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AUD/USD: at major pivotal level on big week

FXStreet (Guatemala) - AUD/USD has started out in early Asia with a finger or two dropping from its grip in the 0.7320's while oscillating below the pivot of 0.7233 albeit against a positive backdrop of last week's continuation of the bullish recovery.

Big ground made by AUD/USD bulls

AUD/USD has been trading in a positive light in October so far. The major commodity currency rallied from the lows on the 0.70 handle and within the vicinity of the hourly 200 SMA on the (2nd of October) and has kept going with little set backs while finding support from the rising 50 SMA on the same hourly time frame. Commodities, including gold and base metals, have been on a bull run this month and supporting the Aussie, with recoveries most prominent in WTI, recovering from below $44bbl in early Oct to recent highs of $50.88bbl.

AUD/USD downside risks ahoy at key level

However, as Valeria Bednarik, chief analyst at FXStreet notes, "The risk of a downward corrective in the AUD/USD pair has increased exponentially, and there's a good chance the pair may correct lower during this week, particularly if Australian employment data disappoint."

China returned from holidays last week, but did not cause any great shakes when risk continued to bounce back. They will be back in the limelight this week with some key data including trade balance and CPI's. The US will offer a stream of data flows also, including key retail sales. So a busy week for the major at a key technical juncture.

AUD/USD bullish/neutral (Spot 0.7321, above Sep highs, RSI's (14) positive)

AUD/USD broke September highs and has scored new territory on the 0.73 handle, supported by the 20 SMA and broke the 50 DMA for the first time since 17th June. The price targets 0.7366 with a break of the weekly 20 SMA at 0.7340 with positive momentum indicators. However, failures could give rise to offers to the 0.72 psychological support.

See here for further analyses and downside levels by Commerzbank (AUD/USD: the demise of the downtrend).

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