Traders, keep a weather eye on the AUD/USD pair! At the moment it trades at 0.7570, down by 1.38%, wit a daily high at 0.7684 and low at 0.7566.
FX Street experts note that the pair appears to be one of the worst performers this week, as the USD fights to regain its top place among the G10’s. The Aussie’s recent triumph as being the best performer, going up above 6% this year, with last month its best month, was short-lived due to Australia’s performance being burdened on the commodity sector. Moreover, with the greenback’s bounce back, chances that commodities like iron ore and copper be significantly pressured are pretty high. China’s commodity and manufacturing industry is no exception. Australia’s export industry relies a lot on the Chinese commodity and manufacturing sectors, with exports to China reaching around 34%.
As regards the DXY, Bank of Tokyo Mitsubishi’s analysts pointed out that the USD has to break 104.00 in the event of a breakout and a catch-up play relative to the divergence of yields and the Fed’s trajectory of tightening this year. There’s a high chance that the greenback’s strength could play catch up with widening yield spreads, the FX Street notes.
Commerzbank analysts estimate that prices will need to drop below 0.7464, the 55-day MA to make the upside pressure more bearable on the Aussie and prompt losses to 0.7312/00 and then 0.7161/64, the recent lows. For now, the 50-day SMA is maintaining the offers up at about 0.7575 and the lows at 0.7563 today. However, analysts suspect that the bears might extend the supply and test the H&S’ neckline to secure a break at 0.7320 on the wide. The upside target is 0.7440 to attenuate the reversal of 2017’s rally from late Dec. lows of 0.7159
Don’t miss out on USD/CAD coming up next!