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Australian Dollar Found Support Near 76 Cents But Looking Vulnerable

Published 09/02/2017, 10:24 am
Updated 06/07/2021, 05:05 pm

Originally published by AxiTrader

Key Takeaway

The Australian dollar has found support again above the 76 cent region against the US dollar in the past 24 hours as the dollar itself has struggled again.

It's still the case that where goes the US dollar so goes the Aussie. So with USDJPY back under 112 and the Euro hanging on near 1.07 it's no surprise that the Aussie is holding 76 cents.

But the charts suggest it's vulnerable.

What You Need To Know

It has been a quiet 24 hours for the AUDUSD overall. But the RBNZ interest rate announcement this morning and their desire for a lower NZD has seen the Aussie Kiwi (AUDNZD) rate bounce back to 3 week highs after getting hammered in the past day or so when the Kiwi rose to 0.7375 against the US dollar.

Naturally, given Australia's tr5ade relationship with New Zealand, RBNZ governor Wheeler isn't just targeting the NZDUSD rate but also the AUDNZD. There is every chance that we see a strong rally in AUD/NZD if my target of 0.7175, possibly lower, for NZD/USD is correct.

But a falling Kiwi begs the question of whether or not Aussie dollar traders will sell in sympathy or whether they will separate the commodity cousins and drive AUD/NZD up and through 1.06.

It's an interesting question and one that largely depends on the outlook for the US dollar - yes that again. A benign or falling US dollar and Aussie can outperform the Kiwi. But if the US dollar starts to rally again both the Aussie and Kiwi will come under selling pressure.

That battle is still being waged as the moves in Euro, USD/JPY, and the US dollar index overnight show. equally though the outlook for the Aussie also rests on a combination of how the market views

In the immediate term there is little fresh impetus for trade in Asia today. But, and I'll talk more about this tomorrow morning, the outlook for the Aussie also rests on a combination of how the market views the RBA's quarterly statement on monetary policy when it is released at 11.30 am tomorrow. Equally the release of Chinese Trade and loans data tomorrow will be key to how the AUD/USD ends the week.

But for today the only roadmap traders really have is the chart.

And on this front, even with yesterday's recovery the AUD/USD still looks a little vulnerable in the short term as you can see in my setup on the chart below.

The key remains 0.7580/7600 as noted in previous notes. Unless this region breaks the Aussie is in good hands. Otherwise a deeper move is in the offing.

Chart

Have a great day's trading.

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