AUD/USD rebound loses momentum
James Chen September 22, 2015 1:56 AM
<p>AUD/USD (daily chart shown below) bulls had two good weeks of a relief rally as the punishing long-term downtrend finally relented and the currency pair […]</p>
AUD/USD (daily chart shown below) bulls had two good weeks of a relief rally as the punishing long-term downtrend finally relented and the currency pair rebounded off its new six-year low of 0.6903 that was just established in early September.
That rise culminated in a spike late last week that attempted, but has thus far failed, to overcome major 0.7200 resistance during and shortly after the Fed’s announcement that it was keeping US interest rates unchanged. On both Thursday and Friday of last week, the AUD/USD daily chart printed candlesticks with long upper wicks (or shadows) that implied an attempt and failure to follow-through to the upside.
To begin the new trading week, Monday saw the currency pair retreat substantially further below resistance as the US dollar regained momentum and AUD/USD began to reassert its longstanding bearish trend.
Currently situated just slightly above the noted 0.7200 resistance is the key 50-day moving average, which has served as a major resistance factor for the downtrend since June.
Adding further to Monday’s pullback for the commodity-linked Australian dollar has been a corresponding pullback in gold after the precious metal rallied sharply during the latter half of last week.
With continued expectations of a near-term US rate hike despite the Fed’s non-action in September, the US dollar should continue to be supported, which could likely place sustained pressure on AUD/USD.
If the currency pair continues to be rebuffed by the noted 0.7200 resistance level, the immediate downside target is at the 0.7000 psychological support level. Any further follow-through that extends the entrenched downtrend should then target the next major downside objective at the 0.6800 support level.
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