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  • AUD/USD fails to hold to weekly gains, holds in familiar range.
  • A stronger dollar across the board weighs more than risk appetite.

The AUD/USD pair reversed after the beginning of the American session amid a stronger US dollar across the board and dropped to 0.7728, hitting a fresh daily low. It is back in negative territory for the week.

The fact that US stocks are higher on Friday is not helping the AUD/USD. The influence of market sentiment is being offset by the rally of the US dollar, even as US yields remain in the recent range.

On Friday, the key economic report was the flash IHS Markit service sector that surged to 70.1, significantly above expectations. The number triggered a rally of the US dollar that is going on. Metals dropped sharply and bond yields rose modestly. Another economic report showed Existing Home Sales fell 2.7% in April.

From a technical perspective, AUD/USD continues to move sideways, unable to break 0.7800/0.7700. The outlook points to the downside in the short term, but support is expected to emerge around 0.7700. A firm break below would suggest more losses ahead. On the upside, immediate resistance is seen at 0.7780, followed by the 07810 area. A close above 0.7800 would strengthen the outlook for the aussie.

Technical levels

 

Expert score

5

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