AUD/USD: dollar's purchasing power sinking, Aussie to regains the 0.80 handle?

Analysis General

Published: 2/19/2018 12:09:00 PM

AUD/USD has been down to test the bull's commitments at 0.79 the figure again on Monday in thin liquidity while the US and China have been out on holiday. 

Currently, AUD/USD is trading at 0.7909, up 0.04% on the day, having posted a daily high at 0.7937 and low at 0.7898.

AUD/USD is sensitive to a shift in the stock market and the greenback that was testing the upside on the 89 handle earlier in the DXY, failing at 89.44 for the session so farm within a range of between 88.955 - 89.442, +0.19% at the time of writing. 

The S&P index hit a resistance at the 21 D SMA last Friday, while the Aussie was sent a cent lower as the DXY recovered from the YTD lows, (perhaps a warning to equity traders returning on Tuesday). 

RBA and FOMC minutes coming up

Meanwhile, we await the RBA minutes and desks will be looking out for any verbiage that offers guidance that the CB officials have not already been very clear about. This may well be a non-event considering how much we have already heard from the RBA over the next couple of weeks. 

The FOMC minutes are also due this week and considering the current shift in market focus, these also will be heavily scrutinised with respect to inflationary pressures. Traders will be looking for the premise in the need to hike rates sooner than later and more frequently.

In the background, Gold is a major focus, as are commodities in general, all highly correlated to the Aussie while traders watch the dollar and what it will buy throughout 2018. 

AUD/USD levels

AUD/USD remains in the bullish channel that was formed on the daily sticks from the 200-D SMA down at 0.7769. Key resistance came in at 61.8% of the 0.8136/0.7759 move at 0.7992. However, the price dropped back below the 21-D SMA at 0.7953 and is now consolidating in the lower leg of the range with momentum flat and RSI neutral on the same daily time frame. 0.8000 remains on the map on continued failures of the downside below 0.7900.

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