AUD/USD remains on the road to recovery despite challenges to global risk sentiment
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AUD/USD remains on the road to recovery despite challenges to global risk sentiment

  • Near-term strong support played its role at the time of greenback weakness.
  • Global risk sentiment remains under pressure.
  • Fewer economic data on hand highlights qualitative catalysts.

The AUD/USD pair has the ability to disappoint bears as soon as it hits near 0.6860 levels off-late. The quote is on the road to recovery by taking rounds near 0.6900 during the early Asian session on Friday.

Aussie has often been considered as a global risk barometer and uses to rise in times of market optimism. However, the quote took advantage of the US Dollar (USD) weakness on Thursday and registered a U-turn from the latest lows marked since last one week. The greenback couldn’t withstand disappointment front the economic calendar while its trade rift with China is in the spotlight.

Global risk sentiment was challenged yesterday as not only the trade rift between the US and China but disappointing stats of purchasing manager index (PMI) from leading economies also spread macro disappointment.

The US 10-year treasury yield, another risk gauge, recently slipped to a multi-year low of 2.322%.

Looking forward, the economic calendar at Australia offers no major data/event to follow while the US durable goods orders for April could become important to watch.

The forecast suggests another hit to the US Dollar via headline data as durable goods orders bear the consensus to dive into contraction region to the tune of -2.0% whereas non-defense capital goods orders ex-aircraft might also decline to -0.3%.

Technical Analysis

Even if the 14-day relative strength index (RSI) and repeated reversals from 0.6860 signal brighter chances of the pair’s U-turn, a five-week-old descending trend-line at 0.6910 can question near-term buyers targeting 0.6930 and 0.7000 numbers to the north.

Should prices sneak below 0.6860, January 2016 low surrounding 0.6830 and 0.6800 round-figure could become bears’ favorite.

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