AUD/USD extremely ovebought near 0.7730; key 0.78 level on the table

Currently, AUD/USD is trading at 0.7733, up +0.43% or 33-pips on the day, having posted a daily high at 0.7740 and low at 0.7665.

The Australian dollar vs. American dollar has been pushing higher to break above the round figure 0.77 as yesterday's FOMC minutes couldn't clock any 'sooner rather than later' narrative to favor long-dollar positions. Furthermore, the 'fairly soon' wording left market participants in the air with no clues as what to do or not. Therefore, the most logical step materialized as traders quickly adjusted their positions limiting their exposure to the greenback.

On the other hand, during the Asian session, short-sellers were caught as the AU economic docket released the Private Capital Expenditure that clocked 'a worse than expected' figure at (2.1%) from (1.0%) consensus and (3.3%) previous. Evidently, such negative result prompted a short-term sell-off that yielded almost 50-pips in the process to reward bears. However, the Aussie erased those losses as the pair moved into the European trading session. Hence, the US dollar shined for a limited time and attracted some interest, but the facts are evident to keep denying the 'awful truth' - Trump's Trade might be over at least for the time being.

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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 2.41% to 2.38%, down -1.11% on the day at 2.38% or -0.0267.

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 head north. Therefore, there is evidence to expect further Aussie gains 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).

AUD/USD analysis: still too risky to buy above 0.7700