AUD/USD gains momentum and rises toward 0.6850
- Australian Dollar extends gains versus USD and NZD.
- Technicals in AUD/USD points to the upside, with a short-term target seen at 0.6855/60.
The AUD/USD pair is rising for the second-day in-a-row on Monday, supported by an improvement in risk sentiment and technicals, ahead of key economic data and FOMC meeting.
During the American session, AUD/USD climbed to 0.6844, hitting the strongest level since Thursday. The US Dollar weakened despite higher US yields, and equity prices consolidate gains in Wall Street. “A dose of trade optimism improved market risk sentiment after the U.S. President Trump said the phase one trade deal with China may be signed ahead of schedule. Moreover, the Chinese media said that the two sides have agreed to address each other’s core-interest concerns. Separately, China’s Ministry of Finance is planning to sell U.S. dollar and euro-denominated bonds in November”, explained analysts at BBVA.
On Tuesday, Reserve Bank of Australia (RBA) Governor Lowe will deliver a speech, and on Wednesday, the inflation report is due. In the US, GDP data will be released on Wednesday, before the Federal Open Market Committee (FOMC) statement. According to BBVA economists, it is almost a virtual certainty that the Federal Reserve will cut its interest rates again by 25bps “as markets are pricing in a 90% probability”.
A double bottom?
In the short-term, the consolidation on top of 0.6830 reinforces the bullish outlook. The mentioned level could be seen as the neckline of a double bottom formation (0.6810) with the target near 0.6860. The pair also broke a short-term bearish trendline.
The daily chart also shows AUD/USD pointing to the upside after the correction from one-month highs reversed before the 20-day moving average. A slide below 0.6800 would likely negate the bullish bias.
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
