audusd rises to critical resistance on us dollar pullback gold surge 1319042015
<p>AUD/USD (daily chart shown below) rose to critical resistance around the 0.7200 handle on Wednesday, primarily due to a weakened US dollar that was shaken […]</p>
Share this:
AUD/USD (daily chart shown below) rose to critical resistance around the 0.7200 handle on Wednesday, primarily due to a weakened US dollar that was shaken by August’s unexpected drop in US inflation. Gold also surged on this inflation data, helping to further support the positively-correlated Australian dollar.
Earlier, the Reserve Bank of Australia (RBA) had released the minutes of its last monetary policy meeting. As expected, the RBA kept rates unchanged, but also took on somewhat of a dovish tone as it asserted a relatively negative outlook for the Australian economy. While this tone prompted a modest initial dip for the Australian dollar, AUD/USD was quick to recover on the weakness in the US inflation report.
Having reached up towards major resistance at 0.7200, AUD/USD is at a critical technical juncture. The past week-and-a-half have seen the currency pair rise from its new six-year low of 0.6903 in early September up to its current height just short of 0.7200. This rebound has also brought AUD/USD up to approach its key 50-day moving average, which has not been significantly breached to the upside since the substantial rally that began in mid-April.
The 0.7200 level has served as a key support/resistance level for the past few months, as it was a support target prior to its breakdown in late August, after which it has held strong thus far as resistance.
While the longer-term trend for AUD/USD continues to be strongly to the downside in light of continued commodity weakness and the likely future rate hike prospects for the US dollar, the short-term fate of the currency pair will primarily be driven by this week’s Fed decision on US interest rates.
In the event that the Fed postpones a September rate hike, AUD/USD will likely rally significantly, breaking above the 50-day moving average with an initial upside target potentially around the 0.7500 resistance level. In contrast, any decision to raise rates on Thursday should lead to an AUD/USD retreat back down towards the 0.7000 level, with a further, longer-term downside objective around 0.6800 support.
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.