The AUD/USD has had a tumultuous couple of week as the currency has battled against a highly bearish trend line. However, the AUD might finally be turning the corner as the currency recently broke through and held steady after a retest of the bearish trend.
Last Friday was an important day for the embattled pair as price action moved sharply above the long term bearish trend line. However, the real litmus test was whether the move could survive a retest of the bearish trend. That retest came early Monday morning and, thankfully, the pair managed to remain buoyant and hold above the bearish trend.
Subsequently, traders are now keenly eyeing resistance levels around the 0.7235 level for signs of a short term bullish push. This contention is actually supported the RSI oscillator which has started trending higher from within neutral territory. Along with the bullish RSI, the moving averages are also heading higher with the 12 and 30 EMA’s having turned steadily north.
The reality is that the pair will need to surmount the 0.7235 level to cement a move higher with targets around the 0.7362 level. However, the signs are encouraging given the swing in sentiment away from the US dollar of late. The Australian dollar has been a net beneficiary of that swing and the coming days could certainly prove buoyant for the pair.
However, a slew of US economic data points are looming upon the horizon this week, which could certainly impact the pair. Keep a close watch on the upcoming US Unemployment Claims result, as any strength could see the AUD sold back below the trend line.