AUD/USD: Bulls break above the 0.7500 handle amid USD profit-taking

16 May 2018

  • Profit-taking on the US dollar pushes the Aussie above the 0.7500 handle.
  • US Treasury yields and the US dollar are both in corrective mode after their strong advance earlier this week.
  • Coming up next in Australia is the consumer inflation expectations and the employment data at 1:00 and 1:30 GMT respectively.

The AUD/USD pair is trading at around 0.7516 up 0.60% on Wednesday as both USD and the US Treasuries are in corrective mode.

In Asia, the Aussie rebounded from the 0.7450 level and climbed steadily throughout the European session. In the early part of the American session, the pair broke above the 0.7500 handle.

The recent move higher on AUD is attributed to some USD profit-taking, a mild boost in copper prices which affect the commodity-linked currency and to a lesser extent the China’s industrial production which advanced to 7.0% year-on-year in April. 

"Copper price, known as a barometer of economic health, reversed direction and is touching previous resistance now converted into support," Gonçalo Moreira, technical analyst at FXStreet noted on the market risk on/off sentiment on Wednesday. 

On Tuesday, the US Treasury yields broke multi-year highs. The 10-year Treasury yield benchmark is now consolidating its advance in the 3.070% region while the US Dollar Index (DXY) is also in corrective mode trading close to the 90.30 mark.

Coming up next on the macroeconomic front in Australia, the consumer inflation expectation at 1:00 GMT followed by the employment data at 1:30 GMT on Thursday. If the Australian data come above expectations and the US dollar continues its corrective move, then the AUD/USD can have another boost higher.

On the broader picture, the greenback has been in a strong uptrend since mid-April as investors are expecting the Fed to hike at least three times in 2018.

AUD/USD 4-hour chart 

The main trend is bearish and immediate support is seen at the 0.7450 level (low of the day) followed by 0.7411 cyclical low and the 0.7500 handle. To the upside, bulls can expect resistance at the 0.7550 figure and the 0.7640 previous supply level. The Aussie is trading below its 100 and 200-period simple moving average suggesting downward momentum, however, bulls are challenging the 50-period SMA.

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.

Register a Demo Account

Test drive our trading platform with a 30 day free trial

Register a Live Account

Get started.Open a Forex and CFD trading account with AUSFOREX now

Deposit Funds

Express way for deposit funds

Live Chat

Chat live with one of our 7*24 hour multilingual customer service team