AUD/USD: will commodities tip the bulls over the line?

Currently, AUD/USD is trading at 0.7956, down -0.02% on the day, having posted a daily high at 0.7961 and low at 0.7953.

Iron ore has been a wild wide, how much higher can they go? - Westpac

AUD/USD is consolidated after failed upside attempts through 0.7980 resistance and ahead of the psychological target of 0.8000. Analysts at Westpac explained that they would require a further significant appreciation in commodity prices for us to be happy that an aggressive push into the mid 0.80s is possible. 

"Now we have long argued that the siren calls of ‘the mid $40s’ for iron ore were way out of line with rebar at 5yr highs and hot rolled close to 4yr highs in China. However, that story is maturing in our view," the analysts said, adding, "the AUD/USD is up 4.7% from the lows seen July 4 – the risks of a shift in guidance on the AUD/USD from the RBA at the August 1 meeting appear high. To be sure, as Rich notes the USD should continue to trek lower if the US inflation continues to undershoot as we expect.  However, we stick with our core view– the AUD/USD is destined for lower levels later in the year. For us, that means 0.75 not 0.85 before year end."

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet suggested that for the meantime, the risk for the pair is towards the upside, despite the lack of upward momentum. "In the 4 hours chart, the pair bounced strongly from a bullish 20 SMA, currently offering a dynamic support at 0.7910, while the RSI indicator remains flat in the overbought territory. The Momentum indicator, however, heads lower near its 100 line, barely holding within a positive territory."