AUD/USD broke above the September excessive on Friday and closed at its highest degree since 29 August
From a basic perspective, the financial coverage divergence story in AUD/USD has been one in all my favorite tales this yr. Nonetheless, even when fundamentals proceed to assist that rhetoric, it is wanting much less outstanding than it was a few months in the past.
You’ll be able to say to some extent that the brief masking within the aussie has contributed to a shift in perspective however the newest market view on the Fed is suggesting that greenback beneficial properties shall be much less rampant except the Fed can present assurances that they’ll hike properly past what they understand to be impartial charges.
However for me, the technical change in AUD/USD for the reason that begin of this month has been telling that the winds are altering within the pair. And final Friday’s break of the September excessive of zero.7315 could be the start.
Consumers are properly in management almost about the near-term chart however they nonetheless have a lot work to do. Value continues to be sticking across the zero.7315 degree and that is making it robust to see an extension to the upside for now because the aussie is weighed down by the deal with US-China commerce tensions.
Nonetheless, except worth closes again beneath the zero.7315 deal with right now, consumers could have the best platform to construct on a transfer again in direction of the zero.7400 deal with after which the 38.2 retracement degree @ zero.7447.
And no less than for now, the financial coverage divergence story is taking a little bit of a breather because the yields unfold is creeping again in favour of the aussie over the previous few weeks:
Couple that with stretched brief positioning, key technical degree breaks, and lack of greenback momentum, this will likely but assist AUD/USD get well some floor as we head into the closing phases of the yr.
For me, I am watching that zero.7315 degree right now, that shall be key in telling whether or not the run to the upside right here has legs.