AUD/USD quietly climbs back above 0.7200
Buyers continue to hold near-term control in the pair and defended support level around 0.7180 as the 38.2 retracement level@ 0.7186 helped to limit downside movement since Friday. The aussie got hit by the fact that Trump's reported trade deal offer was nothing but speculation and that hurt risk as we rounded off the week.
The aussie has been trading tepidly today but is slowly climbing back up now against the dollar making its way back above 0.7200. It shows that buyers are still poised for a move higher but can they deliver?
The daily chart shows that price came close to a test of the 100-day MA (red line) on Friday before encountering some setbacks. Technically, breaking above the downwards trendline this year is a good sign but the key test remains if buyers can break above the 100-day MA and put an end to the bearish momentum/bias in the pair.
I'm all for a correction/retracement based on short positioning being squeezed, but seeing as how markets are starting to calm down again, focus may start to shift back towards the many factors that have been driving down AUD/USD this year again.
More so after the US jobs report last week which showed that annual wage growth is at its fastest pace since April 2009. That will only put more attention on the Fed as they seek to raise rates further and that will result in further monetary policy and rates divergence between the US and Australia.
Should the pair fail to sustain a move above the 100-day MA as the US midterm elections clear, I would expect the downside move to resume and a break back below the downwards trendline (now at 0.7150) will be confirmation of a move to test the lows near 0.7000 once again.
