AUD/USD: upside stalling at 0.7674 despite bullish outlook

AUD/USD is stalling the upside momentum of the last week with 0.7674 highs on the 22nd Sep capping the Aussie, despite Central Banks on hold, with risk turning lower into the US close. 

The Aussie has been underpinned of late due to the new RBA governor's less dovish rhetoric. RBA Governor Philip Lowe. Testifying to a parliamentary committee on Thursday and indicated that he will not be cutting rates in a hurry to try and lift inflation. At the same time, the Fed have not been in a position to hike rates again this year and this leaves the door open to the upside for the major commodity currency in times of risk-on appetite. 

However, analysts at Westpac explained that while further gains to around 0.77 are possible during the month ahead, driven in part by the faltering US dollar and yield-chasing flows, the AUD is losing energy (perhaps a reflection of its declining yield advantage). "By year end, there's a case for a correction towards 0.74 if the Fed tightens in December as we expect. (13 Sep)."

Outlook for antipodeans - Westpac

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that technically, the daily chart shows that the price is not only above the mentioned level, but also above a bullish 20 SMA, although technical indicators have turned south around their mid-lines, suggesting that a break below 0.7600 will result in further declines. 

"Considering that the latest weekly recoveries have resulted in lower highs, chances of a bearish breakout have grown, although the price needs to break below 0.7450, the 38.2% retracement of the mentioned rally, to confirm so."