Originally published by AxiTrader
There is no other way to characterise the Australian dollar's performance in the last 24 hours other that strong.
That's because the Moody's downgrade of Australia's biggest trading partner and the impact it had on iron ore and other metals in Asia trade yesterday could have given the bears every excuse they needed to come after the Aussie and drive it sharply lower.
Of course the bears did initiate some selling and that drove the Aussie down to a low in the support zone I highlighted yesterday between 0.7440/50.
Equally the data yesterday on construction work was an interesting read on the economy. The weaker than expected headline print of -0.7% was much weaker than expected and has already seen some downgrades to Q1 2017 GDP which this data feeds into.
Likewise, the big fall in residential construction suggests maybe that sector is not going to be able to support growth across the course of 2017 in the manner that the RBA, and the market, expects.
So again, against this backdrop the Aussie's performance was a good one.
Throw in a set of Fed minutes that read much more dovish than the market expected - weakening the US dollar - and we end up with the Aussie back up near 75 cents against the US dollar.
But the Aussie is not out of the woods, as the 4-hour chart above shows. Rather the Aussie has clear parameters for the next move in the short term.
Trendline support today has moved up to 0.7450/55 while a break of the recent high at 0.7516 would be necessary to kick the Aussie into a higher range.
My daily charts suggest such a break could open a move toward 0.7540 but more particularly dua lFibonaccii resistance in the 0.7580/90.
Sellers are likely to be still lurking on any move however given the outlook.
Have a great day's trading.