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AUD/USD: Shorts scramble to cover, more to come?

FXStreet (Bali) - AUD/USD is presently using old 0.8750/60 resistance as new support at the Tokyo open, following an upside gap to 0.8775 during interbank trading.

The massive miss in Japan's Q3 GDP initially saw AUD/USD retrace a bit on USD/JPY strength, but with a massive liquidation of longs in this latter at the touch of 117.00 - buy rumour, sell fact play - , AUD has found the selling pressure reduced, keeping prospects for a continuation of the bullish run intact. It is worth noting that last Friday's counter-intuitive bear move in USD is suggestive of a potential extension in the USD bear correction in the days to come.

Technically, Valeria Bednarik, Chief Analyst at FXStreet, notes: "The 1 hour chart shows indicators heading higher well into positive territory as 20 SMA turns higher well below current price, while the 4 hours chart shows price stalling so far at 200 EMA, while indicators are biased higher. The RBA will publish the minutes of its latest meeting during the upcoming days, main fundamental reading of the week: a less dovish than expected wording may favor some further advances beyond the 0.8800 level, reinforcing the interim bottom idea at mentioned 0.8539 mark."

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