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AUD/USD: headed back to 0.7625?

  • AUD/USD downside opening up?
  • AUD/USD better offered on US developments.
  • Don't expect anything new from RBA.

AUD/USD has been pressured lower below the 100 hourly SMA on the back of the US data and key highlights from last week, currently trading at 0.7648.

The key drivers for the greenback last week came from:

President Trump Nominates Jerome Powell as the Next Fed Chair, The November FOMC statement that contained no significant surprises and remained consistent with the market’s expectation of a December rate hike, some progress in relation to the Republicans tax plans and indeed the US nonfarm payrolls report that keeps a Fed rate hike on the cards next month. 

AUD/USD, initially bid as traders first reacted to the NFP's negatively,  dropped sharply in a reverse of the greenback and US yields and broke the base and Oct 31 lows. For the week ahead, it looks quieter, although the RBA is due but unlikely to offer anything new.

Westpac offered their outlook for the day:

AUD/USD 1 day:  Momentum remains negative, the next downside target at 0.7625 probably requiring further US dollar gains.

AUD/USD 1-3 month: If the RBA remains firmly on hold, as we expect, and the US dollar rises on delivery of a Fed interest rate rise in December, then AUD/USD could fall to 0.76 by year-end. 

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that, technically, the daily chart shows that the weekly recovery was contained by selling interest around the 38.2% retracement of the latest daily decline and that the price settled below its moving averages and not far from 0.7624, October low. "Technical indicators in the mentioned chart turned south within negative territory and after correcting oversold conditions, all of which favors a bearish extension for this upcoming days. In the 4 hours chart, the risk leans towards the downside as the price settled below its moving averages, while technical indicators hold within negative territory, albeit lacking directional strength," Valeria added. 

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