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AUD/USD making an early case for further downside, eyes 0.7625?

  • AUD/USD breaking lower in early Asia. 
  • 200-D SMA caps rallies before 0.77 handle.
  • A busy week ahead in the Australian calendar.  

AUD/USD has started out in early Asia better offered, mimicking the downside in Friday's closing sessions in a correction reversal of 0.7695 highs.

AUD/USD bulls could not make it over the goal line last week in a number of failed attempts at the 0.77 handle; once rejected at the figure to 0.7627 lows before two further attempts that only amounted to a double top at said previous high, (200-D SMA) 

AUD/USD was buffeted by a weak/mixed USD  although US yields picked up later in the day and the effect was a narrowing in the AU-US spreads, making for a drop to 0.7653 before closing near 0.7660. 

RBA's Debelle has been crossing the wires at the start of this week, but that does not explain the early downside to the Aussie for his comments have been mainly upbeat. He has been speaking at UBS Australasia Conference, Sydney. 

  • RBA's Debelle speech: Rate hike likely to come from a good economy and not a shock
  • RBA's Debelle speech: Sounds upbeat on non-mining investment

US dollar playing catch up 

The greenback is playing some catch up here and has on the back foot for most of the last week. In terms of the DXY, analysts at Brown Brothers Harriman explained that a two-week low was recorded before the weekend, but important support is in the 94.00-94.25 area. "This area corresponds to the 20-day moving average, which the Dollar Index has not closed below in more than six weeks, and a trend line drawn off that September and October lows. A small double top may be in place near 95.15. The neckline is about 94.40.  A convincing break would point to 93.75," the analysts added.

AUD/USD 1-3 month:

"If the RBA remains firmly on hold, as we expect, and the US dollar rises on the delivery of a Fed interest rate rise in December, then AUD/USD could fall to 0.76 by year end," explained analysts at Westpac.

For the week ahead:

Tuesday: NAB Oct bus. conditions & confidence. Chinese retail sales, Chinese industrial production: Wed: Australian wage price index. Thurs: Australian employment.

AUD/USD levels

Technically, the bias is on the downside, with RSIs biased down, the 200-DSMA capping rallies and a break of the recent lows in early Asia today.  

Valeria Bednarik, chief analyst at FXStreet explained that the Momentum indicator in the daily chart aims higher, but below its 100 level, also supporting the bearish perspective, although argues that a break below 0.7625 is required at this point. "Shorter term and according to the 4 hours chart, the pair presents a neutral-to-bearish stance, as the price settled below an anyway horizontal 20 SMA, while indicators head nowhere within neutral territory," Valeria added.

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