AUD/USD: bulls in control and lok to a test of 0.72 the figure and the 0.7304 2018 channel

• AUD/USD has been struggling to really get its head above the 38.2% Fibo of the Sep highs and recent double bottom lows as the pair embark on an impressive recovery from those aforementioned lows down at 0.7070.
• However, R1 is not far off, stationed at 0.7158 with today’s high at 0.7151.

The US dollar has been under pressure giving rise to a better performance in the commodity complex and relief to the EM-FX sector, both of which the Aussie trades as a proxy too. However, eyes China and the Yuan also and things there do not look so sustainably positive which the Aussie also trades a proxy too and the RBA noted such potential risks around the global outlook whilst also assessing domestic dangers in the soft housing market, a peak in the residential construction cycle and weak household income growth.

“Most forecasters are predicting that the Bank will be able to deliver on its longer-term preference to raise the cash rate during 2019,”

analysts at Westpac noted after the release of yesterday’s RBA minutes.  

US dollar still has upside left in there

With respect to the greenback, while the bears are in control currently, US growth estimates are being revised upwards and we are still no clearer as to where peak rates might be considered being and thus the dollar still has room on the upside when considering the divergence in the performance of the US economy to that of competitors such as China that had led the way in this recent global equity market’s rout. However, a break of the 95 handle will certainly be a plus for the Aussie and commodities in general and bulls can target a break of the 0.72 handle.  

AUD/USD levels

Analysts at Commerzbank noted that AUD/USD maintains upside corrective pressure:

“The market last week saw a minor break to a new low which was accompanied by a TD perfected set up and we note TD support at .6995. We look for further near term gains. The market will find strong resistance at the 55 day moving average at .7235 and the .7304 2018 channel and remains under pressure. Below .6995/75 targets .6827 the 2016 low.”