AUD/USD needs to close the week above 0.7341/49 to avoid a turn back lower – Credit Suisse

AUD/USD reversed sharply lower on Friday. Nonetheless, economists at Credit Suisse stay biased toward a corrective move higher to 0.7341/49.                                        

Aussie to see a deeper corrective recovery

“We still believe that a deeper corrective recovery is likely, with short-term MACD momentum still outright positive. With this in mind, we look for a move to the back of the broken channel and retracement resistance at 0.7341/49, which we then look to cap for the risks to turn back lower.” 

“Only a weekly close above 0.7341/49 would negate the very large topping structure that we have been highlighting recently, which is not our base case.”

“A break below the short-term channel bottom at 0.7163 would be sufficient to end the corrective recovery potential and turn the risks directly lower. Next supports are seen at 0.7129, then 0.7089/82, below which would trigger a retest of next support at 0.6992/91.” 

“Below 0.6992/91 would then open up an eventual move to 0.6758, which remains our core medium-term objective.”