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  • AUD/USD has been making a fresh recovery high and is at the highest levels since the 10th August.
  • The Aussie is currently trading at 0.7322 having made a session high of 0.7324 so far.

The greenback has dumped to 95.9390 from 96.4020 on the basis that the US Pres. Trump voiced his displeasure about rate hikes again.

AUD/USD has been in a recovery to a hard resistance line that is made up of a series of supports, a support line, that started back in early July. The pair has moved in tandem to the recovery in the Chinese Yuan and indeed, a self-fulfilled correction in the greenback that started last week, 14th August).

In fact, as noted in recent positioning data, AUD shorts have dropped back having increased to their largest levels since October 2015 the previous week where US/China trade tensions had been weighing on confidence while at the same time, the RBA has remained cautious on its policy outlook and domestic politics.  

RBA overload

In fact, we have been overloaded with the RBA of late and markets seem to have quite frankly, moved on from its rhetoric – theRBA minutes are likely to be a non-event as well. Instead, traders will most likely look to the FOMC minute this week as well as the Jackson Hole where the strong dollar will most probably be a major topic of discussion. The ECB is also due this week and it will draw attention from the markets as to timings of a possible rate hike and whether such events taking place in Turkey and Italy will be weighing on the board’s outlook.  

AUD/USD levels

The August 14th doji played out its role and the price is continuing to hit up the upside. However, the price has arrived at a crossroads and a potentially hard line of resistance. Looking at the fundamentals, it is hard to see a sustained reason to hold onto the Aussie while the broader technical outlook has the price accelerating down through the weekly channel. Only a sustained break above the 10-D SMA and then 0.7360 could alleviate the near term bearish pressure with 0.7480 being the primary target above the sideways bearish continuation channel. On the flipside, 0.7110/60 is on the bear’s map while a complete breakdown to 0.7150 opens the floodgates for lower grounds in the 0.69 handle.