AUD/USD bulls regain control, comfortable above 0.80 handle
• USD selling remains unabated.
• Aussie inches back closer to 4-month tops.
• Move above 0.8030-40 zone to open room for additional gains.
The AUD/USD pair was seen building on its momentum back above the key 0.80 psychological mark and has now reversed previous session's retracement slide.
The pair on Tuesday came under some intense selling pressure following trade action by the US against China and South Korea, slapping tariffs on imported washing machines and solar panels. The downfall, however, was bought into ahead of mid-0.7900s amid resumption of the US Dollar bearish slide.
With markets looking past a congressional vote to end a three-day government shutdown, a sharp retracement in the US Treasury bond yields exerted some fresh downward pressure on the greenback and extended some support to higher-yielding currencies - like the Aussie.
The greenback extended its weakening through the Asian session on Wednesday, which along with a subdued US bond yields and a modest rebound in copper prices helped the pair to build on its up-move back above the 0.80 handle.
It, however, remains to be seen if bulls are able to maintain their dominant position or the pair once again meet with some fresh supply near the 0.8030-40 region, 4-month tops, as traders now look forward to the second-tier US economic data for some impetus.
Technical outlook
Valeria Bednarik, American Chief Analyst at FXStreet writes: “The short-term outlook is bearish, as in the 4 hours chart, the pair broke below a horizontal 20 SMA at the beginning of the day, with the later recovery stalling below it. Technical indicators in the mentioned chart have recovered within negative territory before losing upward strength, now poised to resume their declines. The pair has a strong support area around 0.7930/40, where it bottomed multiple times last week, with a break below it probably leading to a test of a major Fibonacci support at 0.7890, the 61.8% retracement of the September/December decline.”