Currency Analyst since 2010

AUD/USD: upward correction

Analysts at FBS point out that the pair AUD/USD hit $0.9065 (76.4% Fibo of the advance from Aug. to Oct.) and is now trying to push above yesterday’s highs in the 0.9140 area.

Aussie rose on strong Australia’s capital expenditure data (+3.6% vs. expected -1.2%). There’s also a divergence on H4 MACD and RSI. According to FBS, in the short-term we expect Aussie to recover at least to $0.9200, but the specialists to sell higher, at $0.9250/80. The target of the H&S pattern lies at $0.9000. Resistance lies at $0.9200, $0.9250, $0.9280 and $0.9300. Support is at $0.9100, $0.9065, $0.9035 and $0.9000. 

Credit Agricole gives fundamental reasons to sell AUD/USD on rallies. Firstly, the RBA is unlikely to become less dovish on the back of the most recent data. On the contrary, they will likely continue to keep a cautious stance when it comes to tighter monetary conditions on the back of the still strong currency. Secondly, AUD/USD keeps a reverse correlation to US yields. Credit Agricole thinks that there is room for investors’ Fed monetary policy expectations to adjust higher, this would come to the detriment of the AUD. RBS adds that resource investment outlook in Australia has weakened further and growth outlook in China, Australia’s main trading partner, is uncertain as the nation tightens monetary conditions.

Chart. AUD/USD

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