AUD/USD - Sell-off stalled around 61.8% Fib, risk reversals hit 3-week low
- AUD/USD rebounds from 0.7633 (61.8% Fib R of May low/Sep high)
- Risk reversals hit 3-week low, suggests the relief could be short lived
- Doji candle on the daily chart
Bears have loosened their grip on the Aussie, allowing for a much needed technical correction in the AUD/USD ahead of the weekend.
At the present time, the currency pair is trading at 0.7658; largely unchanged on the day. A combination of weak Aussie producer price inflation, Australian political drama and a better-than-expected US GDP reading pushed the spot down to 0.7625.
However, a bullish RSI divergence on the 1-hour chart and an oversold RSI on the 4-hour chart seems to have helped the Aussie defend the 61.8% Fib support and the rising trend line (sloping upwards from May 9 low and June 2 low).
Risk reversals hit 3-week low
- The one-month 25 delta risk reversal fell to -0.725; the lowest level since Oct 9. The recent high stands at -0.625 (Oct 11 low).
- The drop in risk reversals indicates increased demand for AUD puts, thus the relief in AUD/USD could be short lived.
AUD/USD Technical Outlook
The latest price action around the Aussie Dollar hints at the likelihood of some consolidation vs. the US Dollar in the near term, noted Karen Jones, Head of FICC Technical Analysis at Commerzbank.
Key quotes
“AUD/USD has reached the 55 week moving average at .7631. We note the 13 counts on the 240 minute chart and suspect that we may see some near term consolidation. Failure here targets the 2016-2017 uptrend line at .7458. Rallies will find initial resistance at the 200 day ma at .7694 and the 20 day ma at .7797”.
“Key near term resistance remains last week’s high at .7896 – its stays immediately negative below here”.
“Above the .8162 May 2015 peak lies the .8295 January 2015 high”.