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AUD/USD picking up momentum, talk of China easing cycle

FXStreet (Bali) - AUD/USD has found further bullish momentum in early Asia, as the rate recovers off 0.8660 en-route to retest offers at 0.8700, with last pricing at 0.8690.

Talk that China might be gearing up to begin an easing cycle is boosting the appeal for the commodity complex, with the Australian Dollar the main beneficiary given the strong ties with China. Friday's initial AUD spike towards 0.8720 on China rate cut was followed by a 60+ pips retracement amid the assumption that it would be a one-off cut instead of a long-lasting easing cycle. However, judging by the AUD performance so far in Asia today, that logic may be shifting, with the market growing confident over the possibility of a more aggressive easing stance by Chinese policy-markers.

Technically, Valeria Bednarik, Chief Analyst at FXStreet, notes: "As a new week starts the 1 hour chart shows price gapping higher, holding above a still bullish 20 SMA as indicators stand flat in positive territory. In the 4 hours chart price stands above a bearish 20 SMA as indicators stand flat above their midlines, lacking upward strength (currently picking up some momentum). Some steady consolidation above 0.8700 is required to see the pair attracting buyers, yet if 0.8650 gives up, the downside is exposed towards 0.8590 today."

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