13 Mar 2018
• A modest USD rebound prompts some profit-taking at higher levels.
• Pickup in the US bond yields adds to the downward pressure.
• US CPI print/Chinese macro data should provide a fresh directional impetus.
The AUD/USD pair struggled to build on the early uptick and retreated around 25-30 pips from fresh two-week tops.
The pair built on its recent gains and rose to an intraday high level of 0.7885 during the Asian session on Tuesday. The bullish move was supported by upbeat Aussie NAB Business Confidence index, which to some extent was negated by a sharper than expected drop in monthly home loan figures.
The up-move, however, lost steam ahead of the 0.7900 handle and a modest US Dollar rebound prompted some profit-taking at higher levels, especially after the post-NFP upsurge of over 100-pips. This coupled with a goodish pickup in the US Treasury bond yields further collaborated towards keeping a lid on any further up-move for higher-yielding currencies - like the Aussie.
Meanwhile, the downside remained cushioned as traders refrained from placing aggressive bets ahead of the latest US inflation figures, which is likely to influence Fed rate hike expectations. Apart from this, a flurry of Chinese macro releases on Wednesday would further contribute towards determining the pair's near-term trajectory.
Technical levels to watch
Immediate support is pegged near 0.7845 level, below which the pair could correct further towards 100-day SMA support near the 0.7820 region. On the upside, momentum beyond 0.7885 level, leading to a subsequent breakthrough the 0.7900 handle, now seems to pave the way for an extension of the pair up-move further towards 0.7945-50 supply zone.
Trading foreign exchange on margin carries high potential rewards but also high potential risks that may not be suitable for all investors. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience and risk appetite. Past performance is not indicative of future results, which can vary due to market volatility. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Any opinions, news, research, analyses, prices or other information contained on this website or linked to from this website are provided as general market commentary and do not constitute investment advice. AUSFOREX does not accept liability for any loss or damage, including any loss or profit, which may arise directly or indirectly from use of or reliance on such information.