Originally published by AxiTrader
Quick Recap
77 cents proved to be a level to tough to take out again overnight. To many traders minds that will reinforce the notion that above there remains the zone of supply from the Aussie dollar bears.
But the persistence of the Aussie dollar's strength speaks volumes for the underlying support the AUD/USD has in the current global environment which is conducive to further gains and a real test of resistance.
What You Need To Know
The US presidential debate has been good for the Aussie dollar. That the market has perceived Hillary Clinton the victor has seen a general lift in risk appetite which is almost always Aussie dollar supportive.
So it's no surprise that the Aussie was stronger overnight and had a pop at 77 cents once again reaching a high around 0.7695. It's clearly still in it's short term hourly uptrend but it does look like it's starting to lose a little momentum and traders back away from the obvious supply zone. Short term traders will be watching 0.7630 on the day as the support zone.
One thing that could weigh on the Aussie is Fed Chair Janet Yellen's appearance in front of US lawmakers on Capitol Hill tonight. After her deputy, Fed vice chair Stanley Fischer, said overnight that rates this low in the US are sending the wrong signals about capital and the economy and that he wanted to raise rate Yellen is likely to face a barrage of questions about the outlook for interest rates in the US.
I'd expect her to stick to the same script she used after last week's FOMC meeting and signal that rate hikes are coming. That should be supportive for the US dollar and weigh on the Aussie a little.
That's particularly the case because two of the dissenters from last week's decision to hold rates stable, Mester, and George, are both talking along with James Bullard.
So 77 cents could remain a bridge too far - for now.
Longer term though I highlighted yesterday that I'm getting a little bullish the AUDUSD for 2017 with the chances increasing of a run toward 80 cents over that time frame. That's not an especially big call given the Aussie is already sitting at 0.7660 this morning.
But it is an interesting call when you view it in the context of the negativity towards the Aussie of many traders and investors and the myriad of overhead resistance in the 0.77-0.7830 zone.
Here's the monthly chart that shows if the Aussie can break higher, up and through this years high of 0.7834, then it is off to the races. It has to break first though. And that might be a bit of a stretch until the US election, and especially if Donald Trump wins and traders get themselves into risk off mode.
Have a great day's trading