AUD/USD jumps above 21-day MA of 0.71 with 2% rise in iron ore
- Risk-on and broad-based USD selling are likely boding well for the AUD in Asia.
- An uptick in iron ore prices is likely adding to the bid tone around the Aussie dollar.
- AUD/USD is teasing an expanding sideways channel breakout on the hourly chart.
AUD/USD crossed the 21-day moving average (MA) of 0.71 soon before press time and is currently trading at a session high of 0.7110.
The Aussie dollar is likely benefitting from the broad-based weakness in the US dollar, possibly triggered by the weakness in the treasury yields. Notably, the 10-year treasury yield fell four basis points on Friday and closed below 2.6 percent, signaling a continuation of the drop from the recent high of 2.77 percent.
As of writing, the yield is flat-lined around 2.6 percent and could fall further, as suggested by Friday's bearish close, on dovish Fed expectations.
Possibly adding to the bid tone around the Aussie dollar at press time is the risk-on action in the Asian equities. The major Asian indices like Nikkei, S&P ASX 200, Kospi and the Shanghai Composite are all flashing green.
Further, Dalian iron ore futures are nearly up 2 percent and that could be helping the AUD score gains. Note that iron ore is one of Australia's top exports.
Technically speaking, the bullish cross of the 5- and 10-day moving averages indicate the path of least resistance is to the higher side. Also, on the 4-hour chart, the pair seems to have found acceptance above the upper edge of the expanding sideways channel. So, further gains towards the 50-day MA, currently at 0.7134 cannot be ruled out. That said, risk assets need to remain bid, else the bull momentum may weaken, leaving the AUD sidelined just above 0.71.
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Technical Levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
