AUD/USD is transferring in direction of a take a look at of the 200-day transferring common
If patrons do handle to check the extent, it will be the primary time since April final yr that value truly tried a extra bullish break. The earlier run greater in early December fell wanting testing the 200-day MA (blue line) however this time round aussie patrons may capitalise sufficient on greenback weak spot from the Fed to aim a break greater.
From a technical perspective, value is closing in on a key degree that might both sign a breakout to the upside on the again of extra bullish momentum or a key resistance degree that might restrict good points for the pair.
Therefore, let’s examine what the basics are saying. Markets are actually zooming in on greenback weak spot after the Fed yesterday as members look to cut back additional their fee hike expectations from two to at least one. That mentioned, when it comes to pricing, the Fed continues to be seen not mountain climbing charges in any respect this yr.
So, is there something new for us to work with?
Primarily, there is not a lot because the Fed continues to evangelise on ‘persistence’ and being ‘data-dependent’. That mentioned, US financial knowledge as of late hasn’t been too encouraging and that is not serving to with greenback sentiment both. I reckon the backlog of information from the shutdown can even point out additional weak spot in financial sentiment in order that’s not going to be excellent news for the dollar within the near-term.
Nevertheless, the aussie facet of the equation is not that a lot brighter both. However the distinction right here is that almost all of what’s dragging the aussie decrease over the previous yr are ‘identified unknowns’. That’s within the sense that everyone knows what these elements are reminiscent of excessive family debt ranges, stalling inflationary pressures, comparatively weak wage development nonetheless, and falling home costs.
Therefore, I would not rule out additional near-term weak spot within the greenback however within the massive image I will not be too optimistic about AUD/USD operating in direction of zero.7500 or greater until issues within the Australian economic system enhance. The 200-day MA could be a great place to scale out on longs earlier than reviewing the pair once more. Proper now, it is all about how far the weak spot within the greenback will go.
Basically, I might argue there should not be a lot. However you can also’t argue with technical breaks i.e. gold at Eight-months excessive, EUR/USD above 1.15, USD/CAD under 200-day MA.