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AUD/USD surpasses 0.9700, has eyes set on 0.9845

FXstreet.com (Barcelona) - The Aussie finished the day sharply higher, closing up 160 pips to finish the day at 0.9768 as weaker than expected economic data released during the New York session sent US Dollar bulls running for cover.

According to analysts at NAB Global Markets , “all the focus was on the US dollar overnight with the release of the first
of this week’s big US double, the ISM Manufacturing report. The market was priced for virtually no change in May but the outcome was on the soft side,immediately spurring selling of the US dollar, the DXY index falling in a very short time by nearly 1%, with very little recovery since."

They went on to comment “the AUD was also caught up in this USD selling, on the buying end, rallying strongly to the high 97s, also before consolidating. Yesterday’s mix of local data provided no new direction for the AUD, stronger profits and just OK retail sales offset by weaker inventories and declining job advertisements ahead of next week’s labour force report. A further decline in the RBA commodity price index signifying a lower terms of trade had no discernible impact on the AUD.”

From a technical perspective, the move today was impressive and the latest developments on the daily chart could help lead to further gains during the coming session. Price closed above the 9dma, which is a constructive sign and will now be support on any pullbacks. Initial resistance sits overhead at 0.9845 (the 20dma), which the pair has not closed above since mid-April. The RSI (14) is now back above the 40 level, but would need to breach 60 on a closing basis to turn the trend back to bullish.

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