AUD/USD rebounds, turns flat near mid-0.78s as USD struggles to recover
The AUD/USD pair gained traction after finding support at the 0.78 handle in the early European session and erased its daily losses with a consistent recovery. As of writing, the pair was trading at 0.7845, only 4 pips below its opening level.
The pair's rebound seems to be fueled by a broad-based selling pressure witnessed on the greenback. The US Dollar Index, which rose to 93.50 on Thursday, is now moving sideways near the 93 handle, losing 0.3% on the day. Although today's drop looks like a technical correction of the rally that we have seen on the first three days of the week, mixed macro data from the U.S. may have increased the selling pressure. Moreover, the US Treasury-bond yields are struggling to extend their gains with the 10-year reference staying virtually unchanged at 2.312%, further weighing on the buck.
On the other hand, the risk-sensitive aussie is finding some extra demand amid a relatively positive market sentiment in the NA session. At the moment, the Dow Jones Industrial Average and the S&P 500 indexes are gaining 0.2% and 0.1% respectively.
The only data that will be featured from Australia on Friday will be the private sector credit, which is expected to remain unchanged at 0.5%. However, before the core PCE price index, the Fed's favorite inflation gauges, is released from the U.S. later in the day, the pair's price action is likely to remain choppy.
Technical outlook
The RSI indicator on the H4 chart rose above the 30 mark with today's upsurge, suggesting that the pair is correcting oversold readings. 0.7820 (100-DMA) remains as a critical support for the pair ahead of 0.7785 (Jul. 17 low) and 0.7730 (Jul. 14 low). On the upside, resistances could be seen at 0.7890 (Sep. 27 high), 0.7945 (50-DMA) and 0.8000 (psychological level).
Today's data from the U.S.
- US: Weekly initial claims was 272,000, an increase of 12,000 from previous week
- US: Real GDP increased at an annual rate of 3.1% in the second quarter of 2017
- US: International trade deficit was $62.9 bln in Aug, down $0.9 bln from $63.9 bln in July
- US: Wholesale inventories for Aug were estimated at $608.4 bln, up 1.0% from July 2017
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
