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  • AUD/USD bears bailing out as price consolidates the down move.
  • US dollar giving back some ground, could give rise to healthy upside correction in AUD crosses.

AUD/USD is currently trading at 0.7044 between a narrow start of the day range in Asia of 0.7042 and 0.7048 following an overnight session of corrective behaviour from a low of 0.7015 to 0.772 the high.

August’s combination of rising equity prices and a sliding US dollar has been reversed in no uncertain terms, sending the AUD/USD back to late July levels.

However, despite the market chatter about Reserve Bank of Australia cuts next month, AUD/USD is performing the bid in improved risk appetite.

US stocks finished in the green on Thursday and the greenback is starting to find sellers across the board according to the DXY, (see below).

AUD/USD is responding to improved risk sentiment on Wall Street coming off a weak European session.

US equities were in the green as they digested strong US housing data. However, there was a disappointment in the initial jobless claims, and ongoing concerns about a lack of additional fiscal stimulus.

There is now the scope, from a technical basis for recovery, especially if commodities can maintain the bid, for an upside correction.

Oil, copper and the CRB index were marching ahead on dollar weakness. The CRB index was some 0.4% higher overnight.

AUD/USD technical analysis

Bearish long-term outlook

Daily chart

Hourly chart

There is still plenty of work to be done by the bulls at this juncture as the 4-hour charts show heavily bearish conditions still.

DXY bearish for now

The hourly conditions show that the dollar is retesting what was support, now turned resistance structure.