- Australian dollar holds to losses against the US dollar on Tuesday.
- AUD/USD about to test the short-term uptrend line near 0.6835.
The AUD/USD pair trimmed losses after the beginning of the American session but the move higher was limited and it is back below 0.6850.
USD gets stronger
The recovery from 0.6837 peaked at 0.6856. A stronger US dollar limited the move higher of the AUD/USD pair that dropped back below 0.6850. As of writing trades at 0.6845, looking again toward daily lows.
The recent move lower took place amid a rebound in the DXY from 97.00 to 97.20 and also amid higher US yields and after US data. The optimism in Wall Street failed to boost the demand for commodity currencies. The Dow Jones is up 0.25% and the Nasdaq 0.10%-.
Earlier today the Australian dollar was among the worst performers but it managed to recover some ground against currencies like the Kiwi. The minutes of the latest minutes from the Reserve Bank of Australia weakened the Aussie. According to analyst at TD Securities, the minutes “have increased expectations of a Q1 rate cut. Markets are priced around 60% for a cut, though we note AUD short positioning sits at extremes relative to the G10.”
Testing key support
The slide today was capped by an uptrend line from November lows at 0.6835. Also around 0.6545/55 there is an horizontal support are. A firm break under 0.6830 would leave AUD/USD vulnerable to more losses. The next support might be seen at 0.6800/05.
On the upside, above 0.6860 the AUD/USD would improve the short-term outlook. The next resistance is located at 0.6895 (weekly high) and 0.6925.
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