Can buyers keep the run higher from yesterday going?
Despite stocks pulling back on the session, major currencies are still sticking with dollar and yen weakness as the key theme for the most part in European morning trade.
AUD/USD is still settling higher, around 0.6540-50 levels currently, after having started the session a little lower closer to 0.6520 amid concerns about Australia-China tensions.
From a technical standpoint, the pair is now starting to try and keep a break above its 100-day MA (red line) – a key line in the sand that has prevented gains over the past few weeks.
That level currently rests @ 0.6508 and for buyers, staying above that is pivotal now.
There is some upside resistance from the recent highs @ 0.6561-70 but a move above that – especially on a daily break – should pave the way for a further upside move towards the 200-day MA (blue line) @ 0.6664, another key resistance level in the pair.
For now, it is all about risk flows and despite some caution heeded in the equities space, AUD/USD buyers appear convinced that dip buyers will step in once again later today.
Let’s see if that will be the case as the S&P 500 is also approaching a test of its own key daily moving averages after breaking above the 61.8 retracement level yesterday.
With the AUD/USD recovery pretty much mirroring the S&P 500 move as well, the break of the latter may very well to a stronger break higher in the former as well.