AUD/USD recovers from S&P’s outlook downgrade

Outlook downgrade by the ratings agency S&P failed to have a major impact as the AUD/USD pair is back above 0.75 handle and trading largely unchanged on the day around 0.7513.

Aussie supported by Iron ore prices

The recovery in Aussie from the intraday low of 0.7467 despite S&P’s downward revision of Australia’s outlook to negative may be due to the resilience in the Iron ore prices.

According to The Steel Index, Iron ore hovered around $55.80/tonne. Prices are holding steady despite calls from major investment banks for substantial falls over the rest of 2016. Meanwhile, uptick in gold and oil prices in Asia also helped Aussie regain poise.

AUD/USD Technical Levels

The immediate resistance is seen at 0.7545 (July 4 high), above which the pair could target 0.7571 (61.8% of 0.7835-0.7145). A violation there could yield 0.76 handle. On the other hand, a breakdown of support at 0.7508 (5-DMA) would open doors for a slide to 0.7450 (100-DMA + 38.2% of 0.6827 – 0.7835). A break of the support would expose 0.74 handle.