The AUDUSD moved higher today, extending above both its 100-hour and 200-hour moving averages. This marks the first time the pair has traded above both key averages simultaneously since breaking below them on June 17 following the more hawkish FOMC decision. Since then, the backdrop has shifted. Oil prices have fallen sharply, and today’s softer-than-expected U.S. jobs report has increased hopes that inflation pressures could ease, providing support for risk-sensitive currencies like the Australian dollar.
The rally carried the pair to an intraday high of 0.6943, but buyers stalled just ahead of the 38.2% retracement of the decline from the June 15 high at 0.69503. The inability to break above that Fibonacci level is an early technical warning sign that upside momentum is not yet convincing. Adding to the caution, the reversal lower in U.S. equities has begun to weigh on risk-on currencies, prompting the AUDUSD to give back a portion of its gains.
The pair now trades near 0.6925. Looking ahead, buyers need to defend the 200-hour moving average at 0.69098 to maintain today’s bullish technical break. Holding above that level would keep the near-term bias tilted to the upside. On the topside, buyers should first reclaim Tuesday’s high and last Thursday’s high near 0.6928, before taking out the 38.2% retracement at 0.69503. A sustained move above those levels would strengthen the case that buyers are beginning to wrest back control from the sellers. Until then, the broader technical advantage still leans in favor of the sellers, with today’s rally looking more like a corrective bounce within the existing downtrend.
This article was written by Greg Michalowski at investinglive.com.
