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AUD/USD and its chances to recover

As you can see on the daily chart, AUD/USD is swinging on Tuesday around $0.9140/50 (38.2% retracement of the advance in 2008-2011). The day’s high is just below $0.9200, while low is at $0.9082. The market seems uncertain. On the one hand, Aussie’s undermined by higher Chinese inflation data. On the other hand, Australian dollar was supported as there were reports of heavy AUD short-covering against the USD, JPY and CHF.

From the technical point of view, daily MACD and RSI diverge from the prices – they didn’t confirm the recent lows. This fact together with general oversold conditions represents a bullish factor. In addition, there’s a kind of double bottom at $0.9040 (last week’s and this week’s lows). There’re may be deeper retracement higher up to resistance at $0.9250, $0.9345 and probably $0.9400 if Aussie manages to overcome $0.9180 on the sustainable basis.

Still the general trend is bearish. AUD/USD hasn’t been able to close above $0.9150 since last Monday. This week the volatility might remain high ahead of the release of the FOMC minutes on Wednesday and Australian labor market data on Thursday. Analysts at Barclays Capital expect slightly higher reading of Australia’s employment release and recommend buying AUD versus its New Zealand counterpart, not against USD. Support for AUD/USD lies at $0.9100, $0.9050 and $0.9000.

Chart. Daily AUD/USD

AUD
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