AUD/USD: Rejected again at 50% Fib resistance

  • AUD/USD has failed to pierce key Fib resistance at 0.6880 despite the US-China trade optimism.
  • Australian inflation expectations cooled in September. That data may be capping gains in the AUD.

AUD/USD is currently trading at 0.6870, having faced rejection at 0.6880, which is the 50 percent Fibonacci retracement of the drop from 0.7082 to 0.6677.

The pair has faced rejection at the key Fibonacci level for the second straight day, despite optimism on the US-China trade front.

The US President Trump Thursday delayed the decision to impose extra 5% tariffs on $250 billion worth of Chinese goods by two weeks to Oct. 15, sending the risk assets higher. Notably, China’s offshore Yuan clocked three-week highs against the US Dollar and the reduced haven demand for bonds pushed the US 10-year treasury yield to a one-month high of 1.76%.

Even so, the AUD is reversing lower from key Fib hurdle, possibly due to the weak domestic data – Australia’s consumer inflation expectations for September came in at 3.1% vs 3.5% in August.

Looking forward, the bulls need to defend the session low of 0.6859, else the rejection at the key Fib hurdle would gain credence, possibly leading to a deeper drop to 0.6830. As of writing, the futures on the S&P 500 are reporting a 0.30% gain, so, the AUD may be able to defend 0.6859.

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