- AUD/USD attracted some dip-buying on Monday near the 0.7335 confluence support.
- Hawkish Fed expectations acted as a tailwind for the USD and might cap the upside.
- Mixed technical indicators further warrant some caution before placing bullish bets.
The AUD/USD pair recovered over 30 pips from one-and-half-week lows touched earlier this Monday and refreshed daily tops heading into the North American session. The pair was last seen trading around the 0.7365-70 area, up over 0.10% for the day.
The prevalent risk-on environment – as depicted by a strong rally in the US equity futures – was seen as a key factor that extended some support to the perceived riskier aussie. The uptick, however, lacked bullish conviction amid a broad-based US dollar strength, buoyed by expectations for an imminent Fed taper announcement.
From a technical perspective, the AUD/USD pair stalled its recent pullback from the highest level since mid-July near the 38.2% Fibonacci level of the 0.7106-0.7478 strong rally. This coincides with the 200-period SMA on the 4-hour chart and should now act as a key pivotal point amid absent relevant market moving economic releases.
Meanwhile, technical indicators on the daily chart are holding in the positive territory but have been struggling to gain any meaningful traction. Moreover, oscillators on the 4-hour chart are yet to recover fully from the bearish territory, warranting some caution for bullish traders and positioning for any further gains.
Hence, any subsequent move up is more likely to confront stiff resistance near the 23.6% Fibo. level, around the 0.7385-90 region. This is closely followed by the 0.7400 mark, which if cleared decisively would set the stage for a move beyond mid-0.7400s, towards retesting monthly swing highs, around the 0.7475-80 region.
On the flip side, the 0.7335 confluence support should continue to protect the immediate downside. Some follow-through selling has the potential to drag the pair further towards testing sub-0.7300 levels, or the 50% Fibo. level. Failure to defend the mentioned support levels might be seen as a fresh trigger for bearish traders.
The AUD/USD pair might then accelerate the slide towards mid-0.7200s, en-route the 0.7230-25 support before eventually dropping to the 0.7200 round-figure mark. The downward trajectory could further get extended towards the 0.7170-65 horizontal support, below which bears are likely to aim to retest YTD lows, around the 0.7100 mark.
AUD/USD 4-hour chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.