Will AUD/USD Hold 70 Cents?

Will AUD/USD Hold 70 Cents?

Will AUD/USD Hold 70 Cents?

The Australian dollar experienced its strongest one-day decline versus the U.S. dollar in a month and this month is exceptionally painful for our long AUD/USD trade. Considering that there were no Australian economic reports released today and the decline in gold prices was relatively mild, U.S. dollar strength was the primary driver of AUD/USD flows. While U.S. dollar strength can be a powerful catalyst at the end of the day Australia still offers a higher yield than the U.S and for the next 2 months the focus should shift away from a Fed hike which should help AUD/USD recover. A year end Santa Claus rally could also bolster risk appetite helping to lend support to AUD.

The technical picture for AUD/USD is less encouraging. For the first time in 3 weeks, AUD/USD closed firmly below its 100-day SMA. Thankfully there’s plenty of support below current levels including the Oct 29 and Nov 18th lows near 0.7068 and the November low right above 70 cents. Resistance is back at the moving average.

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