.8% Fib) is the next support that bears need to fight in the near term. Later, 0.7396 (short-term 38.2% Fib) is another support ready to play defense for the Aussie. If the greenback were to extend its weakness as another leg down, then 0.7543 may be a target worth for risk takers. A close and open above this resistance would open doors for further gains. 

AUD, CAD and NZD – another case of January overshooting?